Detectives on board

Part III

In carrying out your due diligence, the first major question you should be trying to establish and investigate is;-

A) Who owns the land and how did they acquire it? In whose names is the title registered?

• Through letters of administration? Then beware, these don’t necessarily allow him to sell, he owns the land on behalf of other beneficiaries and the sale can be cancelled at any time where fraud is proved because land held in trust is exempted from bona fide purchaser for value principle. Ensure you get a certified copy of the letters of administration from the court that granted them. The court record will also indicate the beneficiaries. Ensure that these beneficiaries are witnesses to the sale and sign the Land Sale/Purchase Agreement.

• Family land? ; Visit the land and ensure that the family is not living on it or that no economic activity is taking place on it. Otherwise you need to obtain spousal consent for the sale. Failure to do so, that purchase can be cancelled. Section 40 of the Land Act prohibited a land owner from selling, mortgaging, leasing, donating (except in a will), or entering into any transaction in respect of land the family resides on and earns a livelihood from without prior written consent of the land owner’s spouse. This provision has led to Banks losing out so much especially when they give mortgages to clients without seeking spousal consent. To make matters worse, the Land Amendment Act, 2004 widened the scope of family land to include “land which is treated as family land according to the norms, culture, customs, traditions or religion of the family.” e.g. burial grounds of the family.

• Minors; Is the land registered in the seller’s child’s names? Is the child a minor? You need a court order for that. The parent needs to apply to court to get permission to sell the property. otherwise the sale is a nullity.

• Company names; Is the land registered in the names of a company? You need a board resolution to prove authorization of the sale.

• Two or more people registered thereon? All of them should sign. Are you well versed with the meaning of co-ownership of land. There is joint tenancy / co-owners in joint tenancy where the two or more persons registered on the title do not have distinct shares in the land. If one person dies, the land belongs to the surviving/ “remaining” person. E.g. title registered as “Mr. Julius Kakeeto and Mrs. Claire Amanya Kakeeto”, if one dies, the property belongs to the survivor. However where you want to have separate interests and incase of death or separation, each person’s interest is clearly demarcated, always include words of severance e share and share alike, amongst, in equal share. After registering your names on the title they add “tenants in common” to mean that it will be distributed in proportion to their contribution towards the purchase price. This is helpful for investment clubs and business partners. Protect your family!

• Untransferred land; Is the land still in the names of the previous owner? Ensure the transfer requirements e.g. identification id and passport pictures are available. If need be, talk to the person.

• Minerals; are you purchasing the land because it has minerals underneath? Ensure that someone else has not acquired a license to mine and exploit the minerals. Section 3 of the Mining Act (Cap 248) states that the entire property in and control of all minerals oils in, under or upon any lands or waters in Uganda are and shall be vested in the government.

Try to use an independent advisor for your due diligence, it is not advisable to use the seller’s advisors. Do not be too trusting, a lawyer always seeks to protect their client’s interests first.
tax man investigating

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