Due Diligence in Tanzania: A Guide to Buying and Selling Land

Importance of Due Diligence

When it comes to buying or selling land in Tanzania, exercising due diligence is essential to ensure a smooth transaction. The Tanzanian Land Act, Cap 113 allows for the disposition of land through sale and purchase agreements. However, it’s crucial to ensure that all necessary checks are conducted to avoid potential pitfalls.

Investigation and Pre-Contractual Requirements

Before entering into a purchasing agreement, it’s essential to conduct due diligence by:

• Visiting the Property Site
  • Identify various aspects of the plot, including its location, boundaries, physical condition, and any potential conflicts with neighbors.
• Conducting an Official Search (Title Investigation)
  • Uncover any restrictive covenants or legal restrictions, such as encumbrances, mortgages, leases, and easements.
  • Visit the Land Registry or make an application through the relevant authorities.
• Evaluating the Property
  • Assess the property’s value, condition, and potential for development.
  • Hire experts to conduct a thorough evaluation to determine the property’s worth.
• Entering into a Pre-Contractual Agreement
  • Outline the terms of the sale, including the price, payment schedule, and any contingencies.

Steps After Signing the Sale Agreement

After signing the sale agreement:

• Pay Capital Gain Tax
  • The amount of tax payable will be assessed by the Tanzania Revenue Authority.
  • Upon payment, a tax clearance certificate will be issued.
• Visit Registrar of Title’s Office for Changes of Ownership
  • Submit the relevant documents to transfer ownership from the seller to the buyer.
  • Register the new title under the buyer’s name.

Conclusion

Due diligence is a critical component of buying and selling land in Tanzania. By following these steps, you can ensure a smooth transaction and avoid potential pitfalls. It’s essential to consult with experts, including attorneys and surveyors, to guide you through the process.

Note: This article provides general information only and should not be considered as professional advice. Readers are advised to seek specific professional guidance before making any decisions based on this publication.