Kenya Mortgage vs Charge: What Is the Legal Difference?

In everyday Kenya property language, "mortgage" and "charge" are used interchangeably. But they are legally distinct instruments with different characteristics. Understanding the difference matters when you are dealing with registered security interests on land.

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The Traditional Distinction

Mortgage (traditional sense): A mortgage traditionally involves a transfer of the property itself to the lender as security, with a right of redemption for the borrower. When the loan is repaid, the property returns to the borrower.

This form of mortgage — where ownership actually transfers — is not commonly used for Kenya registered land.

Charge: A charge does not involve a transfer of ownership. Instead, the chargor (borrower) grants the chargeholder (lender) specific rights over the property — specifically, the right to sell if the chargor defaults. Ownership remains with the chargor throughout the loan.

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The Kenya Land Registration Act Position

Under the Land Registration Act 2012 (and the Land Act 2012), the instrument used for registered land in Kenya is a charge, not a mortgage in the traditional sense.

Section 78 of the Land Act 2012 defines a charge as: "an interest in land securing the payment of money or money's worth or the fulfillment of any condition, and including a sub-charge."

When a Kenya bank or SACCO takes security over land for a loan, they register a charge — not a mortgage in the classical common law sense.

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Why Practitioners Use "Mortgage" in Kenya

Despite the technical position, Kenya practitioners, banks, and SACCOs commonly use the word "mortgage" to describe what is legally a charge on land. This is a historical usage that reflects the international terminology that banks have traditionally used.

When a bank advertises a "home mortgage loan" in Kenya, they are offering a loan secured by a registered charge on the property — not a mortgage in the strict legal sense of an ownership transfer.

This usage inconsistency is common and does not create practical problems, but understanding the underlying legal mechanism helps when dealing with:

Enforcement proceedings (governed by the Land Act's charge provisions, not common law mortgage provisions). Title searches (the encumbrance appears as a "charge" in the registry). Discharge (the instrument to remove the security is a "discharge of charge").

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Practical Implications

For borrowers: When you agree to secure a loan on your land, the instrument your advocate prepares is a "charge." The lender's rights are set out in the charge instrument and the Land Act.

For SACCOs: The instrument you register is a "charge." The enforcement procedures under Section 90 of the Land Act govern your rights.

For title searches: The official search result will show a "charge" if land is mortgaged. Not a "mortgage."

For discharge: When the loan is repaid, the document that removes the security is a "discharge of charge" (Form RL 8), not a "mortgage discharge."

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The Equitable Mortgage

There is a distinct instrument called an equitable mortgage, used when:

An unregistered interest over land is given as security. A deposit of title deeds creates an implied security (an older form).

Equitable mortgages are not recommended for modern secured lending as they do not create the registered security of a formal charge.

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This article is for general information only. It does not constitute legal advice. Consult a qualified Kenya advocate for specific advice on mortgage and charge instruments.