An Act of Parliament to provide for the regulation for negotating for or otherwise acting in relation to the selling purchasing or letting of land and buildings; Regulation and registration of real estate agents, land companies, developers and establishment of the real estate board.
| PROPOSED PROVISION FOR AMENDMENT | PROPOSED AMENDMENT | OUR COMMENTS |
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| PART I – PRELIMINARY | ||
Clause 2 Interpretation | “developer” means: a. a person who offers for sale built units in a real estate project; or b. a person who offers for sale land in a real estate project. | The developer will be responsible for selling real estate property to the purchaser. |
“purchaser” means the buyer of real estate property. | This term has been included as the purchaser will be responsible for buying real estate property from the developer or real estate agent. |
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“real estate agent” means a person who sells, offers for sale or offers for rent a piece of land, building or any part of a building. | Real estate agents have comprehensive knowledge of the real estate sector. They can provide valuable insights into property prices and trends which help potential purchasers make informed decisions. |
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“real estate project” means a project where: a. land exceeding five acres is subdivided and offered for sale; or b. more than ten built units are developed for sale. | The subdivision threshold for land should be lowered as currently most plots for sale by real estate agents measure 1/8 of an acre. Likewise, the construction threshold should be reduced to align with the sectional titles threshold of 2 or more units on the same land. |
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Clause 3 Values and principles | The regulation of the practice, registration and licensing of estate agents and real estate projects shall be guided by: a. the National values and principles provided under chapter six of the Constitution; b. established code of conduct, standards and practice guidelines as prescribed by the Board; and c. principles of openness, accountability, consultations and due regard to the best interest of the real estate sector. | The addition of paragraph (a) is a good proposal as leadership and integrity principles ensure that members of the Board possess a strong commitment to ethical conduct. For paragraph (b), adhering to a code of conduct, standards and practice guidelines ensures consistency, professionalism and quality of service within the real estate industry. This promotes consumer protection, market integrity and public trust in the real estate sector. |
PART II –THE REAL ESTATE BOARD | ||
Clause 4 Establishment of the Board | There is established the Real Estate Board which shall be a body corporate with perpetual succession, common seal and in its name, be capable of: a. suing and being sued; b. acquiring, holding and disposing of movable and immovable property; c. entering into any contract or other transaction, and doing all such other acts and things which a body corporate may lawfully do; and d. exercising the powers and performing the functions conferred to it under this Act. | The purpose of this clause is to give the Board capacity to act in its own name as a legal person. |
Clause 5 Functions of the Board | The functions of the Board shall be to: a. advise the national and county governments on the regulation and development of the real estate sector; b. regulate real estate agents and real estate projects; c. register real estate agents and real estate projects; d. licence real estate agents; e. maintain a public database with information on real estate agents and real estate projects registered under this Act with such details as may be prescribed; f. maintain a public database with information on real estate agents and real estate projects whose registration has been denied or revoked with such details as may be prescribed; g. prescribe standard fees and charges to be levied by real estate agents and developers; h. ensure developers, real estate agents and purchasers comply with this Act and the rules and regulations made under it; i. ensure compliance of the orders or directions made in exercise of its powers under this Act; and j. perform such other functions as may be necessary to carry out the provisions of this Act. The Board shall, in order to facilitate the growth and promotion of an efficient and competitive real estate sector, make recommendations, to the relevant government agency, on the: a. protection of the interests of purchasers, real estate agents and developers; b. creation of a single window system for processing time bound project approvals and clearances to ensure timely completion of projects; c. creation of a transparent and robust grievance addressing mechanism against acts of omission and commission of competent authorities; d. measures to encourage investment in the real estate sector; e. measures to encourage construction of environmentally sustainable and affordable buildings; f. measures to facilitate amicable conciliation of disputes between the developers and purchasers through dispute settlement forums set up by purchaser, real estate agent or developer associations; and g. any other issue that the Board may consider necessary for the promotion of the real estate sector. The Board shall have all powers necessary for the performance of its functions under this Act. | The functions of the Board have been clearly stated to ensure that it does not perform tasks that are ultra vires. |
Clause 6 Board of Directors | The management of the Board shall vest in a Board of Directors consisting of: a. a Chairperson appointed by the Cabinet Secretary; b. the Principal Secretary responsible for matters relating to land or a designated representative; c. the Principal Secretary responsible for matters relating to housing or a designated representative; d. the Principal Secretary responsible for the National Treasury or a designated representative; e. one man and one woman nominated by the Council of County Governors; f. one person nominated by the association representing the largest number of purchasers of land in Kenya; g. one person nominated by the association representing the largest number of developers in Kenya; h. one person nominated by the association representing the largest number of real estate agents in Kenya; and i. the Registrar appointed in accordance with section 15 who shall be an ex officio member of the Board. The Cabinet Secretary shall appoint the Chairperson and members of the Board of Directors under subsection (1) (e), (f), (g) and (h) by a notice in the Gazette. A person is qualified for appointment as the Chairperson or member of the Board of Directors under subsection (1) (e), (f), (g) and (h) if such person: a. is a citizen of Kenya; b. holds a degree from a university recognized in Kenya; c. has at least seven years' relevant professional experience; d. is a member in good standing of a relevant professional association; and e. meets the requirements of leadership and integrity set out in chapter six of the Constitution. The Chairperson and members of the Board of Directors appointed under section 6(1)(e), (f), (g) and (h) shall be so appointed at different times so that the respective expiry dates of their terms of office shall fall at different times but no more than six months shall lapse between one appointment and another. | For sub-clause (1)(a), we propose that the Chairperson is appointed through a fair, transparent and competitive process by the Public Service Commission. This proposal has the following benefits: a. a fair, transparent and competitive appointment process ensures that candidates are evaluated based on their qualifications, skills and experience. This helps to attract and select the most suitable individual, contributing to the overall effectiveness and efficiency of the Board of Directors; and b. this proposal ensures that appointments are done in a fair and transparent manner in accordance with the values and principles set out in the Constitution. Secondly, the Board of Directors should have an odd number of members who can vote during meetings. When there’s an even number of members who can vote, there’s a greater risk of deadlocks. This makes it difficult for the Board of Directors to make decisions, resolve conflicts or move forward with its agenda. An odd number ensures that there will always be a majority decision. For sub-clause (3), specifying qualifications in the Bill provides clear and standardized criteria for eligibility in a particular position. This clarity helps both applicants and decision makers understand the minimum requirements for the role. Fourthly, the addition of sub-clause (3)(e) is a good proposal. Leadership and integrity principles ensure that members of the Board of Directors possess a strong commitment to ethical conduct. Fifthly, the addition of sub-clause (4) is a good proposal. Different appointment dates for members minimize the potential for disruption caused by mass turnover or vacancies on the Board of Directors. By spreading out the expiration dates of members' terms, the Board of Directors remains stable and functional, avoiding periods of uncertainty or instability. |
Clause 7 Tenure of office | The Chairperson and members of the Board of Directors appointed under section 6 (1)(e), (f), (g) and (h) shall hold office for a period of three years and shall be eligible for reappointment for one further term. | A fixed tenure provides stability to an organization by ensuring continuity in leadership and decision-making. It prevents frequent turnover and the associated disruptions that can occur with frequent changes in personnel. Secondly, individuals with a fixed tenure are accountable for their performance during that period. This accountability leads to increased focus and commitment to achieve the goals and objectives of the Board. Thirdly, knowing when a position will become vacant allows the Board of Directors to engage in effective succession planning. It provides an opportunity to identify and groom potential successors. This ensures there’s a smooth transition when the incumbents’ tenure ends. |
Clause 8 Vacation of office | The office of the chairperson or a member of the Board appointed under section 6(1)(e), (f), (g) and (h) shall become vacant if the chairperson or member: a. is unable to perform the functions of office by reason of mental or physical infirmity; b. is otherwise unable or unfit to continue serving as the chairperson or member of the Board; c. is adjudged bankrupt; d. is convicted of a criminal offence and sentenced to a term of imprisonment of not less than six months; e. is absent, without reasonable cause, from three consecutive meetings of the Board; f. resigns in writing addressed to the Cabinet Secretary; g. fails to declare their interest in any matter being considered by the Board; or h. dies. | We propose the addition of timelines in this clause. This proposal ensures that a vacancy is filled within a prescribed period without delays. |
Clause 9 Remuneration | There shall be paid to the members of the Board, such remuneration, fees or allowances as the Cabinet Secretary may, in consultation with the Salaries and Remuneration Commission, determine. | This proposal will be in line with article 230(4)(a) of the Constitution which gives the Salaries and Remuneration Commission power to set and review the remuneration and benefits of all public officers. |
Clause 11 Staff of the Board | The Board may appoint such officers, agents and staff as are necessary for the proper and efficient discharge of the functions of the Board under this Act. The staff appointed under subsection (1) shall serve on such terms and conditions as the Board may, in consultation with the Salaries and Remuneration Commission, determine. | For sub-clause (1), we propose that staff members are appointed by the Board through a fair, transparent and competitive process. A fair, transparent and competitive appointment process ensures that candidates are evaluated based on their qualifications, skills and experience. This helps to attract and select the most suitable individual, contributing to the overall effectiveness and efficiency of the Board. Secondly, the addition of sub-clause (2) is a good proposal. This proposal will be in line with Article 230(4)(a) of the Constitution which gives the Salaries and Remuneration Commission power to set and review the remuneration and benefits of all public officers. |
Clause 12 Seal of the Board | The common seal of the Board shall be kept in the custody of the Registrar or such other person as the Board may direct and shall not be used except on the order of the Board. The common seal of the Board shall, when affixed to a document and authenticated, be judicially and officially noticed and unless the contrary is proved, any order or authorization by the Board under this section shall be presumed to have been duly given. The seal of the Board shall be authenticated by the signature of the Registrar and the chairperson of the Board of Directors or in the absence of either person, such other member of the Board of Directors who shall be designated by the Board of Directors for that purpose on their behalf. | A common seal is used to authenticate documents, indicating that they have been formally approved or endorsed by the Board. |
Clause 13 Liability of the Board for damages | This Act shall not relieve the Board of the liability to compensate or pay damages to any person for any injury to them, their property or any of their interests caused by the exercise of any power conferred by this Act or any other written law or by the failure, whether wholly or partially of any works. | This clause safeguards the rights of individuals who may suffer loss or injury due to the actions of the Board. It ensures that such individuals have an avenue for legal address for the losses or injuries caused by the acts of the Board. It is a radical departure from the norm of “professional” immunity, where public officers are shielded from liability for actions taken in the discharge of their official functions. |
Clause 14 Delegation of powers or functions | The Board of Directors may by resolution either generally or in any particular case, delegate to any committee of the Board of Directors or to any member, officer, employee or agent of the Board, the exercise of any of the powers or the performance of any of the functions of the Board under this Act or under any other written law. | Delegating powers to a person who specializes in a particular area allows for more efficient and effective decision-making within that domain. This leads to better outcomes and higher-quality work. Secondly, delegating powers creates a clear chain of accountability for specific tasks or responsibilities. This clarity ensures that individuals are held responsible for their actions and outcomes. |
Clause 15 Committees of the Board of Directors | For purpose of effective carrying out its functions under this Act, the Board of Directors may establish such number of committees as it may consider appropriate for the effective performance of its functions. The Board of Directors may co-opt, to sit in its committees, such persons as it considers necessary as having the knowledge and skills for the effective performance of its functions. | The addition of sub-clause (2) is a good proposal. Co-opting allows the Board of Directors to bring in individuals with specialized expertise, knowledge or experience that will assist it in performing its functions. This can be valuable when the existing board members lack the required skills or expertise. |
PART III ― THE REGISTRAR AND REGISTER | ||
Clause 16 Registrar | There shall be a Registrar of Real Estate Agents and Projects who shall be appointed by the Board of Directors through a competitive recruitment process, on such terms and conditions of service as the Board of Directors may, in consultation with the Salaries and Remuneration Commission, determine. The functions of the Registrar shall be to: a. maintain a register of real estate agents and real estate projects in accordance with this Act and in the manner prescribed by the Board of Directors; b. receive applications for registration and, with the approval of the Board of Directors, register real estate agents and real estate projects; c. on the recommendation of the Board of Directors, suspend or revoke the registration of a real estate agent or real estate project; and d. perform such other functions as may from time to time be assigned by the Board of Directors. A person is qualified for appointment as the Registrar if such person: a. is a citizen of Kenya; b. has a degree in real estate or its equivalent from a university recognised in Kenya; c. has at least ten years experience in the real estate sector; d. has knowledge and experience in policy formulation, management and procedures of government; e. is knowledgeable in, or has actively contributed to, the promotion of the real estate sector; and f. meets the requirements of leadership and integrity set out in chapter six of the Constitution. The Registrar shall serve for a term of five years and shall not be eligible for re-appointment. The Registrar may: a. at any time resign from office by a notice in writing addressed to the Chairperson of the Board of Directors; b. be removed from office by the Board of Directors if the Registrar: i. breaches a term or condition of the employment contract; ii. is unable to perform the functions of the office by reason of a mental or physical infirmity; iii. is convicted of an offence and sentenced to imprisonment for a term exceeding six months without the option of a fine; iv. is convicted of an offence that violates chapter six of the Constitution; v. is adjudged or admits in writing to being bankrupt; or vi. conducts herself or himself in a manner deemed to be inconsistent with this Act. Before the removal of the Registrar under subsection (5)(b), the Board of Directors shall: a. investigate the circumstances giving rise to the proposed removal; b. accord the Registrar an opportunity to be heard; and c. after complying with paragraphs (a) and (b), determine whether or not the Registrar is removed from office. | The addition of sub-clause (1) is a good proposal that has the following benefits: a. a fair, transparent and competitive appointment process ensures that candidates are evaluated based on their qualifications, skills and experience. This helps to attract and select the most suitable individual; and b. this proposal ensures that appointments are done in a fair and transparent manner in accordance with the values and principles set out in the Constitution. Secondly, the inclusion of the Salaries and Remuneration Commission in sub-clause (1) is a good proposal. This proposal will be in line with article 230(4)(a) of the Constitution which gives the Salaries and Remuneration Commission power to set and review the remuneration and benefits of all public officers. Thirdly, the addition of sub-clause (3) is a good proposal. Specifying qualifications in the Bill provides clear and standardized criteria for eligibility in a particular position. This clarity helps both applicants and decision makers understand the minimum requirements for the role. Fourthly, the addition of a fixed tenure in sub-clause (4) is a good proposal that has the following benefits: a. a fixed tenure provides stability to an organization by ensuring continuity in leadership and decision-making. It prevents frequent turnover and the associated disruptions that can occur with frequent changes in personnel; and b. knowing when a position will become vacant allows the Board to engage in effective succession planning. It provides an opportunity to identify and groom potential successors. This ensures there’s a smooth transition when the incumbent’s tenure ends. We propose the addition of timelines in sub-clause (5). This proposal ensures that the vacancy is filled within a prescribed period without delays. . |
Clause 17 Register of real estate agents | The Registrar shall keep and maintain a register in which the name of every person accepted by the Board for registration under this Act shall be entered indicating: a. the date of the entry in the register; b. the address of the person registered; c. the qualifications of the person; and d. such other particulars as the Board may from time to time direct. All changes in the particulars under subsection (1) shall be entered in the register by the registrar. The registrar shall remove from the register any name which is ordered by the Board of Directors to be removed from the register under this Act. | The register contains a list of all registered real estate agents in Kenya. This promotes transparency, trust and confidence among purchasers, as they can verify the credentials and qualifications of real estate agents before engaging with them. |
Clause 18 Publication of register and list | The Registrar shall cause to be published in the Gazette, as soon as may be practicable after registration, the name, address and qualifications of every person registered under this Act. The Registrar shall, subject to the directions of the Board of Directors, cause to be published in the Gazette any amendment to, or deletion from the register. The Registrar shall cause to be published in the Gazette, at the beginning of each year, a list containing the names, addresses and qualifications of all persons remaining on the register at the close of the previous year. | Publishing the register in the Gazette raises public awareness about the approved real estate agents. Prospective purchasers can easily access information about real estate agents, facilitating informed decision-making when selecting a real estate agent to represent them. |
Clause 19 Evidence of registration | A publication under section 17 shall be sufficient evidence that the persons named therein are registered under this Act. The deletion from the register of the name of any person notified by such publication or the absence of the name of any person from such publication, shall be evidence that such person is not so registered. | For sub-clause (1), we propose the deletion of the words “section 17” and replacing it with the words “section 18”. Clause 17 of the Bill contains provisions on the publication in the Gazette of the names, addresses and qualifications of real estate agents. |
Clause 20 Inspection of register | A person may, during office hours and on payment of the prescribed fee, inspect the register or any document or entry in the register and may obtain from the Registrar a copy of, or an extract from, the register or any such document. | Access to the register helps sensitize purchasers of unlicensed or fraudulent agents. By inspecting the register, purchasers can verify the legitimacy of real estate agents before purchasing land, reducing the risk of scams or misconduct. Secondly, public access to the register enables purchasers to make informed decisions when selecting a real estate agent. Prospective buyers and sellers can review the credentials of real estate agents before engaging their services, ensuring they choose a reputable and qualified professional. |
Clause 21 Proof of documents | In any legal proceedings, any document purporting to be a copy of or an extract from the register or any document kept or published by the Registrar and purporting to be certified by the Registrar to be a true copy or extract, shall be admissible as evidence of the contents of the register or document. No process for compelling the production of the register or any document kept by the Registrar shall issue from any court except with the leave of that court, and any such process which is so issued shall bear a statement that it was issued with the leave of the court. The Registrar shall not, in any legal proceedings to which he or she is not a party, be compelled to: a. produce the register or any document if its contents can be proved under subsection (1); or b. appear as a witness to prove any entry in the register, the matters recorded in the register or any such document, unless the court for special case so orders. | By allowing certified copies or extracts from the register or documents kept by the Registrar to be admissible as evidence, legal proceedings can proceed more efficiently. This reduces the need for parties to obtain original documents, which may be difficult or time-consuming to acquire. |
Clause 22 Certificate of registration | Where the name of a person is entered in the register, the registrar shall issue to him a certificate of registration in such form as the Board may prescribe and the certificate shall remain the property of the Board. A certificate of registration issued by the registrar shall be valid and shall remain in force for one year but shall be renewable on the payment of the prescribed fee. | For sub-clause (1), a certificate of registration is conclusive proof to purchasers that a person is qualified to practice as a real estate agent. For sub-clause (2), requiring annual renewal holds real estate agents accountable for their ongoing professional development and conduct. Real estate agents must demonstrate their continued suitability for licensure, which fosters a culture of accountability and responsibility within the real estate industry. |
Clause 23 Real estate portal | The Registrar shall establish and maintain an online digital real estate portal. The real estate portal shall: a. facilitate the registration of real estate agents; b. facilitate the registration of real estate projects; c. provide a platform for interaction between real estate agents and developers with the National and county governments, private institutions, investors and other relevant institutions; d. provide access to finance, information, innovation and the global market for real estate agents and developers; e. provide information on clearances, approvals and registration requirements for real estate agents and real estate projects; f. receive complaints and comments from members of the public and other industry stakeholders; g. serve as a gateway to all real estate services offered by the National and county governments; and h. discharge any other duties as may be required by the Board. | Users can access the portal from anywhere with an internet connection, allowing them to register as real estate agents, submit real estate projects, and access information and services at their convenience. Secondly, the portal streamlines various processes such as agent registration, project registration and accessing information on clearances and approvals, saving time and effort for users and the Registrar. |
Clause 24 Consequences of conviction, professional misconduct or undertaking activities contrary to public interest | The Board of Directors may, if a real estate agent or a developer with a registered real estate project is convicted of an offence under this Act or if the Board of Directors determines that a real estate agent or developer is guilty of professional misconduct or undertaking activities contrary to public interest: a. caution or censure the real estate agent or developer; b. suspend the registration of the real estate agent or respective real estate project for such period as it may specify; c. impose a fine not exceeding five hundred thousand shillings on real estate agent or developer; or d. suspend or revoke the registration of the real estate agent or real estate project. The Board of Directors shall accord a real estate agent or developer, as the case may be, an opportunity to be heard before undertaking the actions set out under subsection (1) against the real estate agent or developer. | We propose that a person who is dissatisfied with the Board’s decision in this clause may appeal to the High Court. This proposal seeks to provide legal redress to a person who is dissatisfied with the Board’s decision. Further, we propose the addition of timelines which will allow the High Court to hear and determine the appeal within a prescribed period without delays. |
PART IV ― REGISTRATION AND LICENSING OF REAL ESTATE AGENTS | ||
Clause 25 Application for registration | A person who wishes to be registered as a real estate agent under this Act shall apply to the Board in the prescribed form and upon payment of the prescribed fee. | The application process allows the Board to assess the qualifications, credentials and suitability of individuals seeking to become real estate agents. This helps maintain standards within the profession and ensures that only qualified individuals are granted registration. |
Clause 26 Qualifications for registration as a real estate agent | A person qualifies for registration as a real estate agent if such person: a. is a citizen of Kenya; and b. has a degree in real estate or equivalent from a university recognised in Kenya. | We propose the clarification of what constitutes a degree in real estate as the same is not defined. Specifying qualifications in the Bill will provide a clear and standardized criteria for eligibility in a particular position. This clarity will help both applicants and decision makers understand the minimum requirements for the role. |
Clause 27 Duties of a real estate agent | Every real estate agent registered under this Act shall: a. maintain and preserve such books of account, records and documents in the prescribed manner; b. not facilitate the sale or rent of any parcel of land, apartment or building in a real estate project which is not registered in accordance with this Act; c. not be involved in any unfair trade practices, including: i. making any statement, whether orally, in writing or by visible representation, which: A. falsely represents that the services are of a particular standard or grade; B. represents that the real estate agent has approval or affiliation which another real estate agent or developer which they do not have; C. makes a false or misleading representation concerning the services rendered or offered; and ii. permitting the publication of any advertisement for property that is not intended to be offered; d. facilitate the possession of all the information and documents that a purchaser is entitled to; and e. discharge such other functions as may be prescribed. | Outlining specific duties helps in safeguarding the interests of purchasers. It ensures that real estate agents adhere to certain standards of conduct, thereby protecting purchasers from potential exploitation or unethical practices. Secondly, clearly defined duties promote professionalism within the real estate industry. Real estate agents are expected to uphold certain standards and fulfill their obligations, which enhances the reputation of the profession as a whole. |
Clause 28 Practicing licence | A person shall not practice as a real estate agent unless that person has been issued a practicing licence by the Board of Directors and has complied with the requirements of this Act. A person who contravenes subsection (1) commits an offence and is liable, on conviction, to a fine not exceeding five million shillings or to imprisonment for a term not exceeding two years or to both. A person in breach of subsection (1) shall not be entitled to payment for any service rendered. | The addition of sub-clause (2) is a good proposal. This proposal acts as a deterrent as it ensures that only a person with a practicing licence can practice as a real estate agent. |
Clause 29 Application for, and issuance of a practicing licence | A person who intends to practice as a real estate agent shall make an application for a practicing licence to the Board of Directors in the prescribed form. An application under subsection (1) shall be accompanied by the prescribed fee and any other document prescribed by the Board of Directors. The Board of Directors shall, within twenty eight days from the receipt an application for a practicing licence, issue to the applicant a practicing licence in the prescribed form upon being satisfied that the applicant: a. is registered in accordance with this Act; b. has complied with any relevant continuing professional development standards for that year as prescribed by the Board; and c. has complied with all other requirements prescribed by the Board. Despite subsection (3), the Board of Directors shall communicate to a relevant applicant its decision on the application for a practicing licence, by email, within twenty-eight days from the date of receipt of the application. A practicing license issued under this section shall be valid from the day it is issued to the thirty first day of December of that same year. Despite subsection (5), a practicing licence issued during the first month of any practicing year shall be valid from the first day of that month. | The addition of timelines in sub-clause (3) is a good proposal as it ensures that the application form is reviewed by the Board of Directors within a prescribed period without delays. Secondly, the use of e-mail in sub-clause (4) as a mode of communication is a good proposal that has the following benefits: a. e-mails are transmitted almost instantly, allowing for rapid communication across different locations and time zones. This can significantly expedite decision-making processes and facilitate quick responses; and b. sending emails is generally more cost-effective than traditional mail or other forms of communication, especially for long-distance or international correspondence. There are no postage fees and multiple recipients can be reached with a single message. |
Clause 30 Suspension of a practicing licence | The Board of Directors may suspend a practicing license issued under this Act where: a. an offence under this Act in relation to the licensee is being investigated by relevant authorities; b. allegations of misconduct have been investigated and proved against the licensee; c. a false declaration was made in the application for the practicing license; or d. a licensee has contravened any provision of this Act. The Board of Directors shall accord the relevant licensee an opportunity to be heard before suspending a practicing licence. The Board of Directors shall communicate to the relevant licensee, by both email and prepaid registered mail, its decision to suspend a practicing licence within seven days from the decision. | We propose that a person who is dissatisfied with the Board’s decision to suspend his practicing licence may appeal to the High Court. This proposal seeks to provide legal redress to a person who is dissatisfied with a decision of the Board of Directors. Further, we propose the addition of timelines which will allow the High Court to hear and determine the appeal within a prescribed period without delays. |
Clause 31 Cancellation of a practicing licence | The Board of Directors shall cancel a practicing licence where a licensee: a. is convicted of an offence under this Act or the rules made under it; or b. ceases to be qualified for the issuance of a licence under this Act. The Board of Directors shall accord the relevant licensee an opportunity to be heard before cancelling a licence. The Board of Directors shall communicate to the relevant person, by both email and prepaid registered mail, its decision to cancel a practicing licence within seven days from the decision. | We propose that a person who is dissatisfied with the Board’s decision to cancel his practicing licence may appeal to the High Court. This proposal seeks to provide legal redress to a person who is dissatisfied with a decision of the Board of Directors. Further, we propose the addition of timelines which will allow the High Court to hear and determine the appeal within a prescribed period without delays. |
PART V — REGISTRATION OF REAL ESTATE PROJECTS | ||
Clause 32 Prior registration of real estate project | No developer shall advertise, market, book, sell, offer for sale or invite persons to purchase any plot, apartment or building in any real estate project that is not registered in accordance with this Act. Where a real estate project is to be developed in phases, every such phase shall be considered a separate real estate project and the developer shall obtain registration under this Act for each phase separately. | For sub-clause (1), registration requirements help protect consumers from fraudulent or unscrupulous developers. Buyers can have confidence that registered projects have met certain standards and regulatory requirements, reducing the risk of scams or substandard construction. For sub-clause (2), treating each phase as a separate project mitigates risk for both purchasers and developers. If there are issues with one phase of the project, it does not necessarily affect the entire development. This protects buyers' investments and helps maintain the overall integrity of the real estate market. However, we note that there is duplication on the registration requirements of projects, as the National Construction Authority (NCA) Act (Cap 118) as read with the Regulations thereunder, require the same. Therefore, there’s need for exclusivity so that only one public entity deals with the registration of projects. |
Clause 33 Application for registration of real estate projects | A developer shall make an application to the Board for registration of the real estate project in such form, manner, within such time and accompanied by such fee as may be prescribed. An application under sub-section (1) shall include: a. a brief description of the developer including their name, registered address, the particulars of registration, the names and photograph of the developer; b. a brief detail of the projects launched by the developer, in the past five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending; c. an authenticated copy of the approvals and commencement certificate from the relevant Board obtained in accordance with the laws as may be applicable for the real estate project mentioned in the application, and where the project is proposed to be developed in phases, an authenticated copy of the approvals and commencement certificate from the relevant authority for each of such phases; d. the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof, and the whole project as approved by the relevant authority; e. the plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including firefighting facilities, drinking water facilities, emergency evacuation services and use of renewable energy; f. the location details of the project, with clear demarcation of land dedicated for the project along with its boundaries including the latitude and longitude of the end points of the project; g. proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the purchasers; h. the number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas appurtenant with the apartment, if any; i. the number and area of parking for sale in the project; j. the names and addresses of developer’s real estate agents, if any, for the proposed project; k. the names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project; l. a statutory declaration signed by the developer or any person authorised by the developer, indicating: i. that the developer has a legal title to the land on which the development is proposed along with legally valid documents with authentication of such title, if such land is owned by another person; ii. that the land is free from all encumbrances, or as the case may be details of the encumbrances on such land including any rights, title, interest or name of any party in or over such land along with details; iii. the time period within which the developer undertakes to complete the project or phase thereof, as the case may be; iv. that seventy per cent of the amounts realised for the real estate project from the purchasers, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose; v. that the developer shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project; vi. that the amounts from the separate account shall be withdrawn by the developer after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project; vii. that the developer shall get their accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for that project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project; viii. that the developer shall take all the pending approvals on time, from the competent authorities; ix. that the developer has furnished such other documents as may be prescribed by the rules or regulations made under this Act; and x. such other information and documents as may be prescribed. The Board shall operationalise a web based online system for submitting applications for registration of projects within a period of one year from the date of its establishment. | The addition of sub-clause (2) has the following benefits: a. online submission systems streamline the application process by eliminating the need for physical paperwork and manual processing. This can lead to faster turnaround times for application reviews and approvals; b. by reducing the need for paper-based processes, the Board can save on printing, storage and postage costs associated with printing of paper; and c. online forms can include validation checks to ensure that applicants provide all required information and input it correctly. This reduces errors and improves the overall accuracy of the data collected. |
Clause 34 Grant of registration | The Board shall, on receipt of the application under section 33, within fourteen days: a. grant registration subject to the provisions of this Act; or b. reject the application for reasons to be recorded in writing after giving the applicant a fair hearing The registration granted under this section shall be valid for a period declared by the developer for completion of the project. | The addition of timelines in sub-clause (1) is a good proposal. This proposal ensures that the application form is reviewed within a prescribed period without delays. |
Clause 35 Extension of registration | The Board may, due to force majeure, extend the registration granted under section 34 for not more than one year on an application made by the developer in such form and on payment of such fee as may be prescribed. For the purpose of this section, the term “force majeure” means a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project. | This clause seeks to cater for instances where the Board will be unable to review the application form within the prescribed fourteen-day period due to unforeseen events. |
Clause 36 Revocation of registration | The Board may, on receipt of a complaint or on its own volition or on the recommendation of a competent authority, revoke the registration granted under section 34, after being satisfied that: a. the developer has defaulted in doing anything required by or under this Act; b. the developer has violated any of the terms or conditions of the approval given by the competent authority; c. the developer is involved in any kind of unfair practice or irregularities including: i. falsely representing that the services are of a particular standard or grade; ii. representing that the developer has approval or affiliation which such developer does not have; iii. making a false or misleading representation concerning the services; iv. permitting the publication of any advertisement or prospectus whether in any newspaper or otherwise of services that are not intended to be offered; d. the developer has indulged in any fraudulent practices. The Board shall not revoke the registration granted to the developer under section 33 unless the Board has given to the developer not less than thirty days notice, in writing, stating the grounds on which it is proposed to revoke the registration, and has considered any cause shown by the developer within the period of that notice against the proposed revocation. The Board may, instead of revoking the registration under sub-section (1), permit it to remain in force subject to such further terms and conditions as it thinks fit to impose in the interest of the purchasers, and any such terms and conditions so imposed shall be binding upon the developer. The Board, upon the revocation of the registration: a. shall debar the developer from accessing its website in relation to that project and specify his name in the list of defaulters and display his photograph on its website and also inform the other government entities about such revocation or registration; b. shall facilitate the remaining development works to be carried out; c. shall direct the bank holding the project bank account to freeze the account, and thereafter take such further necessary actions, including consequent de-freezing of the said account, towards facilitating the remaining development works; and d. may, to protect the interest of purchasers or in the public interest, issue such directions as it may consider necessary. | This clause does not provide legal redress to a person whose registration has been rejected by the Board. We propose that a person who is dissatisfied with the Board’s decision may appeal to the High Court. This proposal seeks to provide legal redress to a person who is dissatisfied with a decision of the Board. |
Clause 37 Effect of lapse or revocation of registration | Upon lapse of the registration or on revocation of the registration under this Act, the Board, may consult the appropriate level of government to take such action as it may consider fit including the carrying out of the remaining development works by a government entity or by the association of purchasers or in any other manner, as may be determined by the Board. A direction, decision or order under this section shall not take effect until the expiry of the period of appeal provided under the provisions of this Act. In case of revocation of registration of a project under this Act, the association of purchasers shall have the first right of refusal for carrying out of the remaining development works. | We propose the deletion of this clause. Depending on government entities to carry out remaining development works may strain their resources and capacities.It may also face legal hurdles due especially where the expenditure has not been budgeted for. This could result in delays or resource constraints in addressing other public needs. |
PART VI — DUTIES OF DEVELOPERS | ||
Clause 38 Functions and duties of a developer | A developer shall, upon registration of a relevant real estate project, ensure all details of the proposed project entered in the Board online public portal, including: a. details of the registration granted by the Board; b. quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked; c. quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate; d. quarterly up-to-date status of the project; and e. such other information and documents as may be specified by the regulations made by the Board. The advertisement or prospectus issued or published by the developer shall mention prominently the online public portal of the Board, wherein all details of the registered project have been entered and include the registration number obtained from the Board and such other matters incidental thereto. The developer, at the time of the booking and issue of allotment letter shall make available to the purchaser, the following information, namely: a. approved plans, layout plans, along with specifications, approved by the relevant authority, by display at the site or such other place as may be specified by the regulations made by the Board; and b. the time schedule of completion of the project, including the provisions for civic infrastructure like water, sanitation and electricity. The developer shall: a. be responsible for all obligations, responsibilities and functions under the provisions of this Act or to the purchasers as per the agreement for sale, or to the association of purchasers, as the case may be, till the conveyance of all the apartments, plots or buildings, as the case may be, to the purchasers, or the common areas to the association of purchasers or the relevant authority, as the case may be; b. be responsible, with respect to the structural defect or any other defect even after the conveyance deed of all the apartments, plots or buildings, as the case may be, to the purchasers are executed; c. be responsible to obtain the completion certificate or the occupancy certificate, or both, as applicable, from the relevant authority and make it available to the purchasers individually or to the association of purchasers, as the case may be; d. be responsible to obtain the lease certificate, where the real estate project is developed on a leasehold land, specifying the period of lease, and certifying that all dues and charges in regard to the leasehold land has been paid, and to make the lease certificate available to the purchasers; e. be responsible for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the purchasers; f. enable the formation of an association of the purchasers; g. execute a registered conveyance deed of the apartment, plot or building, as the case may be, in favour of the purchasers along with the undivided proportionate title in the common areas to the association of purchasers or relevant authority, as the case may be, as provided under this Act; h. pay all service charges until they transfer the physical possession of the real estate project to the purchasers or the association of purchasers, as the case may be, collected from the purchasers, for the payment of service charges; i. after they execute an agreement for sale for any apartment, plot or building, as the case may be, not mortgage or create a charge on such apartment, plot or building, as the case may be, and if any such mortgage or charge is made or created then notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and interest of the purchasers who has taken or agreed to take such apartment, plot or building, as the case may be. The developer may cancel an allotment only in terms of the agreement for sale provided that an purchasers may approach the Board for relief, if they are aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause. | Developers are accountable for providing accurate and up-to-date information about their projects on the portal. This accountability helps prevent misinformation or discrepancies and fosters trust between developers and purchasers. Under clause 38(5) purchasers have an additional forum being the Real Estate Board, where they can ventilate their issues with developers relating to improper termination of sale transactions.Therefore, there is need to clarify how determinations by the board may relate to the relevant courts of law, in terms of the right to appeal an adverse finding. |
Clause 39 Obligations of developers on the veracity of the advertisement or prospectus | Where a person makes an advance or a deposit on the basis of the information contained in a notice, advertisement or prospectus, or on the basis of any model apartment, plot or building, as the case may be, and sustains any loss or damage by reason of any incorrect, false statement included therein, they shall be compensated by the developer in the manner as provided under this Act. If the person affected by such incorrect, false statement contained in the notice, advertisement or prospectus, or the model apartment, plot or building as the case may be, intends to withdraw from the proposed project, they shall be compensated their entire investment along with interest at such rate as may be prescribed and the compensation in the manner provided under this Act. | Providing compensation to individuals who suffer losses due to misleading information protects purchasers from financial harm. It ensures that purchasers are not unfairly disadvantaged by inaccurate or deceptive statements made by developers. Secondly, victims of false or incorrect information have recourse to compensation in the Bill. This provides a mechanism for redress and helps mitigate the financial impact of misleading statements, promoting fairness and equity within the real estate sector. Lastly, the right to compensation will be enshrined under the law, as opposed to the current situation where it is basically contractual depending on the agreed terms by the parties. |
Clause 40 No deposit without first entering into an agreement for sale | A developer shall not accept a sum of more than ten per cent of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under the applicable law. The agreement for sale referred to in sub-section (1) shall be in such form as may be prescribed and shall specify the particulars of development of the project including: a. the construction of building and apartments; b. specifications and internal development works and external development works; c. the dates and the manner by which payments towards the cost of the apartment, plot, or building, as the case may be, are to be made by the purchasers; d. the date on which the possession of the apartment, plot or building is to be handed over; e. the rates of interest payable by the developer to the purchaser and the purchaser to the developer in case of default; and f. such other particulars, as may be prescribed. | Limiting the advance payment or application fee to ten percent helps protect purchasers from excessive financial risk arising from exploitation by the developers. It ensures that purchasers do not commit a significant portion of their funds without a formal agreement in place, reducing the potential for financial loss or disputes. |
Clause 41 Adherence to approved plans and project specifications by the developers | A developer shall develop and complete a proposed project in accordance with the approved plans, layout plans and specifications as approved by the relevant authorities. A developer shall not make any additions and alterations in the approved plans, layout plans and specifications and the nature of fixtures, fittings and amenities described therein in respect of the apartment, plot or building, as the case may be, which are agreed to be taken, without the previous consent of a purchaser. A developer shall not make any other alterations or additions in the approved plans, layout plans and specifications of the buildings or the common areas within the project without the previous written consent of at least two-thirds of the purchasers, other than the developer, who have agreed to take apartments in such a building. In case of any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the developer as per the agreement for sale relating to such development is brought to the notice of the developer within a period of five years by the purchaser from the date of handing over possession, it shall be the duty of the developer to rectify such defects without further charge, within thirty days. In the event of a developer's failure to rectify defects under (4), the aggrieved purchasers shall be entitled to receive appropriate compensation in the manner provided under this Act. | For sub-clause (1), adhering to approved plans and specifications ensures that the project meets quality standards and specifications set by relevant authorities. This helps maintain consistency and reliability in the construction process, resulting in better-built structures and infrastructure. For sub-clause (2), requiring the purchaser’s consent ensures that purchasers have a say in any changes made to the property they have agreed to purchase. This protects purchasers from unexpected modifications that may not align with their preferences or expectations. For sub-clause (3), requiring the consent of at least two-thirds of the purchasers mitigates the risk of potential disputes or conflicts arising from unilateral changes made by the developer. For sub-clause (5), we propose the addition of the word “section” immediately before the word “(4)”. This proposal seeks to remedy the omission present in this sub-clause. Most importantly, the defects liability period has been extended under clause 41(4) to 5 years from grant of possession. This is a major extension from the usual 6 months window granted by most developers from the date of issuance of the certificate of occupation by the relevant county government.In some instances, this 6 month window expires even before some purchasers have been granted possession by the same developers, making it difficult to ensure any subsequent defects are rectified by the developers. |
Clause 42 Obligations of developer in case of transfer of a real estate project to a third party | The developer shall not transfer or assign their majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two thirds of the purchasers and without the prior written approval of the Board. A transfer or assignment under subsection (1) shall not affect the allotment or sale of the apartments, plots or buildings as the case may be, in the real estate project made by the developer. On the transfer or assignment being permitted by the purchasers and the Board under sub-section (1), the third party shall be required to independently comply with all the pending obligations under the provisions of this Act or the rules and regulations made thereunder, and the pending obligations as per the agreement for sale entered into by the erstwhile developer with the purchaser. | Requiring purchaser consent ensures that purchasers have a say in any significant changes or transfers of ownership that may affect their investment. This protects purchasers from unexpected changes in project ownership or management that could impact their interests or rights. In doing so, purchasers are able to hold developers accountable by enforcing privity of contract with the developers. |
Clause 43 Insurance of real estate projects | A developer shall obtain all insurances as may be required by the Board, including but not limited to insurance in respect of: a. title of the land and building as a part of the real estate project; and b. construction of the real estate project. The developer shall be liable to pay the premium and charges in respect of the insurance specified in subsection (1) and shall pay the same before transferring the insurance to the association of the purchasers. The insurance as specified under subsection (1) shall stand transferred to the benefit of the purchaser or the association of purchasers, as the case may be, at the time of developer entering into an agreement for sale with the purchaser. On formation of the association of the purchasers, all documents relating to the insurance specified under subsection (1) shall be handed over to the association of the purchasers. | Insurance coverage for title of land and building safeguards purchasers' interests by providing assurance that their investment is protected against potential risks and liabilities. It gives purchasers peace of mind knowing that their investment is backed by insurance in case of adverse events. Secondly, requiring developers to obtain insurance instills confidence in the project among purchasers. It demonstrates the developer's commitment to risk management and financial responsibility, enhancing trust and credibility in the real estate project. Lastly, the assignability of the insurance cover ensures continuity of protection of the project even after the developer exits the project. |
Clause 44 Transfer of title | The developer shall execute a transfer in favour of the purchaser along with the undivided proportionate title in the common areas to the association of the purchasers or the relevant authority and hand over the physical possession of the plot, apartment or building, as the case may be, to the purchasers and the common areas to the association of the purchasers or the competent authority, in a real estate project, and the other title documents pertaining thereto within specified period as per approved plans as provided under the relevant laws. Transfer in favour of the purchaser or the association of the purchasers or the relevant authority, as the case may be, under this section shall be carried out by the developer within three months from date of issue of an occupancy certificate. After obtaining the occupancy certificate and handing over physical possession to the purchasers under sub-section (1), it shall be the responsibility of the developer to handover the necessary documents and plans, including common areas, to the association of the purchasers or the competent authority, as the case may be, as per the relevant laws. The developer shall handover the necessary documents and plans, including common areas, to the association of the purchasers or the relevant authority, as the case may be, within thirty days after obtaining the completion certificate. | Executing a transfer of title enables purchasers to officially become owners of the property. This facilitates the transfer of ownership rights and responsibilities, allowing purchasers to fully enjoy and utilize their property. Therefore, the prescribed period of 3 months within which transfers must be undertaken ensures the proactivity of developers to promptly transfer ownership and exit developments. However, the downside of this provision is that it does not elaborate what happens where developers are unable to comply with such timelines, principally due to delays by purchasers in settling stamp duty and other closing costs. There should be clarification in that regard. |
Clause 45 Compensation | If the developer fails to complete or is unable to give possession of an apartment, plot or building: a. in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or b. due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason; c. the developer shall be liable on demand to the purchaser, in case the purchaser wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by the developer in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in their behalf including compensation in the manner as provided under this Act. Where a purchaser does not intend to withdraw from the project, they shall be paid, by the developer, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed by the Board. The developer shall compensate purchasers in case of any loss caused to them due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act. Claims for compensation under this section shall not be barred by limitation provided under any law for the time being in force. If the developer fails to discharge any other obligations imposed on them under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, they shall be liable to pay such compensation to the purchasers, in the manner as provided under this Act. | The inclusion of sub-clause (1) has the following benefits: a. the provision ensures protection for purchasers who may suffer financial losses or delays due to the developer's failure to fulfill its contractual obligations. It provides purchasers with recourse to recover the amount paid, including interest and compensation, in case of non-completion or non-possession of the property; and b. purchasers are assured that their investment is safeguarded, as they have the option to withdraw from the project and receive a refund of the amount paid. This mitigates the risk of losing money in case the developer fails to deliver the property as agreed. For sub-clause (2), purchasers often invest significant amounts of money in real estate projects with the expectation of receiving possession within a certain timeframe. Delays in possession can result in costs for purchasers, such as missed investment opportunities or alternative housing arrangements. Providing interest compensates purchasers for the costs incurred due to delays. This is a significant milestone in property transaction as the right to refund together with interest has been settled under the law. This entitlement to recoup investments has mostly been contractual depending on whether the sale agreement provided for it or not. Moreover, it has in a significant number of instances (especially in off plan transactions) been subjected to the developer first reselling the unit to a third party, before the purchaser can be refunded. Even then, the purchaser would only be refunded te principal amount without any interest, irrespective of how long the purchaser has had to wait for the payment. Lastly, there is also the recognition of a purchaser’s right to continuity of a transaction. Where a purchaser is keen to continue with a transaction to conclusion, he/she shall be entitled to monthly compensation by the developer for delays in delivering the project. This has not been a common feature in most property transactions hence an rare exception to the usual sale terms. |
| PART VII — RIGHTS AND DUTIES OF PURCHASERS | ||
Clause 46 Rights and duties of purchasers | The purchasers shall be entitled to: a. obtain the information relating to approved plans, layout plans along with the specifications, approved by the competent authority and such other information as provided in this Act or the rules and regulations made thereunder or the agreement for sale signed with the developer; b. know the time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the developer and the purchaser in accordance with the terms and conditions of the agreement for sale; c. claim the possession of apartment, plot or building and the association of purchasers shall be entitled to claim the possession of the common areas, as per the declaration given by the developer under this Act; d. the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the developer, if the developer fails to comply or is unable to give possession of the apartment, plot or building, in accordance with the terms of agreement for sale or due to discontinuance of their business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder; e. have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building as the case may be, by the developer. Every purchaser, who has entered into an agreement for sale to take an apartment, plot or building as the case may be, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any. The purchaser shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under subsection (2). The obligations of the purchaser under sub-section (2) and the liability towards interest under sub-section (3) may be reduced when mutually agreed to between the developer and such purchaser. Every purchaser of the apartment, plot or building as the case may be, shall participate towards the formation of an of the purchasers. Every purchaser shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot or building. Every purchaser shall participate towards registration of the conveyance deed of the apartment, plot or building, as provided under this Act. | Purchasers have the right to obtain comprehensive information about the project, including approved plans, layout, specifications and other relevant details. This ensures transparency and empowers purchasers to make well-informed decisions. Secondly, purchasers are entitled to claim possession of their apartments, plots, or buildings as per the terms of the sale agreement within a stipulated period of 2 months from issuance of the certificate of occupation. This protects purchasers' rights and interests, ensuring that they receive the property they have invested in as per the agreed-upon terms. |
The addition of sub-clause (2) is a good proposal as it mandates the purchaser to pay the purchase price within the prescribed period stipulated in the sale agreement. However, it may not be realistic in the practical sense, as not all purchasers pay stamp duty and closing costs at the same time, for transfer purposes. There is also a mismatch between the right of a purchasers to take possession under this clause 46(6) (i.e. within 2 months of issuance if the occupation certificate)as compared with the corresponding obligation on developers to transfer/hand over property under clause 44(2) (i.e. within 3 months of issuance of the same occupancy certificate). Therefore, these timelines need to be reconciled to either 2 months or 3 months for both parties. |
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The addition of sub-clause (3) is a good proposal as the prospect of incurring additional costs in the form of interest encourages purchases to make payments on time. Secondly, interest payment compensates the developer for the delayed payments. It ensures that developers are adequately compensated for the delay, mitigating any financial losses incurred as a result. |
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We propose the deletion of sub-clause (5) as the sub-clause is ambiguous. |
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PART VIII — FINANCIAL PROVISIONS | ||
Clause 47 Funds of the Board | The funds of the Board shall comprise of: a. such monies as may accrue to, or vest in the Board in the course of the exercise of its powers or the performance of its functions under this Act; b. such monies as may be payable to the Board pursuant to this Act or any other written law; c. such gifts as may be donated to the Board; d. such money as may be appropriated by Parliament for the purposes of the Board; and e. money from any other source granted, donated or lent to the Board. | This clause provides the source of funds that the Board will use to fund its activities. |
Clause 48 Investment of funds | The Board may invest any of its funds in securities in which for the time being trustees may by law invest in trust funds, or in any other securities which the Treasury may, from time to time, approve for that purpose. The Board may place or deposit with such bank or banks as it may determine, any moneys not immediately required for the purposes of the Board. | Investing surplus funds of the Board ensures prudent use of public resources in line with Article 201(d) of the Constitution of Kenya, 2010. |
Clause 50 Annual estimates | At least three months before the commencement of each financial year, the Board shall cause to be prepared estimates of the revenue and expenditure of the Board for that year. The annual estimates shall make provision for all estimated expenditure of the Board for the financial year concerned. The annual estimates prepared by the Board under subsection (2) shall be submitted to the Cabinet Secretary for tabling in the National Assembly. | The annual estimates determine how much money is allocated to the Board by the National Assembly. |
Clause 52 Accounts and audits | The Board shall cause to be kept all proper books and records of account of the income, expenditure, assets and liabilities of the Board. The annual accounts of the Board shall be prepared, audited and reported upon in accordance with the provisions of the Public Audit Act. | This clause ensures that monies allocated to the Board can be tracked and easily accounted for. |
PART IX — OFFENCES AND PENALTIES | ||
Clause 53 Non-registration of real estate projects | A person who undertakes a real estate project that is not registered in accordance with this Act commits an offence and shall, upon conviction, be liable to imprisonment for a term not exceeding three years or to a fine of not less than five million shillings, or to both. | Mandatory registration ensures that real estate projects undergo scrutiny and meet regulatory standards before being sold. This protects purchasers from potential risks associated with unregistered projects, such as substandard construction or fraudulent practices. |
Clause 54 Giving false information | A person who provides false information to the Board commits an offence and shall, upon conviction, be liable to pay a penalty of five per cent of the estimated cost of the real estate project, as determined by the Board. | This clause acts as a deterrence as the threat of penalties encourages individuals to provide accurate and truthful information to the Board. This promotes accountability and integrity within the real estate sector. |
Clause 55 Failure to comply with orders of the Board | A person, who fails to comply with, or contravenes any of the orders or directions of the Board under this Act, shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to twenty million shillings or ten per cent of the estimated cost of the real estate project, whichever is higher, as determined by the Board. | The provision of significant penalties acts as a strong deterrent against non-compliance or contravention of the Board's orders or directions. The threat of substantial financial consequences motivates individuals to adhere to comply with the orders of the Board. |
Clause 56 Failure to comply with orders of court | A person who fails to comply with or contravenes any of the orders or directions of the court issued under this Act commits an offence and shall, upon conviction, be liable to imprisonment for a term not exceeding three years or to a fine not exceeding ten million shillings, or to both. | Penalties ensure that court orders issued under the Bill are enforced effectively. This promotes the rule of law and upholds the authority of the Judiciary, ensuring that decisions made by the court are respected and complied with. Secondly, the threat of imprisonment or fines acts as a deterrent against non-compliance or contravention of court orders. Individuals or entities are motivated to adhere to judicial decisions to avoid facing legal consequences, thereby promoting accountability and respect for the law. |
Clause 57 General Penalty | A developer convicted of an offence under this Act for which no other penalty is provided shall be liable to a fine not exceeding one million shillings. | A general penalty clause acts as a deterrent in discouraging developers from engaging in activities that violate the Bill. The potential for a penalty provides a strong incentive for compliance with the Bill’s provisions. |
PART X — MISCELLANEOUS PROVISIONS | ||
Clause 58 Delegation | The Board may, where appropriate and in writing, delegate any power or assign any duty conferred on him or her under this Act to a member of the Board. A delegation or assignment under subsection (1) shall not prevent the Board from exercising the power in question. A delegation under this Act: a. shall be in writing; b. shall be subject to any conditions the Board may impose; c. shall not divest the Board of the responsibility concerning the exercise of the powers or the performance of the duty delegated; and d. may be withdrawn, and any decision made by the person so delegated may be withdrawn or amended by the Board. | Delegating powers to a person who specializes in a particular area allows for more efficient and effective decision-making within that domain. This leads to better outcomes and higher-quality work. Secondly, delegating powers create a clear chain of accountability for specific tasks or responsibilities. This clarity ensures that individuals are held responsible for their actions and outcomes. |
PART XI — REPEALS, SAVINGS AND TRANSITIONAL PROVISIONS | ||
Clause 60 Repeal of the Estate Agents Act Cap. 533 | The Estate Agents Act is repealed. | By repealing the Estate Agents Act Cap. 533, it ceases the operations and existence of the Estate Agents Registration Board upon the appointment of the new Board. Noting that the Bill if enacted will ensure that the Real Estate Board under clause/section 5 serves as a single window for processing approvals and clearance of projects there’s need to review the provisions of the NCA Act to ensure there is no duplication of roles between the NCA and the Real Estate Board. |
Clause 61 Transitional provisions | The term of the Estate Agents Registration Board shall cease immediately on the appointment of the Board. The Board of Directors shall be appointed within three months of the commencement of this Act. Every person who immediately before the commencement of this Act, was a member of staff or employee of the Estate Agents Registration Board not under notice of dismissal shall, at the commencement of this Act, be deemed to be an employee of the Board under this Act. Anything done, any regulation made, directive or instruction issued, or other administrative measure taken or any contract entered into or any obligation incurred by the Estate Agents Registration Board immediately before the commencement of this Act, shall remain in force and shall be deemed to have been made, issued, taken, entered into or incurred, as the case may be, under this Act. All assets and liabilities of the Estate Agents Registration Board which immediately before the commencement of this Act were in place shall be deemed to have been carried out under this Act by the Board. All actions, suits or legal proceedings by or against the Estate Agents Registration Board subsisting immediately before the commencement of this Act shall be carried out on, prosecuted by, or against the Board, and no such suits, actions or legal proceedings shall abate or be affected by the coming into operation of this Act. A direction, notice, order, permit or any other document that was granted, issued or made under the repealed Act, and that was valid immediately before the coming into force of this Act, shall be given effect as if granted, issued or made under this Act. | Transitional provisions facilitate a smooth transition from one legal framework to another by providing guidance on how to apply the new law to situations that arose under the old law. This helps prevent disruptions to individuals, businesses and institutions affected by the change. Secondly, transitional provisions can offer flexibility in implementing new laws by phasing in changes gradually or allowing for exceptions in certain circumstances. This flexibility acknowledges practical challenges in immediately complying with the new requirements and allows for adjustments over time. |