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Fees, Costs, and Taxes Payable When Buying Land or Houses in Kenya (Conveyancing)

Fees, Costs, and Taxes Payable When Buying Land or Houses in Kenya (Conveyancing)

Buyer’s (Purchaser) Costs

  1. Purchase Price
    • Unless advised otherwise by your qualified advocate, let a qualified advocate hold all funds as a stakeholder, not an agent, or jointly by both parties, or by a third party in an escrow account. The purchase price is ideally paid as follows:
      • Deposit: 10% (or higher) of the purchase price on or before execution of the sale/lease agreement.
      • Balance: Remaining purchase price on completion (exchange of documents, transfer of original title, etc.).
      • If it is a gift, state clearly that it is a gift. Never pay in hard cash! Check our Vol 2, 2023.
  2. Professional Fees
    • Qualified Advocate: Minimum legal fees are regulated by the Advocates Remuneration Order (ARO) and based on the value of the subject matter. Avoid agreements for KES 2,000.
    • Qualified Valuer: To value the property.
    • Qualified Surveyor: To obtain maps/mutation at the Ministry (Maps cost about USD 4/KES 400) and resurvey the property.
  3. Nominal Duty to Stamp Agreement
    • The sale/lease agreement must be stamped to be used in a court of law in case of fraud.
    • Cost: Usually USD 20-50/KES 200-500 (expressed in denominations of KES 20, referred to as pounds).
    • The agreement will be stamped with a red dye stamp (in Kenyan pounds).
    • Must be stamped within 30 days, or penalties will accrue.
  4. Stamp Duty
    • 4% for properties within cities and municipalities.
    • 2% of the value for properties outside municipalities/cities.
    • Your advocate will advise on properties exempt from stamp duty.
  5. Bank Fees & Miscellaneous Costs
    • If taking a loan, the bank will charge the property. Charges/mortgages attract 0.1% of the amount secured.
    • Bank miscellaneous costs (RTGS/excise tax).

Seller’s (Vendor) Costs

  1. Land Rent
    • Payable to the government (if leasehold).
  2. Land Rates
    • Payable to the county government.
    • Includes all penalties for late payments.
    • Seller to provide buyer with all clearance certificates and accompanying receipts/bank cheques.
  3. Utility Bills
    • All pending water and electricity bills.
    • All the above costs will be apportioned between buyer and seller. Your advocate will advise on this.
  4. Commission
    • Payable to duly licensed estate agents/brokers.
  5. Partitioning or Subdivision of Land/Building Plans
    • Costs of engaging a surveyor, physical planner, qualified engineer/architect/quantity surveyor.
  6. Consents/Approvals
    • All costs necessary for obtaining consents referred to in our Vol 2 (Commissioner of Lands, Land Control Board, Change of User, County Council Building Permits, etc.).
  7. Probate/Succession Costs
    • In case of succession matters, all probate fees to obtain proper title.
  8. Capital Gains Tax (CGT)
    • Check our Vol 1, 2023.
    • The rate of tax is 15% of the net gain.
    • Your advocate will advise on how to calculate tax and properties exempt.
  9. Bank Loan Discharge Fees
    • If the owner had taken a loan against the property, it must be discharged with consent by the bank. Discharges/reconveyances cost 0.05% of the amount secured.
    • Bank miscellaneous costs/excise tax.
  10. VAT (16%) on Sale of Commercial Buildings
    • On January 17, 2019, KRA was granted a stay of execution on the High Court judgment (civil suit 541 of 2015) until the presumed appeal is heard. For now, VAT on the sale of commercial buildings remains payable.

Buying a House/Apartment + Costs

  • Note that for houses and apartments, the first agreement is called an offer letter, and the sale agreement is known as an agreement of lease. The purchase price is referred to as lease premium.
  • After the passage of the Sectional Properties Act No. 21 of 2020, buyers/owners of apartments will receive a title deed rather than a certificate of lease. Buyers/owners will also have one share in a corporation to manage the common areas.

Seller’s Lawyer Legal Fees

  • 1% of the purchase price.
  • Can be renegotiated by your qualified advocate.

Other Costs

  • Disbursement for Water Infrastructure Costs
  • Electricity Infrastructure Costs: Normally referred to as electricity/power meter & deposit & connection charges.
  • Provisional Service Charge and/or Service Charge: For the first 3 to 5 months, expressed as a percentage of the lease premium.
  • Initial Provisional Infrastructure Levy Deposit: May not be charged.
  • Cost of Transfer of Allotment and Setting Up of Management Corporation
  • VAT on Fees and Disbursements: VAT is payable on legal fees and disbursements at a rate of 16%.
  • Registration of Documents and Pre/Post Search Costs: Green card search and normal search before and after obtaining title, and registration of transfer documents to obtain new title/sectional title.

For more details, visit WKA Advocates.

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WKA Advocates’ Guide to Avoiding Pitfalls When Buying Land or a House in Kenya

WKA Advocates’ Guide to Avoiding Pitfalls When Buying Land or a House in Kenya

Don’ts

  1. Don’t send money directly to the seller (vendor) or their agent unless advised by your advocate. Avoid paying in hard cash to ensure there is a money trail.
  2. Don’t buy or sell/lease land or apartments without involving a qualified advocate. Your advocate will guide you and recommend other essential experts like qualified surveyors and valuers.
  3. Don’t make a decision to buy land based solely on radio and TV adverts or media influencers. Conduct a simple Google search for any cases or complaints against the sellers.
  4. Don’t ignore this advice, or it may end in premium tears.

Who Sells Land/Houses in Kenya?

  • Reputable real estate firms (Ensure they are licensed and check for any court cases against them)
  • Saccos, churches, chamas, cooperatives, financial trusts, companies, individuals, and communities
  • Private developers and licensed estate agents/brokers on behalf of owners for a commission

Do’s

  1. Do a first site visit physically or through your power of attorney to ensure the land is vacant.
  2. Upon your advocate’s advice, engage a qualified surveyor to map out the beacons on a second site visit.
  3. Inform your confidants/family/spouse of your intentions to buy/sell land or an apartment. They may provide valuable opinions or better options.
  4. After a phone call or oral chat, always write an email/WhatsApp/text message to confirm what was discussed. Ensure you have written evidence or minutes of the meeting.

What Are the Types of Land Classification?

  • Private, Public, or Community Land: Refer to the NDUNG’U LAND REPORT to ensure the land was not acquired illegally.
  • Freehold or Leasehold: Freehold indicates absolute proprietorship/ownership, often for agricultural land. Leasehold is for a term like 99 years.
  • Apartments/Townhouses: Classified as sectional properties.

Important Notes

  • A certificate of allotment/share certificate is not a title deed. Do not be deceived.
  • There is no such thing as a “ready title” or “clean title”. The title must be legally transferred to you.
  • Hiring a qualified advocate is not expensive. Advocate fees are guided by the Advocates’ Remuneration Order. Better safe than sorry! Avoid any agreements claiming to cost USD 30/KES 3,000.
  • All agreements involving land/houses must be in writing, signed, and properly witnessed.

Which Consents Do You Need?

  • Land Control Board Consent: The board consists of assistant county commissioners and village elders. A controlled transaction is declared void if this consent is not obtained within six months. Cost: USD 10/KES 1,000 or special sitting USD 50/KES 5,000.
  • County Land Management Board Consent
  • Spousal Consent: As they have matrimonial property rights.
  • Financial Institutions (Banks): If the property was charged (used to secure a loan).
  • Other Authorities: Kenya Airports Authority (KAA), Kenya Railways, Kenya Civil Aviation Authority (KCAA), Kenya Ports Authority (if land is adjacent), and trustees of national parks.

For further information or legal assistance, please contact us at info@wka.co.ke, visit wakilihub.co.ke/, or call +254 798 03 580. Our Nairobi Hub is located at Parklands, Valley View Business Park, 6th Floor, City Park Drive, Off Limuru Road.

Authors:

  • Founding Partner: William Karoki
  • Lawyer: Florence Mwende
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3 Bills Rejected!

3 Bills Rejected!

President Uhuru Kenyatta rejected the Information Communication Technology Practitioners Bill (ICT), 2020. Sections of Kenyans urged Cabinet Secretary Joe Mucheru to advise President Kenyatta against signing the bill, stating it would undermine players in the sector. The contentious bill sought to require all local ICT practitioners to be licensed and registered by a council. Additionally, the Insurance Professionals Registration Bill of 2020 and the Higher Education Loans Bill of 2020 were also rejected and sent back to Parliament with memoranda.

10 Bills Assented into Law!

President Uhuru Kenyatta signed into law 10 bills with the following key features:

  1. 2022 Appropriation Bill and the Supplementary Appropriation Bill 2022
    • Authorizes the issue of funds from the Consolidated Fund for the service year ending on June 30, 2022.
  2. Finance Bill 2022
    • Aims to raise revenue for the Sh3.33 trillion budget for the 2022/23 financial year.
    • Parliament rejected proposed increases in taxes on maize and wheat flour, wines, spirits, and motorcycles.
    • The proposed increase in taxes on beauty products and jewelry was retained.
  3. Radiographers Bill 2021
    • Establishes a legislative framework for the training, registration, and licensing of radiographers.
  4. National Electronic Single Window Bill 2021
    • Facilitates trade and commerce through a single entry point for processing import and export documents and making electronic payments.
  5. Traffic (Amendment) Bill 2021
    • Amends the Traffic Act to align with the Constitution and improve the implementation of traffic laws.
  6. National Government Development Fund (Amendment) Bill
    • Provides an accountable process for the allocation of funds for the National Government Constituencies Development Fund Board.
  7. Supreme Court (Amendment) Bill of 2022
    • Updates the Supreme Court Act to align with current practices and improve efficiency.
  8. County Allocation of Revenue Bill 2022
    • Allocates revenue raised nationally among county governments for the 2022/23 financial year.
  9. Mental Health (Amendment) Bill 2020
    • Ensures the rights of individuals with mental disorders are protected and establishes sufficient mental health facilities at both national and county levels.

For more information or legal assistance on compliance or other legal issues, please contact us at info@wka.co.ke or visit wakilihub.co.ke/. Our Nairobi hub is located at Parklands, Valley View Business Park, 6th Floor, City Park Drive, Off Limuru Road.

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President Kenyatta Announces 12% Minimum Wage Increase for Kenyan Workers

President Kenyatta Announces 12% Minimum Wage Increase for Kenyan Workers

The Employment (Amendment) Act 2022 was signed into law on April 4, 2022, by His Excellency the President of Kenya. The following changes took effect on April 22, 2022.

Key Changes:

  1. Streamlined Job Application Process:
    • Employers will no longer require job applicants to produce clearance and compliance certificates, such as certificates of good conduct, EACC clearance, and HELB clearance, at the initial point of a job application.
    • This amendment aims to ease the financial burden on job applicants, especially young, underprivileged individuals, who previously had to spend around KES 6,000 to acquire these certificates.
  2. Elimination of Application Fees:
    • The fees for applying for clearance and compliance certificates have been scrapped. It is now free to apply for these certificates from relevant institutions like HELB.
  3. Public Service Applicants:
    • Job applicants for public service positions will still be required to submit clearance and compliance certificates.
  4. Post-Offer Requirements:
    • Successful job applicants who receive a letter of offer will still need to submit the required clearance and compliance certificates.
    • Employers have the right to withdraw letters of offer if the prospective employees do not submit the requested certificates.

Recommendations for Employers:

  • Employers should review and update their Human Procedures and Policies Manual and Employment Contracts to align with these changes and ensure compliance with the law.

Please note that the contents of this newsletter are intended to provide a general guide to the subject matter. It should not be relied upon without legal advice. For further information or assistance on compliance or any other legal issues, please contact us at info@wka.co.ke.

Visit us at:
WKA Kenya
Nairobi Hub: Parklands, Valley View Business Park, 6th Floor, City Park Drive, Off Limuru Road
Website: wakilihub.co.ke/

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DOES YOUR LAWYER TALK TO YOU? DO YOU UNDERSTAND?

Communicating Effectively with Clients: Simplifying Legal Opinions

Our clients, most of whom are not lawyers, often perceive that lawyers use complex language. This perception is why law schools now emphasize the use of plain English, an area where many lawyers struggle.

Having worked both in a law firm and as in-house counsel, I have had the privilege of interacting with those who issue instructions to lawyers—CEOs, CFOs, government officials, and other managers. A common theme prevails: they simply do not have the time or energy to read through 5-20 pages of dense legalese. They are more concerned with the solutions and recommendations you provide.

Think about it. How often has a client asked you to explain or summarize the advice in your legal opinion? A wise lawyer will summarize the opinion in an email or place it on the first page of the document. In-house counsel are often overwhelmed and do not have time to read the entire document. They rely on the summary you provide over the phone or via email.

Law school teaches us that every legal opinion must follow a chronological order of facts, issues, rules, application of the law/analysis, and conclusion (FIRAC). This method has remained unchanged since the 1600s. While some innovative lawyers have tweaked their opinions to include summaries, the general format remains the same.

Times have changed, and so have the ways we consume information. There is a perception that lawyers are stuck in the past, using outdated terms like “therein” and “wherein.” I strongly believe there should be a radical reform of legal opinions to benefit the client. Making information more appealing and accessible would save time and resources for both parties.

For starters, we could move away from dense prose and use tables or matrices to explain information. Additionally, we could use audio formats to package legal opinions, allowing clients to listen to them. Podcasts, videos, or PowerPoint slides could enhance the consumption of this information. A comprehensive review of how lawyers present information to clients is necessary. For instance, I have not seen the use of emojis in legal documents, yet they are common in everyday communication. The law should reflect changing societal needs.

Current legal opinions are in the dark ages of the Nokia era, while the world has moved to the iOS/Android period. Let us embrace change and develop more engaging ways to present our work.

At PROW, we strive to communicate with our clients by issuing brief and succinct legal opinions, focusing on solutions rather than merely restating the law.

For assistance with any legal issues or general advice, please contact us at info@wka.co.ke.

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A GUIDE TO ANNUAL LEAVE IN KENYA: Entitlement, Accrual, Carrying over and Forfeiture

This article seeks to shed light on Section 28 of the Employment act of Kenya (“the Employment Act”) which donates the statutory right to annual leave to Employees.

In fact, in my former role as an in house counsel, I discovered that most employees are not aware they are entitled to take leave for at least two (2) uninterrupted working weeks. Did you know this, or your ‘boss’ frowns if you are away from the office for too long?

Annual leave is one of the most highly and bitterly contested misunderstanding between employers, HR and employees (H.R). The prevalent nature of these disputes is exemplified in the numerous cases filed in the Employment and Labor Relations Court.

The Constitution of Kenya, our supreme law states at article 41 (1) that every person has the right to fair labor practices. This statement by the constitution is imperative considering employers have a higher bargaining power than employees. Employees must then be able to take time off from their work related duties and be able to rest. The European Court of Justice (‘ECJ’) in its decision in the case of ANGED V FASGA and Others (C-78/11) stated that the purpose of the entitlement to paid annual leave is to enable the worker to rest and enjoy a period of relaxation and leisure.

In light of this, the Employment Act provides at Section 28 (1) (a) that an employee shall be entitled after every twelve consecutive months of service with his employer to not less than twenty-one (21) working days of leave with full pay. Section 28 (1) (a) of our Employment Act has striking similarities with Section 20 (2) of the Basic Conditions of Employment Act of South Africa(‘BCEA’) which states that , an employer must grant at least 21 consecutive days’ annual leave on full remuneration in respect of each annual leave cycle.

Our judgments in the Kenyan Employment and Labor Relations courts are quite scanty on this pertinent issue of annual leave. Seemingly, more focus has been placed on calculation of the awards in contention rather than an unequivocal interpretation of the Section 28 of the Employment Act.

On the issue of forfeiture, the law is quite clear that unutilized statutory leave which has not been taken beyond the 18 months (NOT 6) period stipulated in the Employment Act will be forfeited while terms of non-statutory leave are regulated by the agreement between the parties.

However, employers should ensure that the Employment policies do not offend the provisions in the Employment Act.

Should you need any assistance in relation to Employment Law, Policy formulation or the above subject matter please contact as at info@wka.co.ke

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Do You Know Your Role in a Construction Project?

Do You Know Your Role in a Construction Project?

“We shape our buildings; thereafter they shape us.” – Winston Churchill

Introduction

Kenya has witnessed numerous instances of collapsing and sinking buildings over the last decade, resulting in the loss of lives and significant economic investments. Additionally, many buildings continue to be condemned by the National Construction Authority (NCA) as unfit for habitation. A final report from an audit ordered by President Uhuru Kenyatta on the state of buildings in Kenya concluded that building collapses are due to poor-quality concrete, lack of proper foundations, and the use of substandard building materials.

It is crucial to understand the roles and responsibilities of different professionals in preventing construction defects.

Owner/Employer/Client

An employer can be an individual, partnership, corporate entity, commercial developer, or the government, who eventually owns the project or sells it after completion.

The employer generates the idea and arranges funding for the project, often securing construction mortgages and other loans. Additionally, the employer provides a scope definition of the work to be done.

Project Manager

A project manager is typically well-versed in the construction industry, often holding a Bachelor’s or Master’s degree in construction-related fields. Employers, who usually have little to no experience, appoint project managers to oversee and manage projects. Once the design phase is complete, project managers assign contractors through a bidding process.

Project managers are responsible for advising the owner on cost estimates, organizing payments, negotiating contracts with architects, vendors, and contractors, scheduling different project phases, and supervising project completion.

Geotechnical Engineer

Geotechnical engineering is essential for high-rise buildings and structures like bridges, ensuring strong foundations. It is a regulated profession under Civil Engineering, and engineers must be registered with the Engineers Registration Board of Kenya (ERB). The ERB website lists all registered engineers at ERB Registered Engineers.

Geotechnical engineers study soil and rock mechanics to determine the properties affecting the project. They assess risks like earthquakes, soil erosion, landslides, and sinkholes, design earthworks, and advise on suitable foundations. They also propose ground improvement techniques to enhance soil load-bearing capacity.

Architect/Designer

An architect plays a significant role in construction projects and must be registered with the Board of Registration of Architects and Quantity Surveyors, as established under the Architects and Quantity Surveyors Act. Registered architects can be found at BORAQS Registered Architects.

The architect conceptualizes the employer’s ideas into blueprints, draws up plans, specifies building materials, and interior finishes, and makes necessary plan variations. Acting as an agent of the employer, the architect ensures the work aligns with the drawings and specifications, coordinating with contractors and project managers. They also collaborate with structural engineers to design safe and aesthetically pleasing structures.

General/Prime Contractor

All contractors must be registered with the National Construction Authority (NCA). The contractor’s role is to realize the architect’s design. In Design & Build contracts, the contractor has additional design responsibilities and provides materials for the architect to select from.

Contractor responsibilities include obtaining permits and approvals, planning and coordinating construction activities, hiring and supervising workers, obtaining materials, managing budgets, and ensuring project completion within stipulated timeframes.

General contractors engage subcontractors for specialized tasks such as electrical wiring, plumbing, carpentry, masonry, air conditioning, painting, and steel fixing.

Quantity Surveyor

A quantity surveyor, registered with the Board of Registration of Architects and Quantity Surveyors, quantifies resources like labor, supervision, plant, and materials required for a project. They provide project budget estimates and analyze the impact of design changes on the budget.

The primary role of the quantity surveyor is preparing the Bill of Quantities (B.Qs), crucial for producing tender documents, managing the tender process, controlling variations, negotiating and assessing claims, valuing completed works, and providing expert witness reports in disputes.

Lawyers/Advocates

Construction law is an exciting field for legal practitioners. Lawyers assist in drafting complex agreements, creating instruments for banking facilities, negotiating construction contracts, warranties, advising on compliance, and guiding dispute resolution processes.

Conclusion

The construction sector is a diverse industry involving multidisciplinary professions. It is in the best interest of society for these professionals to collaborate harmoniously to construct safe, durable, and environmentally friendly structures.

For assistance with real estate and property development, contractual management, construction, infrastructure projects, public-private partnerships, conveyancing, real estate financing, or general advice, please contact us at info@wka.co.ke.

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A Comprehensive Guide to Annual Leave in Kenya: Entitlement, Accrual, Carrying Over, and Forfeiture

A Comprehensive Guide to Annual Leave in Kenya: Entitlement, Accrual, Carrying Over, and Forfeiture

By Admin | May 27, 2022

This article aims to clarify Section 28 of the Employment Act of Kenya (“the Employment Act”), which grants employees the statutory right to annual leave.

In my previous role as in-house counsel, I found that many employees are unaware they are entitled to at least two (2) uninterrupted working weeks of leave. Have you experienced disapproval from your employer for taking extended leave?

Annual leave is a common source of dispute among employers, HR, and employees. These conflicts are evident in the numerous cases filed in the Employment and Labor Relations Court.

Article 41 (1) of the Constitution of Kenya, our supreme law, states that every person has the right to fair labor practices. This is crucial as employers typically have greater bargaining power than employees. Employees must have the ability to take time off from their work duties to rest. The European Court of Justice (ECJ) in ANGED v. FASGA and Others (C-78/11) emphasized that the purpose of paid annual leave is to allow workers to rest and enjoy a period of relaxation and leisure.

The Employment Act, Section 28 (1) (a), states that an employee is entitled, after every twelve consecutive months of service, to at least twenty-one (21) working days of leave with full pay. This provision closely mirrors Section 20 (2) of South Africa’s Basic Conditions of Employment Act (BCEA), which mandates a minimum of 21 consecutive days of annual leave with full remuneration for each leave cycle.

Kenyan Employment and Labor Relations Court judgments on annual leave issues are relatively sparse, often focusing more on calculating contested awards than interpreting Section 28 of the Employment Act.

Regarding forfeiture, the law clearly states that any statutory leave not taken within 18 months (not 6) will be forfeited. Non-statutory leave terms are regulated by agreements between the parties.

Employers must ensure their employment policies comply with the Employment Act.

For assistance with Employment Law, policy formulation, or related matters, please contact us at info@wka.co.ke.

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Salient Features of the Amendments to the Employment (Amendment) Act 2022

Salient Features of the Amendments to the Employment (Amendment) Act 2022

The Employment (Amendment) Act 2022 was signed into law on April 4, 2022, by His Excellency the President of Kenya. These changes took effect on April 22, 2022.

Key Amendments:

  1. Ease of Application Process:
    • Employers no longer require job applicants to produce clearance and compliance certificates, such as certificates of good conduct, EACC clearance, and HELB clearance, at the initial point of a job application.
    • This amendment aims to alleviate the financial burden on job applicants, particularly young, destitute youth, who previously had to spend around KES 6,000 to acquire these certificates.
  2. Free Clearance and Compliance Certificates:
    • The fees for applying for clearance and compliance certificates have been eliminated. It is now free to apply for these certificates from relevant institutions like HELB.
  3. Public Service Applicants:
    • Applicants for public service positions are still required to submit clearance and compliance certificates.
  4. Post-Offer Requirements:
    • Successful job applicants who receive a letter of offer must still submit the required clearance and compliance certificates.
    • Employers have the right to withdraw letters of offer if the prospective employees do not submit the requested clearance and compliance certificates.

Recommendations for Employers:

  • Employers should review and update their Human Procedures and Policies Manual and Employment Contracts to align with these changes and ensure compliance with the law.

Please note that the contents of this newsletter are intended to provide a general guide to the subject matter. It should not be relied upon without legal advice. For further information or assistance on compliance or any other legal issues, please contact us at info@wka.co.ke.

Visit us at:
WKA Kenya
Nairobi Hub: Parklands, Valley View Business Park, 6th Floor, City Park Drive, Off Limuru Road
Website: wakilihub.co.ke/

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Memorandum of Understanding (MOU)

Exploring the Concept of a Memorandum of Understanding (MOU)

In today’s interconnected business environment, companies, organizations, and governments frequently form partnerships to achieve strategic goals and mutual benefits. These collaborations often require organization, which is where preliminary agreements like the Memorandum of Understanding (MOU) come in. An MOU, while generally non-binding, outlines the intent of two or more parties to engage in a business transaction or arrangement.

Key Elements of an MOU:

  • Profiles of the parties involved
  • Intended roles and responsibilities
  • Subject matter of the collaboration
  • Potential outcomes of the agreement

Benefits of an MOU:

  1. Ease of Negotiation – MOUs are simpler to negotiate than legally binding contracts, often requiring only written consent for amendments.
  2. Testing Relationships – MOUs allow parties to assess compatibility before entering into binding agreements, helping identify potential conflicts early on.
  3. Cost-Effective – MOUs are typically less resource-intensive, both financially and in terms of personnel.
  4. Evaluation of New Ideas – MOUs provide a non-committal way to test new concepts, especially in innovative industries like technology and finance.
  5. Public Relations – Companies often use MOUs to promote partnerships, positioning themselves as collaborative and forward-thinking.

Government Benefits from MOUs:

In Kenya, MOUs have become popular in government initiatives, particularly in service delivery sectors like electrification and technology adoption. The Public Procurement and Disposal Act (PPADA) of 2015 regulates these agreements, ensuring fairness and transparency. However, MOUs sometimes bypass these regulations, raising concerns about accountability in public resource allocation.

Drawbacks of an MOU:

  1. Lack of Legal Enforceability – Courts may not recognize MOUs as enforceable unless clear intent to be bound by the agreement is demonstrated.
  2. Ambiguity – MOUs are often intentionally vague, which can lead to misunderstandings.
  3. Potential for Delays – Overreliance on MOUs can stall progress, delaying the transition to formal contracts.
  4. Dependence on Good Faith – MOUs rely heavily on the commitment of all parties, and breaches can be difficult to address without binding terms.

Safeguarding Interests in an MOU:

  1. Legal Expertise – Involving a certified advocate can ensure that the MOU is clearly drafted to reflect the intentions of all parties.
  2. Compliance with Statutory Requirements – Particularly when dealing with government entities, ensure compliance with relevant laws, such as the PPADA.
  3. Confidentiality Clauses – Including non-disclosure agreements or confidentiality clauses within the MOU can protect sensitive information.

Conclusion:

While MOUs offer flexibility and ease in forming partnerships, their non-binding nature can present challenges, especially in legal enforceability. However, with proper drafting and clear intent, an MOU can serve as a valuable tool in preliminary negotiations.

WKA Advocates has a dedicated team of contract law experts ready to assist. Contact us at info@wka.co.ke for guidance on ensuring your rights are protected when entering into agreements.