Car Purchase Due Diligence in Kenya

Car purchase is a significant investment, and conducting thorough due diligence is essential to ensure a smooth and satisfactory buying experience. In Kenya, where the used car market is vibrant, it is crucial to take specific precautions to safeguard yourself from potential risks and make an informed decision. This article provides a comprehensive guide outlining the key steps and considerations to follow when purchasing a car in Kenya.

Research and Vehicle Selection

Before delving into the buying process, conduct thorough research to determine the type of vehicle that suits your needs and budget. Consider factors such as make, model, mileage, fuel efficiency, maintenance costs, and resale value. Comparing prices from various sources, including dealerships, online platforms, and private sellers, will provide insights into prevailing market rates.

Engage a Qualified Advocate

To initiate the process, it is crucial to enlist the services of a qualified advocate who possesses expertise in car purchase transactions. An experienced advocate will skillfully navigate the legal intricacies involved and diligently protect your interests at every step of the transaction.

Ownership Verification

Once you have identified a potential vehicle, verify the ownership details of the vehicle by conducting a search through National Transport and Safety Authority (NTSA) portal to ensure that it is registered in the name of the seller and free from disputes or encumbrances. Request the seller to provide the original logbook and cross-check the details against the original National Identity Card or Passport of the registered owner. Additionally, confirm that the vehicle’s identification numbers (chassis and engine numbers) match the documents and have not been tampered with.

Search for Encumbrances and Restrictions

Perform a thorough search for any encumbrances or restrictions on the vehicle through the National Transport and Safety Authority (NTSA) portal. These could include liens, caveats, or any other third-party interests that may affect the vehicle’s transferability . The search should also cover search in the Collateral Registry to check whether the seller has granted security rights in favour of a lender to secure repayment of a loan or debt and possibly other performance obligations to the lender. Additionally, verify if there are any existing disputes or litigation involving the vehicle.

Vehicle Inspection

Once you have identified and verified the vehicle’s ownership to your satisfaction, it is crucial to inspect it thoroughly to assess its condition. If you lack expertise in automotive mechanics, consider hiring a qualified mechanic or engineer to conduct a comprehensive inspection. The inspection should cover the vehicle’s mechanical components, body condition, frame integrity, electrical systems, mileage and any signs of previous accidents or repairs.

Test Drive

Schedule a test drive to assess the vehicle’s performance, handling, and overall driving experience. During the test drive, pay attention to engine sounds, the braking system, suspension, steering responsiveness, and any unusual vibrations. Ensure that all the vehicle’s features and accessories are in proper working condition.

Purchase Agreement and Documentation

If you decide to proceed with the purchase, it is essential draft a detailed purchase agreement that clearly outlines the terms and conditions, agreed-upon price, payment terms, warranties (if any), and provisions for refund or return policy in case of undisclosed issues. Additionally, ensure that all relevant documents, including the logbook transfer forms, are properly filled and executed.

Financial Transaction and Transfer of Ownership

Exercise caution during the financial transaction to avoid fraud or scams. Whenever possible, use secure payment methods such as bank transfers. Before completing the payment, initiate the transfer of ownership process through the NTSA’s online portal (TIMS). Ensure that the full purchase price is paid only upon the successful transfer of ownership and receipt of all necessary documents, including the updated logbook in your name.

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If you require further guidance or have any inquiries regarding car purchases in Kenya, please feel free to contact us. You can reach out to us via email at the following addresses: info@dmklaws.co.ke and dmklaws@gmail.com. Our dedicated team is here to assist you throughout your car acquisition journey!