20 Questions Every SACCO Credit Manager Must Ask About Land Collateral
These 20 questions, answered before any disbursement decision, cover the post-Sehmi standard, Regulation 43 compliance, and the documented patterns of collateral fraud in Kenya's SACCO sector.
About the Title
1. Is the title registered in the member's name? Run the official search. If the title is in someone else's name (or a deceased person's name), the member cannot validly charge it.
2. What is the LR/CR number, county, and registry? Confirm you are checking the right registry for the county of registration.
3. Is there a current root-of-title check? Post-Sehmi standard: the physical registry file has been reviewed and the chain of title traced back to the original allocation. Has a CVP been obtained? If not, order one.
4. Are there any registered encumbrances? Check for existing charges, cautions, and caveats. Existing charges must be disclosed. The proposed new charge's priority and the combined LTV must be assessed.
5. Has any prior charge been properly discharged? If the member claims a prior loan is repaid, confirm the formal discharge is registered — not just that the member says it is paid.
6. Is the chain of title complete and unbroken? Does the physical file show continuous documented ownership from the original allocation to the current member?
About the Specific Land
7. Is this agricultural land or residential/commercial? Agricultural land requires LCB consent for the charge. Has the consent application been submitted? Has it been granted?
8. What is the current approved use classification? If the member claims the land is residential but the register shows agricultural, there is a discrepancy.
9. Are there any road reserves, railway reserves, or utility easements affecting the parcel? These reduce the usable and developable area.
10. Are the boundary beacons present and in position? For physical field verification: have beacons been confirmed?
About the Valuation
11. Has an independent registered valuer's report been obtained? Regulation 43 requirement. Is the valuer ISK-registered? Are they independent of both the SACCO and the member?
12. What is the current market value? State the assessed market value from the current valuation report.
13. What is the proposed loan amount and what is the LTV ratio? Confirm the LTV is within the credit policy maximum (typically 70% for urban, 60% for agricultural).
14. When was the valuation done? If more than 12 months ago, a fresh valuation should be obtained for a new loan.
About the Member and the Property's History
15. Does the member hold the property jointly with a spouse? Matrimonial Property Act: the matrimonial home requires spousal consent for a charge.
16. Was the property inherited recently? If within the past 3 years: confirm succession was properly completed, the transmission is registered, and no succession disputes are pending.
17. Are there any known family disputes about the property? Ask the member directly. Check court process search for any succession or boundary dispute cases.
About Compliance
18. Is the LCB consent for this charge filed and granted? For agricultural land: mandatory. For non-agricultural: not required.
19. Is the charge instrument ready to be registered before disbursement? Do not disburse before the charge is presented for registration. Confirm registration before releasing funds.
20. Is all documentation in the loan file and updated in the collateral register? Valuation report. CVP (if obtained). LCB consent. Charge instrument. Insurance certificate. If any item is missing, the file is not complete.
Litmus CVP: KSh 3,000 per parcel. Covers questions 3, 4, 5, 6, 9, and 17 from this checklist in a single ordered, signed report.
This article is for general information only. It does not constitute legal advice. For SACCO credit policy and compliance, consult a Kenya advocate with SACCO regulatory experience.
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