CHATTELS TRANSFER

GENERAL OVERVIEW
BY J. NYAGA
 THE CONCEPT OF PROPERTY

l Very comprehensive
l A conglomeration of social, moral, economic,
political and legal factors
l Lawyers are mainly interested to understand
property from a legal perspective

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 LEGAL PERSPECTIVE OF PROPERTY

l Perspective differentiates between things and

rights to the things
l Legally property refers more to the bundle of
rights that one has over things.
l These rights include:
- to use
- to manage
- to transfer e.t.c.

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 CLASSIFICATION OF THINGS

l The two main ones are:

- Real
- personal
l Classification originally used by medieval English lawyers to
distinguish two types of remedies:
a) Real Remedies: whereby the plaintiff recovered the thing
claimed; and
b) Personal remedies: whereby only the value of the thing
claimed (not the thing) was recovered.
l Classification of remedies thereafter led lawyers to distinguish
between things real and things personal

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 CLASSIFICATION OF THINGS cont

l Traditionally, only land was recoverable as a real

remedy for reasons:
a) most chattels (moveable properties) were of a
perishable nature (e.g. grains, cattle etc)
b) it was easy to establish the value of these chattels
and award monetary compensation
l In contemporary terms, real property is used in
reference to land whereas personal property refers
to other forms of property (chattels, IP, choses in
action etc.)

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 THE LAW ON CHATTELS TRANSFER

l Provided for under the Chattels Transfer Act

(cap 28 of the laws of Kenya)
l The Act contains provisions relating to:
-chattel securities; and
- transfer of chattels.
l An old Act whose commencement date was
13th June 1930

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 DEFINITION OF CHATTELS

l Under s. 2 of the Act, chattels" means:

any movable property that can be
completely transferred by delivery, and
includes machinery, stock and the natural
increase of stock as hereinafter
mentioned, crops and wool, but does not
include

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 INSTRUMENTS TO EFFECT
TRANSACTIONS

l All transactions under the Act are to be effected through an

instrument
l Under s. 2 instrument means:
any instrument given to secure the payment of money or
the performance of some obligation and includes any bill
of sale, mortgage, lien or any other document that
transfers or purports to transfer the property in or right to
the possession of chattels, whether permanently or
temporarily, whether absolutely or conditionally, and
whether by way of sale, security, pledge, gift, settlement or
lease, and also
l Act therefore concerned with creation of security over goods.

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 EXAMPLES OF SECURITY CREATED
OVER GOODS

1. Mortgage: effected by the creation or transfer of a

legal or equitable interest in property

2. Bill of Sale: Originally, this was a legal document

assigning personal property. Under the Bill of Sale
Act (UK) such instruments are of two kinds: a)
absolute bills of sale where chattels are sold
absolutely; and b) bills of sale by way of security for
securing loans- not used in Kenya

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 EXAMPLES OF SECURITY CREATED
OVER GOODS cont

3. Pledge: goods or documents of title for the

goods are delivered by the pledgor to the
pledgee to be held as security upon
understanding that the goods will be restored
to the pledgor upon payment of
debt/discharge of obligation.
4. Lien: the creditor retains possession of the
goods previously delivered to him for some
other purpose as security

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 EXAMPLES OF SECURITY CREATED
OVER GOODS cont

5. Hypothecation: goods are availed as

security for a debt without transferring
either the property or the possession to
the lender. Debtor retains ownership but
creditor gets right in rem which entitles him to
deal with the goods in the manner stated in
the letter of hypothecation in the debt is not
repaid.

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 PREPARATION OF INSTRUMENT

l Form: instrument to be in Form 4 of 1st Schedule or with

variations, modification or additions to the same effect s. 22
l Instrument to contain or have endorsed thereon or annexed
thereto a schedule of the chattels comprised therein s. 17
l To be supported by an affidavit in Form 1 of the First Schedule
or one to the same effect
l To incorporate implied terms under 1st and 2nd Schedules.
l Execution to be attested by at least one witness, who shall add
to his signature his residence and occupation- s. 15

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 REGISTRATION OF INSTRUMENTS

l All Instruments must be registered with the office of

the Registrar General (State Law Office)- s. 5
l What is registered is:
a) The instrument and all schedules endorsed
thereon/annexed thereto/referred to therein, or a true
copy of the instrument and the schedules; and
b) An affidavit in Form 1 of the First Schedule or to the
same effect.

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 REGISTRATION OF INSTRUMENTS
cont

l Registration must be within 21 days of execution

(s.6(1))
l The time for registration may however be extended
by the High court on the grounds of inadvertence or
accidental omission- s.9
l Registration must be renewed every five years - s.
10(1)
l Renewal is by way of an affidavit- Form 3 of 1st
Schedule

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 REGISTRATION OF INSTRUMENTS
cont

l If not renewed, the registration ceases to be

of any effect
l The effect of registration is to serve as a
notice of the instrument and of the contents
thereof s.4
l The registrar is required to maintain a
register of instruments and affidavits as
prescribed by Form 2 of 1st Schedule.
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 REGISTRATION OF INSTRUMENTS
cont

l The particulars to be entered in the register are:

- No. (serial)
- By whom given
- To whom given
- Nature and date of instrument
- Date and time of registration
- Date of renewal
- Satisfaction entered
l The instrument takes effect after registration- s.16

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 CONSEQUENCES OF NON
REGISTRATION

l If instrument is not registered, it is deemed to be

fraudulent and void as against:
(a) the official receiver or trustee in bankruptcy of the
estate of the chattels owner;
(b) the assignee or trustee acting under any
assignment for the benefit of the creditors of that
person;
(c) a person seizing the chattels in execution of a court
order authorizing the seizure of the chattels
(d) bona fide purchaser or mortgagee for valuable
consideration

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 SATISFACTION & DISCHARGE- s. 34

l Instruments are discharged by the filing of a memorandum of

satisfaction in Form 5 in the First Schedule or to the same
effect,
l Memo to be signed by grantee or her attorney, discharging the
chattels comprised in the instrument
l Upon production of instrument and payment of filing fees the
Registrar is to file the memorandum and make an entry thereof
in the register book on the page where the instrument is
registered.
l The execution of the memorandum must be attested by at least
one witness
l Memo to be verified by an affidavit of a witness.

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 DRAFTING

l Chattels mortgage
l Affidavit in support
l Affidavit for Renewal
l Memorandum of Satisfaction
l Transfer of Instrument
l Letter of hypothecation

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 THE END

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