How to Spot and Avoid the Snares of Real Estate Conmen

The Kenyan real estate sector has been grappling with a huge number of property fraudsters who stage all manner of scams to steal money from unsuspecting buyers of land and houses.

While property buyers are becoming more informed, it is ironical that they are still falling into the traps of real estate fraudsters who run the show, from staging legal scams to publicising in-existent deals.

Below is an outline of the common tricks used by real estate conmen in Kenya and what buyers can do to avoid falling into the traps of property fraudsters:

Title fraud – This is the most common scam pulled off by most real estate fraudsters in Kenya. Scammers usually forge title deeds of vacant or disputed land and sell them off to unsuspecting buyers.

In other instances, fraudsters steal the identities of property owners and use the information to process duplicate title deeds that are used to sell off the land without the authority of the real property owners.

Once the deal sails through, the fake seller vanishes into the thin air – leaving the buyer fighting with the genuine owner of the property when the scam is eventually uncovered.

Hurried sales – Rogue developers and project marketers try to hurry prospective customers into making purchasing decisions by creating fake hype and an illusion of limited stocks.

The fear of missing out forces a buyer to make absurd decisions without undertaking any due diligence.

In such deals, buyers do not get the opportunity to do any research and most queries go unanswered. It is only after closing the deal that a buyer notices that he or she has been tricked into a bad transaction.

False promises – Some property developers in Kenya have been making false promises in desperate efforts to lure potential customers in a highly competitive marketplace.

The developers promote false specifications and amenities such as swimming pool, sports area, etc. but fail to deliver the same citing lack of approval and other technicalities.

It is also common to find builders deviating from the original house plan. Angry buyers are often unable to challenge the developers in court since most contracts contain clauses indicating that “layouts and images are for visual presentation only and are subject to change”.

Deliberate delays – Real estate conmen in Kenya have perfected the art of project delays. In many instances, rogue developers launch and hype mega projects without any funds for construction works.

They wait until they attain a certain number of buyers in the initiation phase of the project so as to reach their funding goals. In most cases this takes a very long time to happen thereby inconveniencing buyers who take bank loans hoping to vacate rented homes within a specific timeline.

In worse cases, the developers close down their companies and disappear with money pooled from investors who are left with mere purchase agreements to show and huge bank loans to clear.

How to outsmart real estate conmen

1. Site visit – Never buy a property that you have not seen. It does not matter whether you are buying a piece of land, a house under construction, a ready house, or off-plan apartment, you need to view it.

This should be done before you make any decision. If possible visit the site without the seller and talk with the neighbours. This way, you may uncover issues that the seller is unwilling to disclose to you.

Editor’s Note: Never pay any amount to visit the site. Payment requests are a red flag.

2. Due diligence – This step involves getting all the necessary documents looked at by professionals. It is advisable to hire a lawyer to conduct a search to ensure the property has no caveat.

Involving professionals will cost you money, but it will protect your interests in the long run.

Before proceeding with a transaction, you need to confirm that the property is not built on a road reserve or stolen land and that the developer has obtained all the necessary government approvals.

You should also check to confirm that the owner has paid all the required land levies.

3. Check the developer’s background – Be sure to undertake a thorough background check on the developer’s reliability. Never rely on their word for it. Check out social media and other digital mediums for any testimonials or complaints about the developer.

It is also advisable to check out their past or on-going projects to form an informed opinion.

You should also check the financial model of the project. If the developer is using money pooled from buyers to undertake the construction, it is likely the project will stall along the way.

4. Get a valuer – If unsure about the pricing, get a professional to value the property. A bank’s valuer will also help double-check the property in case you are taking a mortgage.

5. Read the fine print – Before signing the deal, agree with the seller on the payment modality – which should be put in writing. Ask your lawyer to study the documentation and advise you on the way forward.

6. Delay clauses – You should ensure that there is a delay clause and a clearly stated construction timeline in the contract. This will protect you from deliberate delays from the developer.

When the deal goes through, be sure to keep all the documents generated in the course of the transaction: legal documents, sale agreement, mortgage agreement, lease agreement, etc.

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