Introduction to Sale of Land in Tanzania
If you want to understand sale of land in Tanzania you are in a right place, please follow along this article to get more knowledge on this. It will however be noted that as long as land is not owned by the individual but by the state, what transfer here implies is sale of interest in land. The article attempts to bring together the theoretical aspects and the more practical component of disposition or conveyancing.
Sale is one of the forms of land transfer or disposition. Others include; will, lease, mortgage etc. In dealing with sale of land the following common terms must be considered:- vendee-vendor, and vendor–purchaser. The vendor is the seller while the vendee is the purchaser/buyer.
Transfer of land involves two Parties as the law implies that the parties should have capacity to form contract, a condition that is met by the two parties, which have to agree without undue influence section 10 of law of contract Act. Thus, the following are the necessary legal documents involved in transfer of Right of Occupancy, fees payable and the government offices involved.
Fees for Sale or Transfer of Property in Tanzania
The following Fees are incidental to the Transfer of a Right of occupancy as according to the Government Notice No. 264 published on 3/8/2012 made under Land Actm(Cap. 113), Regulations (Made under section 174 and 179) and Government Notice No. 261 published on 03/08/2012 Under Land Registration Act (Cap. 334) Rules (Made under section 31)
- Notification of a Disposition 40,000/
- Application Fee 80,000/
- Transfer or Registration Fee 0.25% being whichever is greater between consideration and Valuation
- Stamp Duty being 1% of the Value of a property
- Capital gains tax assessed as 10% of the differences between Valuation and Consideration
Government Offices Involved In Transfer of Land in Tanzania
Local Authority, such as Village chairperson, Ward or Street chairperson this are involved in the primary stage of the contract. Street chair personal is involved to give evidence if the said applicant is a resident of such street and to recognize the Real owner of the property.
Municipal authority or City council, District Authority or Urban Authority.
Department concerned is the Department of Town Planning and Environment, Land and Valuation Section and land register Section. This section will be concerned for the whole process of Transfer before the information being sent to the Registrar or Commissioner for land.
The municipal authority is responsible for the following
- Proof of ownership of specified pieces of Land
- Receiving of all the Documents submitted and correct them where necessary
- Official seal and Stamp of the documents under power vested under the Land Act to Authorized Land officer
- Approval of a Disposition under the power vested to the Authorized Land Officer vested under section 34 of the Land Act
- Sent of the information to the commissioner for Land and Registrar of Title for Approval
- Collect all Fees incidental to the Transfer of a Right of occupancy
Commissioner For Land or Registrar of Title offices
Commissioner for Land
- To approve all Disposition made in accordance of the Land Act No 4 OF 1999 and its amendment versus land regulations
- He has power to Refuse any transfer if it is unlawful made
- He can exercise all power as vested to the Authorized officer regarding transfer of a Right of occupancy
Unless otherwise provided for by this Act or regulations made under Section 36(2) of The Land Act No 4 of 1999 provides that:
Unless otherwise provided for by this Act or regulations made under this Act, a disposition of a right of occupancy shall not require the consent of the Commissioner or an authorized officer
Section 36(2) of The Land Act No 4 of 1999
Registrar of Title Office
Section 2 of Land Registration Act provides that “registrar” means the Registrar of Titles appointed under the provisions of
section 4 and includes a Deputy Registrar and an Assistant Registrar; Section 3(2) provides that:
The Registrar shall maintain in the land registry a land register for the registration of the title to land in Tanzania and the recording of dispositions, transmissions and incumbrance of and over registered land. Therefore the office of Registrar has power to Register all Transfer made under the Land Act
Section 3(2) of The Land Registration Act
Stages in a Transfer of land in Tanzania
While the stages for the conveyance of unregistered land are less formal but only as much as they can guarantee a valid title, for registered title the following stages are vital:-
This involves establishing the existence of the property. It involves the following tasks:- Conduct an Official Search regarding to that Right of occupancy, the official search be it physical and official, The official Search must be lodged in to the, Local Authority, Registrar of Title or Land Register for the said Right of occupancy while physical search includes Site inspection where the property is located. Conduct on-site inspection in order to form some opinion about state of repair and value of the property.
Establish current open market value of property. This is the document or a report that states the market value of the property at a specified period. This report is prepared by a registered valuation Surveyor Signed and stamped by such Valuer and delivered to the Desk of Chief Government Valuer for Approval.
At this stage, the parties enter into prospective sales agreement. It is prospective because it may be subject to certain formalities such as approval and notification. The tasks that are involved include drafting the sale agreement specifying the date of completion and drafting a deed of transfer. This process may take 5 days.
This involves payment of all levies such as rent that depends on the valuation report, stamp duty and capital gains tax. The tax is equivalent to 4% of the value of the property. The tax must be paid at the tax revenue authority office. In addition, the stamp duty is paid at 4% of the value of the property. Generally, the stage envisages obtaining certificate of clearance of land rent, establishing actual value of the property, completing capital gains tax questionnaire, submitting the questionnaire to the Income Tax Department with the necessary attachments and payment of capital gains tax and obtaining capital gains clearance certificate.
Completion stage, this stage requires processing of approval or making notification Parties must enclose with the applications letter of offer, transfer deed, two passport size photos for the vendor and buyer, sale agreement, receipt paid on notification of disposition.
Receipt paid on application for approval, valuation report and approval receipt, current land rent receipt, notification of disposition in triplicate, birth certificate, passport or affidavits of birth.
In case of a company, the memorandum and articles of association, company resolution to buy or sell the property, and particulars or directors; if the company is foreign, a certificate of incentive for TIC and if the property is semi developed a commitment bond by the purchaser that he will develop it.
Post completion stage
Involves parties observing their obligations at the specified dates, compiling completion statement and ensuring surrender of title documents by the vendor. It has to be born in mind that for registered titles, title does not pass unless the purchaser lodges his application to register the transfer.
Official and Physical Search
Despite the fact that a parcel of land is registered or not registered, prior to any proceedings related to disposition of land, it is essential to carryout physical and official search so as to be certain that the plot of land is an existing parcel of land and free from any encumbrances and complies with the land use plans.
Any person may require an official search in respect of any parcel and shall be entitled to receive particulars of the subsisting memorials appearing in the land register relating thereto
section 97(2) of Land Act no.4, 1999.
Furthermore, in order to secure this information as far as our case is concerned, you are obliged to pay a search fee of Tshs.40, 000/= according to GN no. 261 of the Land Registration (Amendment) Rules, 2012.
Power of Attorney
This is a written document where one person (the principal) appoints another person to act as an agent on his or her behalf, thus conferring on the agent to perform certain acts or functions on behalf of the principal.
Powers of attorney are routinely granted to allow the agent to take care of the variety of transactions for the principal, such as executing a stock power, handling a tax audit, handing a transfer of interests in land or maintaining a safe-deposit box.
A special type of power of attorney that is frequently used is ‘durable’ power of attorney. For the preparation of this document the principal is obliged to pay Tshs. 120,000 as the fee for preparation of the document. The document is prepared by any registered advocate and submitted to the commissioner for lands and registrar of title.
This consent is granted by Wife or husband depending on who is going to dispose land, Spouse Consent comprises of the following particulars, Name of the person who grant the consent including his or her physical address, Nature of the Consent and the consent must be witnessed by either Advocate, Resident Magistrate or Commissioner for Oath.
By default, spousal consents are always in community with property as regards to marriage contracts which suggest that the property held by two parties when the marriage subsists belongs to both of them. Thus, such marriages create a joint estate in term of which spousal consent is required when dealing with real (immovable) property.
This document serves to inform the commissioner as to whether he can approve the transfer or not. In order to signify this consent the spouse has to fill into a legal document that shows his/her assent towards disposition of that particular property.
He/she must state the name, country and the signature in order to provide full evidence of spousal assent and minimize ambiguity during the transferring process. The document is prepared by any registered advocate and submitted to the commissioner for land and registrar of title.
Land Act no. 4, 1999 recognizes and endorses that bare land has value in exchange and for this purpose the property appraisal for transfer purpose is to be carried out to obtain market value of the subject property.
The market value serves as the subject matter when assessing fees like stamp duty on transfer that is about 1% and registration fees that is 0.25% of whichever is greater between the market value and consideration. The capital gain tax that is 10% of gain or profit after sale of an asset all this has been stipulated according to section 90 of Income Tax Act, 2008.
Then after all payments have been made, all original receipts are compiled with transfer documents and latter of an offer to be dispatched to the commissioners for signature and sealed then to register for registration. The government office involved is Land Development Office Valuation Section.
Purposes of Valuation Report
- It state the Current Market Value of the property under appraisal
- Once approved by A Chief Government Valuer, Valuation Report is a legal Documents for Charging of Stamp duty, Capital gains tax, and other fees incidental to the transfer of a Right of occupancy
- It form the Basic of Consideration to the buyer and will define the best that describing the evidenced current Market value of the property
Property Sales Agreement in Tanzania
Sales agreement is the contract under which the ownership and possession of land is transferred from seller (vendor) to buyer (vendee) in exchange for specified sum of money. Sale agreement is made under land form no. 38 which is Contract for a disposition of a right of occupancy.
This is one of the legal documents that should be prepared for transfer of land from vendor to vendee. Sale agreement will show the name of vendor and vendee, Consideration for exchanging the piece of land.
Sale agreement is prepared because section 64 of Land Act provides that the contract for transferring of land should be in writing and in prescribed form. Sale agreement should be used as the evidence between both parties.
The government offices involved in sale of land in Tanzania are office for Authorized officer/commissioner, Advocate office and Registrar of Title office. Fee for sale agreement is TZS 80,000/= as shown under section 2 of Registration of Documents (Amendment) Rules, 2012. This fee is supposed to be paid by transferors.
Legal Requirements and Terms of the Contract
According to section 64 (1) of the land Act, the contract can be in writing or oral. Where the contract is oral, it must be supported by a written memorandum of its terms (evidence). The contract or the written memorandum must be signed by the parties to make it enforceable.
Terms of the Contract
An agreement for the sale of land is similar to any other agreement.24 It must have the following: –
- Parties i.e. vendor (ownership of, if agent-power of Attorney) and purchaser.
- Capacity, the parties must be of the age of majority and of sound mind (consider capacity to contract under the Law of Contract Act).
- There should be subject matter capable of sufficient legal definition of the property i.e. Right of occupancy with physical location at…, Plot number…, etc.
- There should be clear Intention to sale and buy (free consent).
- There must be consideration. The contract must show how it will be paid.
- Others may depend on the status of the property. If it is mortgaged a statement from mortgagee, if there is a lease an undertaking to remove the tenant, If there are utilities to ensure they are paid by purchaser, or if there are rent, charges are paid by purchaser etc.
Importance of Preparing Sales agreements on Sale of Sale of Land In Tanzania
- It is a legal document that binds the parties for anything that might happen one has got a power to argue within the grounds of the contract.
- It defines the Consideration for the sale which is important in charging of government fees like capital gain tax
- It defines the mode of Payment to the considerations
- It specifying date of completion of payment to the transferee
General Clauses in a Sale Agreement in Tanzania
A contract for the sale of of land has different clauses. The contract may adopt different styles but must have:-
- Commencement and Date -THIS AGREEMENT is made this..day of ….200..
- Parties -BETWEEN X of…hereinafter ‘vendor’ and Y of ………….hereinafter purchaser of the other part.
- Recitals-WHEREAS…. The vendor is the estate owner of…
- Testatum-NOW THIS AGREEMENT WITHIEST that Consideration – in consideration of the sum of………..
- Receipt clause- paid by the purchaser to the vendor (the receipt whereof the vendor hereby acknowledges)…
- Covenants – the vendor hereby covenants with the purchaser to pay all outgoings…
- Operative Words -the vendor as beneficial owner hereby conveys unto the purchaser…
- Parcels- ALL THAT dwelling house with the flower gardens…
- Testimonial- IN WITNESS WHEREOF the parties to these…
- Attestation Clause- Signed, sealed and Delivered by the vendor in the presence of …to
Enforceability of the Property Sales Agreements
Section 2 of the Land Act defines disposition as including sale. According to section 36 of the Land Act, disposition must comply with sections 36-40 otherwise the disposition will be void. In relation to a right of occupancy sale means a transfer of an interest in or over land on conditions attached to the granted right of occupancy.
Generally, sale requires approval. In determining whether to grant an approval for a disposition or not, the commissioner must find out whether:-
The vendor has complied with all the conditions in the right of occupancy.
he price at which the transfer is to be made is at a significant undervalue of the land.
The transferee or purchaser has any criminal convictions relating to dishonesty, fraud or corruption, the disposition consists of the interest of risk groups i.e. displaced persons, children and any low-income persons.
Under the Village Land Act, a villager may freely assign or transfer his customary right of occupancy to another villager or group of villagers. The parties are required to notify the Village Council. The Village Council will record the assignment in the register of village land and send a copy of notification to the commissioner.
An assignment of a customary right of occupancy to a person or group of persons not ordinarily resident in the village must be approved by the Village Council.
The Village Council may refuse the assignment on stated a grounds e.g. it would operate to defeat the right of any woman to occupy land held under a customary right of occupancy. However, where the land exceeds a certain amount the law has put in place ceilings.
In such case consent has to be obtained. With these provisions, capitalists can now access land in the market and the discretion of public officials has been reduced.
Failure to Seek Approval for Sale of Land
Where the sale is not approved in case approval is a requirement, the transaction will be inoperative. Where the disposition is for value (market value) not less than market value approval is required.
In addition, a party will have to pay all premia, taxes and dues required to be paid in connection with the disposition to which the certificate of approval refers, otherwise the disposition shall be invalid or ineffective to transfer any interest in any land.
Notification of Disposition
Is the legal document prepared by an applicant send or delivered to the commissioner or an Authorized officer. Notification of disposition under Land (form) No 29, Section 36 of the Land Act provides that,
the applicant shall prepare the notification of disposition and send it to the Commissioner/Authorized officer before or at time; the disposition is carried out together with the payment of all fees.
Section 36 of the Land Act
Government offices involved in the notification of disposition is Land Development Office. The reason for preparation of the notification of disposition by the applicant is just to notify the commissioner or an authorized officer that the property interest is deemed to be transferred to another person.
Application of Approval of Disposition
This is a prescribed Land Form No. 30 in which the transferor applies for approval of disposition from the Commissioner/Authorized Officer. The Commissioner may request the transferor to attach some documents like the Sale agreement, Deed of transfer as well as current Land rent payment receipt to ensure that the rent for the current financial year is paid.
Section 39(1) (c) provides that,
an application for a grant of approval for a disposition shall be accompanied by any other information which are prescribed or which may be required by the Commissioner and the commissioner’s office takes care all this.
Section 39(1) (c) LA 1999
Certificate of Approval of Disposition
This is Land Form No. 33, which is received by the applicant from the Commissioner / the Authorized Officer informing him/her that he has agreed with the application as requested. Section 39(5) of Land Act (1999) provides that
the Commissioner shall grant approval subject to any condition which may be prescribed which apply to that disposition.
Section 39(5) of Land Act (1999)
Draft of Deed of Transfer of Land
The law provides that any disposition affecting land shall be in writing and in a prescribed form and comfort to the land Act and any other law.
This document specified in relation to that disposition and it includes the name (s) and addresses of two parties (Transferor and Transferee) and consideration as provided under section 62 & 64 of the Land Act of 1999 and Land (Forms) Regulation of 2001 which scheduled the form number 35 which is Deed of Transfer.
The document must be executed and attested by authorized witness as provided under section 91 & 93 of the Land Registration Act Cap 334. This document is prepared in legal paper for purpose of registration of this instrument of disposition.
You should have this document as law requires and failure to do so makes it ineffectual. The document should be prepared accordingly, and shall include the names of two parties involving Transferors and consideration.
This document cost the registration fee which is 0.25% of whichever is greater between consideration and market value, in our case we can use TZS 14,000,000x 0.25% = 35,000/= as provided under Land Registration ( Amendment) Rule, 2012 in the third schedule.
In addition, the stump duty which is 1% of whichever the greater between consideration and market value which in our case it is TZS 140,000/=. The government office involved is the Registrar of Title’s office.
Capital Gain Tax Clearance Certificate
Capital Gain Tax is the tax levied on the profit from the sale of the property like land or building. The tax must be paid to the Revenue Authority Office; the tax should also be paid by the transferor who is deemed to realize profit from the sale of the property.
For this purpose, the valuation report helps to determine the tax whereby it is 10% of the net profit. You are supposed to pay the capital gain tax complying with the Income Tax Act Section 90 (1) which provides on the capital gain. The purpose of this is to pay a Capital Gain Tax Clearance Certificate, which is among the attachment to to sent to the registrar as an original copy.
Delivery document to the Registrar of Title office for Registration
After the vendor has all legal documents, he must submit them to the registrar of Title to register and to the new owner, these documents are;
- Original Certificate of Title
- Draft of and execute Sale Agreement (Both Parties)
- Draft and execute a Deed of Transfer (Both Parties)
- Approved valuation report of the Land (For Capital Gain Tax purpose)
- Capital Gain Tax Clearance Certificate (By the TRA)
- Notification of Disposition to the Commissioner for Land (Vendor)
- Application of approval for the Disposition (Vendor)
- Consent of the Spouses (In Writing by the Vendor and his wife)
- Certificate of approval for the Disposition
Information that provided to the Registrar of Title are:
- Current year Land Rents receipts of year (By the Vendor)
- Receipts of Stamp Duty Payment (By the Vendor) and
- Proof of citizenship of purchaser by submit passport
All issues pertaining to Transfer of a Right of Occupancy must be legally observed in order to avoid any unnecessary inconvenience that may rise; The Disposition must be properly recorded kept and maintained well in the land registrar in case needed.
It will be unlawfully for transfer of a right of occupancy without following the conditions stipulated in the Land Act, Registration of Document Act and the Land Registration Act and any other regulations as made in accordance of the section 179 of the Land Act.
Any Transfer of a Right of occupancy must be lodged in a proper sequence to the government offices involved from the Local Authority to the Commissioner for Land and Registrar of Title.
Legal Fees are Necessary and vital important evidenced as paid with the receipt attachment for the approval of any Disposition because failure to do so may results to unsuccessful transfer.
Following all the legal procedures, you may successful register the Documents as Purchaser at the Registrar of Titles office.