LEASES AND LICENSES IN KENYA

Differentiating between “leases” and “licenses” can be complex, especially within the real estate sector in Kenya. These terms are often used interchangeably, but they carry distinct legal implications that assign varying rights and responsibilities to the involved parties. For those participating in property transactions in Kenya, understanding the differences between leases and licenses is crucial. This knowledge helps in selecting the appropriate agreement type, ensuring your rights and interests are protected and legal disputes are avoided.

This newsletter breaks down the components and classifications of leases and licenses and outlines the distinctions between them.

A. Leases in Kenya

According to Section 2 of the Land Act, 2012, a lease is defined as the grant of the right to exclusive possession of property for a specified period. In simpler terms, this means the lessee (tenant) has exclusive use of the property, excluding even the lessor (landlord). Leases are commonly used for property transactions in Kenya and confer significant rights to the lessee.

Key Elements of a Lease:

Exclusive possession: The tenant must have exclusive possession of the property.
Defined interest: The lease must relate to a specific interest in land.
Defined premises: The property being leased must be clearly identified.
Definite period: The lease must specify a definite period, as per Section 56(a) of the Land Act.

These elements are essential for establishing a lease agreement, offering security and legal protection to both parties involved.

B. Licenses in Real Estate

A license is defined by the Land Act as a permission to use land that would otherwise constitute trespass. Licenses do not provide exclusive possession and are often used for short-term or specific-use agreements, such as for public land or community property.

Types of Licenses:

Contractual license: Created by an agreement between parties, granting rights under specific terms.
Bare license: Simple permission without formal agreement, which can be revoked at any time.
License coupled with interest: A license that is tied to an interest in the land, granting more robust legal rights.

Licenses are generally easier to revoke compared to leases, as they provide fewer legal protections.

C. Key Differences Between Leases and Licenses

LEASE	LICENSE
1. Grants a lessee a proprietary interest in the property. This is a more substantial legal interest, typically allowing the lessee exclusive possession of the property for a specific period under the lease agreement terms.	A mere permission that allows the licensee to use the property for a particular purpose, but does not confer exclusive possession. It grants a personal privilege that does not amount to an interest in the property.
2. Is granted for a fixed period, which can be short-term or extend up to several years, depending on the agreement.	Tends to be more temporary.
3. Lessees enjoy significant legal protections under the law. For instance, eviction typically requires formal legal procedures and the fulfillment of specific conditions outlined in the lease agreement.	Offers less legal protection against eviction or termination of the agreement. The licensor can often terminate a license more freely, subject to the terms stated in the licensing agreement.
4. Can be transferred or assigned to others unless the lease specifically restricts this.	Generally cannot be transferred unless the license expressly allows it. This non-transferability is due to the personal nature of licenses.
5. Creating a lease usually requires more formal documentation, which might include registration with relevant authorities, especially for longer durations.	Can be created informally and typically does not require registration. Even verbal agreements can be upheld if proof of terms and licensee’s reliance can be demonstrated.
6. Irrevocable unless the terms provide otherwise.	Revocable and can be revoked by the licensor more easily unless it is irrevocable under specific conditions (e.g., a license coupled with an interest).

Get Expert Legal Advice on Leases and Licenses in Kenya

At WKA Advocates, our Real Estate, Conveyancing, and Construction Law department is dedicated to providing expert legal guidance on property transactions, including lease agreements and licenses. Whether you are leasing property or considering a license agreement, we ensure that your rights, obligations, and interests are fully protected under the law.

We hope this guide clarifies the differences between leases and licenses in the Kenyan real estate sector. For further legal assistance, feel free to contact us:

WKA Advocates
info@wka.co.ke | wakilihub.co.ke/ | +254 798 035 580
Nairobi Hub: Parklands, Valley View Business Park, 6th Floor, City Park Drive, Off Limuru Road

Authors
William Karoki, Founding Partner
Florence Mwende, Associate
Erick Karangatha, Candidate Attorney

Conveyancing and Real Estate

Conveyancing Law and Practice in Kenya

With years of experience in land law and property transactions across Kenya and the broader Eastern Africa region, our firm is well-equipped to handle all aspects of property law. Our expertise covers land and property acquisition, management, and disposal, ensuring our clients receive strategic and practical advice tailored to their specific needs.

Expertise in Conveyancing & Real Estate in Kenya

Our Conveyancing & Real Estate practice group has extensive experience in advising both local and international clients on various property-related matters. We specialize in:

Land Acquisition and Disposal: Providing expert guidance on acquiring and selling land in Kenya.
Conveyancing: Handling the entire conveyancing process, including drafting conveyancing documents and managing the legal transfer of property.
Commercial & Residential Development: Advising on development projects, including project financing and joint ventures.
Leases and Licenses: Structuring and drafting lease agreements for both commercial and residential properties.
Project Financing: Offering solutions for financing real estate projects, ensuring compliance with legal requirements.

Understanding the Conveyancing Process in Kenya

Navigating the conveyancing process in Kenya requires careful attention to detail. We assist clients with:

Conveyancing Documents: Drafting and reviewing all necessary documents to ensure a smooth transaction.
Completion Documents: Ensuring that all required documents are completed and properly executed.
Off-Plan Conveyancing: Managing transactions for properties that are yet to be fully developed, ensuring that clients’ interests are protected.

Avoiding Pitfalls in Land and Property Transactions in Kenya

Our guide helps you avoid common mistakes when buying land or property in Kenya:

Don’ts:

Avoid Sending Money Directly to the Seller: Always route payments through your advocate to ensure a proper money trail.
Don’t Bypass Legal Advice: Involve a qualified advocate in all transactions to avoid legal pitfalls.
Don’t Rely Solely on Adverts: Conduct thorough due diligence, including background checks on sellers.

Do’s:

Conduct a Site Visit: Verify the land’s condition with a physical visit or through your power of attorney.
Engage a Surveyor: Have a qualified surveyor mark the land boundaries.
Keep Written Records: Document all agreements and conversations in writing for future reference.