UGANDA, Wakiso | Real Muloodi News | In Uganda, buying land is everyone’s dream. Unfortunately, Uganda has many fraudsters who purport to sell that which they do not have title or the authority to sell.
Therefore it is necessary for buyers of land to conduct due diligence when entering into land transactions to ascertain whether or not the person purporting to sell the parcel of land, has title to it.
The purpose of this article is to introduce the reader to the various steps in conducting due diligence before a buyer pays the purchase price of land to a purported seller, and the steps to take after the land transaction has taken place to secure your land.
Step 1: Pay a Physical Visit to the Land
The first step in due diligence is to conduct a site visit. Apart from ensuring that the land exists, a physical visit will enable you to assess the economic and social infrastructure of the area. During your visit, talk to the local authorities and neighbours who will give you more information about the land that you may not get at the Ministry of Lands.
Step 2: Research at the Ministry of Lands
The next step is to conduct an official search at the Ministry of Lands. The seller of the land will need to give you or your broker or lawyer a recently certified copy of the title of the land. With the title copy, one proceeds to either electronically search online at here at MLHUD UGNLIS (at a cost of USh10,000 for each search), or by making a physical application for official search at the Ministry Zonal Office (MZO) the property depends from.
You can search for your MZO here. The result will give you the details about your office (contact, address, opening times) and its position on a map.
The land title search results will yield the following information:
- The name of the registered proprietor/owner of the land.
- Any encumbrances over the land such as charges, (where the land had previously been charged or mortgaged to a financial institution), registered caveats, cautions, or restrictions on the land, as well as other third party rights such as existing easements and licenses.
- The land tenure system (freehold, leasehold, mailo or customary – explained in further detail below).
- If the property is a leasehold title, the remaining duration of the lease.
With this information, the prospective buyer of the land would be able to ascertain whether or not the prospective seller of the land is the actual owner of the land. The other information on the land would guide the buyer in making an informed decision whether or not to proceed with the transaction.
Step 3: Know the Land Tenure System
There are presently four types of land tenure systems in Uganda; leasehold, customary, freehold and mailo.
Leasehold is a system where land is held based on an agreement between lessor and the lessee, usually for a period of 5, 49 or 99 years. Often there are conditions that will accompany a leasehold agreement, such as the requirement to develop the land within a certain timeframe, or else ownership may be revoked.
Under the customary system, land is owned and disposed of under customary regulations. The land can be owned by an individual, a family or a community. This is the most dominant land tenure system in Uganda.
For a transaction to happen in cases of customary land tenure, the applicant/buyer convenes a meeting with the family, clan or community to express his or her interest, and all interested parties must agree.
While the government is working towards registration of customary land in Uganda, proper records are often not kept with the customary system. This makes it difficult to purchase land and resolve land-related conflicts. The inherent insecurity leads to mismanagement and degradation, as little personal interest in the land exists.
However, customary land tenures can be converted into freehold, which provides secure land titles from the district land offices.
Freehold land is the most coveted land title system in Uganda, as it is considered the most secure. With Freehold, the land title is owned in perpetuity (forever).
Mailo is a similar system to freehold, where land tenure is more stable as land is owned. However, while Mailo land owners have the same rights as freehold land owners, they must respect the rights of lawful and bonafide occupants, known as Kibanja holders. Kibanja holders have the right to occupy and live on the land, and evicting them is illegal unless you financially compensate them.
Step 4: Consult the Local Council
Nicholas Mbabazi, a lawyer, explains that involving the LC 1 authorities in land transactions is important to offer guidance on the history of the land to identify boundaries.
“The role of LC 1 is like that of the neighbour of the land that is being sold. Their purpose is to confirm the boundaries and sometimes they act as whistleblowers in case of red flags,” he explains.
Real estate dealer, John Senyonjo, agrees LC1 chairpersons are important in land transactions to prevent being duped.
“Most previous land transactions involved LC leadership, so they know the history. That is why you should involve them during any current transaction,” says Senyonjo.
While consulting the LC1 is important, be aware that they have no legal obligation in issuing or signing land documents.
Further, even though the government has warned Local Council leaders against administering charges on land transactions, they often do.
Consider Japheth Oloit, who is seeking to acquire a plot of land in Kansanje, Wakiso District for USh17 million.
The area Local Council 1 chairperson who is involved in the transaction is also demanding USh1 million for being a witness to the transaction agreement.
Oloit says that even though LC 1 has no share on the property, he threatens that the transaction will be void if he does not append his signature to the transaction.
The LC 1 official also insists that the buyer has to pay more than USh120,000 for the LC 1 stamp for the transaction to take place.
This is what most people go through while buying land. However, this cost may be worth it in the long run if it helps you to avoid a fraudulent land transaction.
Although Senyonjo also warns that in addition to local authorities and elders, long term residents must be involved to avoid fraud because sometimes even local leaders connive with brokers to dupe buyers.
Step 5: Get the Consent of Family Members
Lawyer Mbabazi warns that a land transaction can be considered fraudulent if all parties that have a stake in the ownership are not involved during the transaction.
In cases where the land is the matrimonial property or where the land is managed by family administrators, the land transaction must involve the family members.
Milly Nassolo Kikomeko, a lawyer and women’s rights activist explains that the constitution and the Land Act gives both men and women equal rights to own land and property, either as individuals or jointly with other persons.
She adds that ownership rights are never lost when people get married.
“Section 38 of the Land Act states that every spouse shall enjoy the security of occupancy on family land, which means a right to have access to it and live on it,” Nassolo explains.
She adds that a spouse has a right to give or withhold his or her consent to the land transaction.
Nassolo advises that in cases of legally married couples, for any transaction to be presumed valid, both parties must consent.
Mbabazi also adds that legally, a spouse is not allowed to sell, exchange or transfer, pledge, mortgage, give away or enter into any other transaction in respect of family except with prior consent of the other spouse and children of consenting age.
He further explains that in cases where land is hereditary, all legal beneficiaries to the deceased owner have to consent for the transaction to take place.
Buyers of land and property beware! Your purchase may be rendered null and void if you have not legally obtained the consent of all interested parties to that land and/or property.
Step 6: Get a Licensed Surveyor
Nassolo says that any potential purchaser must conduct a boundary opening to confirm whether the boundaries are consistent with the particulars of the land one intends to purchase.
A licensed surveyor can help you find out the boundary measurements of the land that you plan to buy. Their expertise is necessary to authenticate a land survey with the title deed. Experienced surveyors use sensitive tools, such as a theodolite, to measure land, location of roads, buildings, topography, and property lines to confirm the validity of property deeds.
Surveyors can also determine if there is an intrusion or encroachment on the property; for instance, a portion of a neighbour’s structure stands on your prospective land.
Surveyors can also help you understand zoning and building regulations. If you wish to buy land to develop or build on, they can help you identify potential problems and look for solutions.
Step 7: Draft a Sale Agreement.
A written sale agreement is critical to ensure both the buyer and seller are protected. The sale agreement will be drafted by the buyer with all terms and conditions agreed on by both parties. This will include all the demarcations, sums, payment schedules, and dispute settlement methods in case issues arise concerning the land.
Step 8: Payment of Property Rates
Property rates is property tax on the value of any property used for business (even rentals), paid to the local government. The seller of the property should clear any outstanding property rates before completing the transaction. Therefore, the buyer needs to satisfy himself or herself that any arrears have been cleared by the seller.
It is the right of the buyer to demand a certification of arrears from the seller, and if the seller does not produce the certificate, the buyer may inquire from the local authority upon the payment of a prescribed fee. The local government will be obliged to issue a certificate of arrears in respect of such a property.
If the seller has unpaid property rates and is cannot to pay them, consider negotiating a much lower price for the property for taking on the debt and paying them yourself.
Faith Sanyu, a real estate news editor and property owner, recently purchased land in Muyenje, Wakiso district with a small house that was rented to tenants. She failed to do her due diligence and did not realise that there were unpaid property rates on the said property. Not long after purchasing, it she decided to sell it. It was only then that she became aware of the property rates debt, and her prospective buyer negotiated a much lower price for the property as a result of the debt. She ended up selling the property for less than she had originally paid for it.
Step 9: Payment of Stamp Duty and Acquisition of the Land Title
Once you have completed your land purchase, it is vital to secure the title in order to prevent it from being grabbed from you. If you don’t hold the title, you may find yourself loosing your land.
Before the title can be transferred into your name, stamp duty must first be paid.
One should therefore apply to a government valuer to make a site visit to enable them to prepare the prerequisite valuation report for purposes of stamp duty.
Once paid, the transfer of land title documents into your name can occur.
Buying land in Uganda doesn’t have to be tricky, so long as you do due diligence to protect yourself from fraudsters in land transactions.
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