Diaspora property losses usually follow a similar pattern. A relative, friend or broker offers to handle a purchase, money is sent to a personal account, authority is assumed rather than documented, and months later there is little to show for it. The legal relationship in these arrangements is agency. This article explains how agency works, the terms that protect a buyer, and the steps to take when an agent is suspected of dishonesty.
Quick answer
An agent acts on behalf of another person, the principal, and the scope of the agent’s authority defines what can bind the principal. A written mandate that fixes the scope, prohibits the receipt of purchase funds into personal accounts, requires reporting and provides for an accounting on exit is the main protection. Purchase funds should move through controlled channels with an audit trail, and title should be verified at the registry through an advocate before money is sent.
How agency works in Kenyan law
Agency is governed by the general law of contract and by common law and equity principles, which apply in Kenya through the Judicature Act (Cap 8), together with the Law of Contract Act (Cap 23). An agency can be created expressly, by a written or oral appointment, or implied from the conduct of the parties. A person can also ratify an act done on their behalf after the event, which is why allowing an unauthorised arrangement to continue can create obligations.
The agent owes duties to the principal. These include following instructions, acting with reasonable skill and care, avoiding conflicts of interest, not making a secret profit, and accounting for money and documents received. The principal can be bound by acts within the agent’s actual authority, and sometimes by acts that fall within the authority a third party reasonably understood the agent to have. That second point is why a vague mandate can be dangerous: it lets others believe the agent has powers the principal never intended to grant.
The agency agreement: terms that earn their place
- Identify the parties and the property or transaction, and state that the agent acts for the principal.
- Describe exactly what the agent may do, such as search, inspect, negotiate or collect documents, and what the agent may not do.
- Prohibit the agent from receiving purchase money, and state the only channels through which funds may move.
- Require regular written reports with supporting documents, and set the reporting interval.
- Prohibit sub-agents or require written consent before one is appointed.
- Set a fixed term, renewable only in writing.
- Provide for termination and for an accounting of all funds and documents on exit.
- Include a dispute route and a governing law clause.
The firm’s contract practice and real estate and conveyancing practice prepare these mandates, and the related article on powers of attorney for diaspora property transactions explains the formal document used where the agent must sign on the principal’s behalf.
Money handling and the audit trail
Purchase money should not pass through an agent’s personal account. Conveyancing funds are commonly handled through an advocate’s client account, which is subject to professional regulation and provides a record of receipts and payments. Payments from abroad should be matched to the transaction, referenced clearly and supported by bank records. Cash payments and requests to split a payment should be refused.
The mandate should make clear that the agent may not receive funds and that any incidental expenses are reimbursed on receipts. Where an agent claims to have paid a deposit or a fee, ask for the receipt and verify it with the payee directly.
Verification before money moves
Independent verification is the core protection. An official search at the land registry confirms the registered proprietor, the tenure and any encumbrances. The registry’s records can also confirm whether the title exists as described. The State Department for Lands publishes the registry offices that serve each county, and the search is usually conducted through an advocate who can confirm the result.
Verify the people as well as the property. Confirm the agent’s identity and authority in writing, speak to the seller directly, and use contact details obtained independently rather than those supplied by the agent. Be cautious about documents sent as screenshots, and confirm the registry result from its source. The related article on land fraud due diligence for diaspora buyers sets out a fuller verification routine.
Warning signs of agent fraud
Common warning signs include a request to pay into a personal account, an unexplained change of bank details, pressure to move quickly, refusal or delay in providing registry documents, title details that change between documents, a new intermediary with no clear role, requests for facilitation payments, and arrangements that must be kept secret from the seller or from the family. Any one of these should stop the transaction until it is explained and verified.
Immediate steps when fraud is suspected
- Stop all further payments and instruct the bank immediately; a prompt recall may recover funds in transit.
- Preserve every message, email, receipt, bank record and document, without editing them.
- Instruct an advocate to search the registry afresh and advise on protective entries.
- Terminate the mandate in writing and demand an accounting of funds and documents.
- Report the matter to the police, and to the Directorate of Criminal Investigations where appropriate.
- Prepare a chronology and a schedule of the money paid, with evidence for each payment.
- Consider civil recovery steps, including a claim for breach of mandate, an account and tracing of funds.
Civil and criminal routes
The civil and criminal routes serve different purposes and can run in parallel. A civil claim seeks recovery of money or property through a court process and can include claims for breach of the mandate, breach of fiduciary duty, an account of profits and restitution. A criminal complaint addresses the alleged offence and is investigated by the police, with the Director of Public Prosecutions deciding whether to charge. A conviction does not automatically return the money, and a civil claim does not determine criminal liability.
Where property has already been transferred, protective steps on the title and a tracing claim may be needed urgently, so early advice matters. The firm’s real estate and conveyancing practice handles verification and recovery steps, and the commercial litigation practice handles claims where a dispute has arisen.
Agency agreement checklist
- The mandate is in writing, signed and dated, and identifies the property and the parties.
- The agent’s powers and prohibitions are stated precisely.
- The agreement prohibits receipt of purchase funds and identifies the approved payment channels.
- Reporting duties and the documents the agent must provide are specified.
- A fixed term and written renewal are required.
- Termination, accounting and return of documents on exit are provided for.
- The dispute route and governing law are stated.
Primary sources
- Law of Contract Act (Cap 23), Kenya Law, for the contract framework that underpins agency.
- Land Registration Act, 2012, Kenya Law, for title registration and entries on the register.
- State Department for Lands: land registries, for the registry office serving the county where the property is situated.
This article is general information, not legal advice.
