Discharging A Charge On Land In Kenya: Process And Legal Basis

By Jerameel Kevins Owuor Odhiambo

Discharging a charge (mortgage) on land in Kenya is the legal process of removing the encumbrance placed on a property once the secured debt has been fully repaid. This process is crucial because it legally confirms that the property owner has satisfied all obligations under the charge agreement, restoring the property to a state where it is free from the lender’s claim. A charge is a form of security interest where a property (land) is used as collateral for a loan. Until the discharge is registered, the property remains technically encumbered, limiting the owner’s ability to deal with it freely, such as selling it or using it as security for a new loan.

The primary legal backing for the discharge of a charge in Kenya is found in the Land Act, 2012, and the Land Registration Act, 2012. Specifically, Section 85 of the Land Act provides for the cessation of a charge. It stipulates that if the sum due under a charge is paid, the chargee (lender) shall, at the expense of the chargor (borrower), execute a discharge of the charge in the prescribed form. This execution signifies the lender’s acknowledgment that their interest in the land has ceased. Furthermore, Section 62 of the Land Registration Act deals with the actual process of removing the charge from the land register, stating that a charge is discharged when a signed discharge form is presented to the Registrar for cancellation of the entry on the register. These two statutes work hand-in-hand to govern the substantive right to discharge and the procedural steps for its registration.

The first step in the discharge process is the full and final repayment of the secured loan to the chargee (lender). The chargor must ensure that the principal amount, accrued interest, penalties, and any other agreed-upon costs have been settled completely. It is important to request a formal statement of account to confirm the nil balance and ensure there are no hidden or outstanding fees. Example: If Jane took out a Kshs 10 million loan from Equity Bank to buy a house, she must ensure her final payment covers every shilling, including the last month’s interest, before proceeding. A common practice is for the bank to issue a “Redemption Statement” outlining the exact amount required to close the loan on a specific date.

The second critical step involves the chargee executing the Instrument of Discharge of Charge. Once the loan is fully repaid, the lender has a legal obligation under the Land Act to prepare and sign this formal document. The document must be in the prescribed form as per the regulations under the Land Registration Act. This form contains crucial details such as the title number of the property, the names of the chargor and chargee, and a declaration that the debt has been fully satisfied and the charge is discharged. The document must be properly executed, often involving the affixing of the bank’s common seal or authorized signatories, and attested.

The third step is the submission of the relevant documents for registration at the appropriate land registry. The chargor, or their appointed advocate, will present the executed Instrument of Discharge of Charge to the Land Registrar. This submission must be accompanied by several supporting documents. These typically include the original duplicate Certificate of Title or Certificate of Lease for the property (which the bank held as security), the duly filled and executed discharge form, and any necessary consents or clearances. Example: When submitting the documents for Jane’s property, her advocate will present the signed discharge form, the original Title Deed, and pay the requisite registration fee.

The fourth step is the assessment and payment of statutory registration fees. The Land Registry charges a fee for processing the discharge and amending the register. This fee is calculated based on the prevailing schedule of fees. The fee must be paid for the registration process to proceed. After payment, the documents are lodged, and the Registrar commences the process of verification. The Registrar’s role is to ensure the discharge instrument is properly executed, the supporting documents are genuine, and that the details match the entries in the land register. This verification is a key safeguard against fraudulent attempts to discharge a charge.

The fifth and final step is the actual registration of the discharge. Upon satisfactory verification, the Land Registrar will cancel the entry of the charge on the property’s folio (register) and on the duplicate Certificate of Title or Lease held by the owner. The Registrar will make an endorsement on the property’s title document stating that the charge has been discharged and the entry has been cancelled. Once this entry is made and stamped, the property is officially and legally unencumbered, meaning the chargee no longer has a legal interest in the land. The property owner will then collect their clean title document, effectively marking the end of the transaction.

In summary, the discharge of a charge is a legally mandated, multi-step process underpinned by the Land Act and the Land Registration Act. It transitions a property from being a piece of collateral back to a free and clear asset for the owner. It moves from full repayment, through the crucial execution of the Instrument of Discharge by the lender, to the final submission, verification, and registration by the Land Registrar. The successful completion of this process is evidenced by the owner holding a title document free of any endorsement or record of the former charge, thus securing their full proprietorship rights.

The writer is a legal writer and researcher