Previous Next

How to Use Land as Collateral: Borrowing Against Your Plot in Kenya

Putting your land (title deed) up as collateral is a powerful way to unlock funding for development, business capital or property upgrades but the process in Kenya has legal steps, costs and risks you must understand. Below is a practical, research-backed guide to borrowing against land in Kenya.

1. When can land be used as collateral?

Most lenders (commercial banks, mortgage finance firms, SACCOs and private lenders) will accept a registered charge over private land as security. The Land Act 2012 defines a charge as an interest in land created to secure payment of money and sets out the rights and remedies available to lenders on default. That instrument gives the lender legal recourse while the borrower keeps ownership subject to the charge.

2. Required documents & initial checks

Before a lender accepts land as security you’ll typically need:

• Original title deed and certified copy.
• Land search/official search report showing ownership and any existing encumbrances.
• PIN certificate and national ID/ company documents (for corporate owners).
• Survey map/surveyor’s plans and plot dimensions.
• Valuation report from an approved valuer (bank will often instruct this).
  Do an independent title search via Ardhisasa (Lands Registry portal) or at the local registry to confirm the title is genuine and unencumbered.

3. Consents & clearances you may need

Some parcels require extra approvals before a charge can be registered:

• Leasehold land: lessor’s consent and evidence of rent clearance.
• Agricultural land: consent from the Land Control Board for transactions.
• Municipal/urban parcels: rates clearance from the county or local authority.
  These consents are mandatory and can delay registration if not obtained early.

4. The legal process; drafting to registration

Typical steps to register a charge (mortgage) on land in Kenya:

1. Title search & valuation. Lender orders valuation; you pay or cost-share.
2. Drafting the Instrument of Charge. A lawyer prepares terms (loan amount, repayment, default remedies). The Land Act requires the instrument to state sale terms and default consequences.
3. Stamp duty & stamping. The instrument must be stamped (duty assessed). (Practices differ by transaction; confirm the applicable rate with your lawyer or KRA).
4. Lodgement at the Lands Registry / Ardhisasa. Submit the stamped instrument, original title deed and fees for endorsement and registration. The registrar will enter the charge as a public encumbrance.

5. Costs, timing & lender conditions

Expect costs for valuation, legal fees, stamp duty, registration fees and sometimes an administration/processing fee charged by the lender. Banks will typically require evidence of insurance (if a building exists), proof of good standing with KRA, and may request guarantors or additional securities. Registration timelines vary. Allow several weeks for consents, stamping and lodgement.

6. Rights, remedies & discharge

Under the Land Act, a charge does not transfer ownership; it creates a security interest. If you repay the loan, the lender must prepare a Discharge of Charge which is stamped and lodged at the Lands Registry to remove the encumbrance and restore an unencumbered title to you. On default, the chargee (lender) has prescribed remedies which should be laid out in the instrument of charge including sale procedures and the borrower’s reliefs. Keep copies of all stamped documents and follow up to ensure discharge is registered after settlement.

7. Practical risks & how to mitigate them

• Unlicensed lenders & unfair terms: Kenyan law allows private lenders to take security over land, but terms can be risky. Vet lenders, insist on clear, stamped legal documents and avoid “off-book” promises.
• Double-selling & title fraud: always verify title at the registry and consider using an advocate to hold original title in escrow until registration.
• Consent delays: factor in Land Control Board or lessor consents when planning timings and cashflow.

Final checklist

• Do an official land search.
• Get a professional valuation and a clear loan offer.
• Secure all required consents early (lessor, LCB, rates).
• Ensure the Instrument of Charge is stamped and lodged at the Lands Registry (Ardhisasa).
• On repayment, confirm discharge is registered and hold the clear title.

Using land as collateral can be an efficient way to access capital, but it should be handled with care, legal advice and full documentation. If you’re considering borrowing against a plot, Thuo Gitau Lands Investments offers title verification, vetted lender introductions and end-to-end guidance on charge registration and discharge. Contact us for a due-diligence pack and recommended legal partners.