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Mtu Biz
#1 Posted : Monday, September 27, 2010 4:21:30 PM
Rank: Veteran


Joined: 1/16/2007
Posts: 1,320

Guys,
Im a complete dummy on matters property, i need some information.

I am in a position to secure a 20year lease on some land (5 acres)in a prime location and i plan to put up some commercial shops/stalls.

1. What legal red flags do i need to be wary of
in this type of arrangement? (The land owner
is a relative)

2. Can i secure financing based on this lease ?

3. Which institutions do i need to talk to for
financing ?


Thank you in advance..smile



Sola Scriptura
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emlyn ngwiri
#2 Posted : Monday, September 27, 2010 5:57:38 PM
Rank: Member


Joined: 8/12/2010
Posts: 129
Location: nairobi
@ mtu biz i will start with Q2 in a lease agreement consider whether it will be an oprerating lease or a finance lease. operating lease is one where you have no intention of buying in future,maintanance of the land and other general up keep of the land weeding and the likes, is incurred by the owner of the land ie the lessor .finance lease i one where you have an intention of purchasing the land in future and the maintanance of the land is done by you .

@Q3 For financing look no further than HFCK,they have the best experts on property development solutions and provide finance at wery competitive rates or at market rates.The customer service is excellent and the staff are just a phone call away.
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Mtu Biz
#3 Posted : Monday, September 27, 2010 6:21:40 PM
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Joined: 1/16/2007
Posts: 1,320

Thanks @ emlyn ngwiri.

Would you know of any actual scenarios where a financial institution has funded a project based on an operating lease ?

In your view (from a financial risk analysis point of view) what are my chances of securing funding in this scenario?

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kenstat
#4 Posted : Monday, September 27, 2010 8:41:48 PM
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Joined: 12/31/2009
Posts: 43
Location: Tundra
I am not a banker.

The amount of funding may be lower than if the land was freehold. The bank would want more equity coming from you. The level of rental returns will also affect how much and how long the finacing is for.




Mtu Biz wrote:

Thanks @ emlyn ngwiri.

Would you know of any actual scenarios where a financial institution has funded a project based on an operating lease ?

In your view (from a financial risk analysis point of view) what are my chances of securing funding in this scenario?
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sparkly
#5 Posted : Monday, September 27, 2010 10:01:51 PM
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Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
@Mtu biz is that a lease or a sublease? If you put up property on the land, the land and buildings will revert to your landlord after the 20 years expire.
Life is short. Live passionately.
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Mtu Biz
#6 Posted : Tuesday, September 28, 2010 9:13:17 AM
Rank: Veteran


Joined: 1/16/2007
Posts: 1,320

Thanks kenstat, i thought so too.



sparkly wrote:
@Mtu biz is that a lease or a sublease? If you put up property on the land, the land and buildings will revert to your landlord after the 20 years expire.



@ sparkly.
Yah the land and buildings will revert to the landlord, is that the case for both Lease and sub lease, Whats the difference ?

@ All.
Is there a standard legally recognized document that shows ownership of a land lease? say from the ministry of lands ?

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Sasha
#7 Posted : Tuesday, September 28, 2010 9:33:01 AM
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Joined: 9/5/2007
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@Mtu Biz

1. You should do a search on the land to ensure there are no existing leases on the land. The search should also indicate whether the land is properly registered to your relative and whether it is charged or used as security for any financing.

2. This has been aptly answered by emyln.

3. There are many and they all have some good products you can explore.

All leases must be registered at the lands registry within 2 months of the signing of the lease agreement. Any lease agreement not registered in this way is voidable in court.
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Mtu Biz
#8 Posted : Tuesday, September 28, 2010 9:40:02 AM
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Joined: 1/16/2007
Posts: 1,320

@ Sasha. Very informative thanks.
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