Don’t get Misled in Land Deals
What to watch out for when buying land in Uganda
As the number of Ugandans in the diaspora rises, so do the remittances they make that topped US $1.2 billion before the COVID-19 pandemic. But many of these Ugandans have had painful experiences of fraud by even relatives when they tried to acquire land or property in Uganda.
Experts at a recent webinar on ‘mitigating the risk of acquiring land in Uganda’ highlighted risks and lessons learned over the years. The webinar was organised by KCBU Bank in conjunction with AB & David Advocates.
Joseph Kakumirizi is a senior supply manager with Amazon in the US but he acts as KBCU’s Diaspora Ambassador gave an overview of the evolution of the Uganda diaspora in the United States.
“Many people have evolved. From the old nkuba-kyeeyo, Ugandans have improved themselves, gone back to school and many are now in good corporate jobs. (Nkuba-kyeeyo was the term used to describe people doing menial jobs in the diaspora) At the last Uganda North American Convention (UNAA) in Dallas, Texas, there were at least 150 top executives of Uganda descent. Hundreds more are now occupying middle-level management positions in companies,” noted Kakumirizi.
He explained that this means that Ugandans are earning more and sending more money home. However, the amount of transfers is not matched with the desired number of investments because of complications and fraud in land acquisition. He added that as a result, the diaspora has lost faith in the traditional systems. He also added that many in the diaspora have lost money sent through traditional systems of using family members, friends, and brokers to acquire land and property.
KCBU’s Bridget Mellisa Anitte is the relationship manager for Diaspora Banking, a portfolio specifically designed to cater to the banking needs of Ugandans in the diaspora. She says KCBU has teamed with a reputable law firm AB & David to provide a streamlined risk-free service for Ugandans in the diaspora. KCBU has spent a year trying to study the diaspora market and has designed several offerings such as accounts markets and financials, and digital banking for different purposes including land acquisition. KCBU also engages in property acquisition, land, wealth management solutions and they also advise Ugandans in the diaspora on what investments to go for.
AB & David Advocates specialize in educating and sensitizing the diaspora, through such webinars on the nitty-gritty of legal aspects of acquiring land in Uganda. The law firm provides the necessary competence and security for Ugandans intending to buy land in Uganda because it is regulated and staffed with competent people. It is headquartered in Ghana but it has branches and partners in many countries including the United Kingdom.
Daniel Lubogo, Counsel at AB & David Advocates said they want to use the webinars to give an insight into what is actually happening in Uganda. Lubogo highlights the following issues.
- Over the years, courts in Uganda have made judgments that have shaped the business of land. It is now mandatory to sign transfer forms; affix passport-size photographs; and produce a national identity card. IDs are a big problem for people in the diaspora. It is also a requirement that a land transaction is witnessed by a lawyer who must also attach a copy of the practicing certificate. This is to ensure that parties to the transaction follow the law. The parties to the sale of land must also indicate their Tax Identification Numbers (TIN).
- Sales Agreement. It is also a requirement that there must be a Sales Agreement to avoid cases of fraud. The sales agreement, after being duly signed by parties and witnesses must be registered with the Uganda Registration Services Bureau (URSB), which body will charge a stamp duty on behalf of the Uganda Revenue Authority.
- Doing due diligence. The buyer is mandated to do due diligence by verifying the land title documents through a search in the Lands Registry as directed by a 2007 ruling. On top of that, following another judgment of 2013, the law expects the bona fide buyer to make a physical visit to the land in question to ensure that it is of the right measurements as on the title and that there are no encumbrances such as caveats, court cases. The physical inspection constitutes 90% of the land transaction because it establishes who and what is physically present on the land. It establishes if there are developments such as roads, and utility infrastructure like underground water pipes, power lines, forests, and wetlands. A buyer must use professionals to examine the land.
- Dealing with family land. Buyers especially from the diaspora should note that the Land Act provides for security of occupancy by members of the family that depend on the land. Any sale of such land requires the written consent of a spouse. The Succession Act of 2023 has also entrenched the rights of family members and spousal consent that must be mandatory before any sale of family land.
- Transfer of land by administrators of an estate. The Court of Appeal ruled in 2014 that the administrators of an estate and trustees must carry out their mandate jointly. No one administrator must act alone. The Succession Act (2023) further demands that before the sale of any family property, the consent of all beneficiaries must be sought.
- Powers of attorney. The Supreme Court of Uganda ruled that once one gives powers of attorney, one cannot turn around and give contrary instructions for one’s private gain. In addition, powers of attorney cannot be delegated. The mandate to delegate must come from the court because that is where the powers are given in the first place.
- Fraud. In 2011, Court ruled that the Registrar of Titles cannot cancel a title on the basis of it being fake. The power to cancel a title now rests with the courts. This is because fraudulent people were abusing the loopholes and colluding with staff in the Lands Registry to cancel genuine titles on allegations that they were not genuine. This is particularly important for Ugandans in the diaspora who may fall victim to mischievous relatives and agents.
- Under-valuation. The Supreme Court in September 2019 ruled that it is unlawful to undervalue land when carrying out a transaction. Under-declaration can render a transaction null and void.
- Lawful occupants. Article 237(8) of the Uganda Constitution provides that the lawful or bona fide occupants of mailo land, freehold or leasehold land shall enjoy security. They cannot just be wished away provided they have lived on the land for over 12 years. But the Land Act also provides that tenants on land must give the land owner first priority to buy when selling their plots.
- Leases. Leases are contractual and the law expects the terms of a lease to be respected. However, leaseholders must always monitor the lease for expiration. Leases can be renewed before they expire depending on the negotiations with the land owner.
- Mortgages. Lubogo explained that mortgages need considerable due diligence and Ugandans in the diaspora wishing to enter mortgage arrangements should engage professional people at all levels.
- Citizenship issues. For persons who lost Ugandan citizenship but still have property in Uganda, it is noted that Uganda adopted a dual citizenship policy. So such persons can actually opt for dual citizenship and enjoy full rights of access to land in Uganda. Non-citizens, however, can only acquire leases but not own land in perpetuity.
Lubogo also advised Ugandans in the diaspora to form saving clubs through which they can buy property in Uganda.
The partnership of KCBU and AB and David Advocates fills a critical gap to provide expert legal advisors on land acquisition and a bank that provides both digital services across countries, and investment, financial and property advisory and management services.
The KCBU and AB & David Advocates webinars will be monthly and Zaminna will bring to you their highlights.
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