Are you a budding entrepreneur looking to take over a shop in Kenya? Picture this: You step into a ready-made business, armed with a secret weapon called goodwill. This intangible asset holds the power to propel your venture to new heights, captivating customers and outshining competitors. Brace yourself for the game-changing benefits that goodwill brings when renting a shop in Kenya.

1. Seize the Loyal Legion: The allure of goodwill lies in its ability to transfer the existing customer base into your eager hands. Imagine the instant revenue stream flowing in as you inherit a tribe of loyal patrons from the previous business. Prepare to reap the rewards of their loyalty while effortlessly attracting new customers to your doorstep.

2. Ride the Wave of Recognition: Building a brand from scratch is an arduous journey. However, with goodwill on your side, you'll catapult ahead in the race. Bask in the glow of a pre-established brand image and enjoy the fruits of its recognition. Say goodbye to countless hours spent building awareness and embrace the head start that goodwill offers.

3. Leave Competitors in the Dust: Picture yourself as the trusted frontrunner in the market. Goodwill is your secret weapon, positioning you miles ahead of new entrants. Stand tall as an established entity, as customers flock to your shop, drawn by the reputation you've inherited. Watch your rivals fade into the background as you secure a competitive edge.

4. Unleash the Marketing Magic: In a world where marketing costs can drain your resources, goodwill comes to the rescue. Prepare to save a fortune on advertising and promotional efforts, thanks to the positive reputation of the previous business. Capitalize on the free publicity that goodwill effortlessly generates and witness your customer base grow without emptying your wallet.

5. Financing Made Effortless: Conquering financial hurdles becomes a breeze with goodwill by your side. Lenders and investors view businesses with established goodwill as less risky ventures. This perception elevates your chances of securing financing for expansion and operational needs. Say hello to a smoother journey towards growth and prosperity.

6. The Wisdom Transfer: As you step into the shoes of the previous business owner, brace yourself for a treasure trove of knowledge. Benefit from their experience and gain invaluable insights into the local market, trusted suppliers, and operational intricacies. This seamless transition, aided by goodwill, ensures you hit the ground running and avoid unnecessary stumbles.

Be prepared for the rental price dance, as goodwill may hold sway over negotiations. This prized asset is often discussed separately from the physical property, with its value etched into the rental agreement or lease terms.

In the bustling world of Kenyan entrepreneurship, goodwill emerges as a vital force, allowing you to harness the existing business's reputation, customer base, and intangible assets. Unlock the door to success, save time, and resources, and witness your dreams flourish beyond your wildest imagination. The key lies in embracing the power of goodwill when renting a shop in Kenya.

[*This article generally explains the law in force in Kenya and does not constitute an opinion or a legal opinion. To find out the rules specific to your situation, write to us on info@wjmaxwelll.co.ke or call/WhatsApp on 0733 610 961]

Introduction

The Small Claims Court in Kenya was established with the primary goal of offering a streamlined and efficient platform for resolving minor civil disputes involving small monetary claims. While the court is accessible to both individuals and businesses alike, it is evident that the system is better equipped to assist businesses and companies than individuals. This article explores the reasons behind this assertion, shedding light on the challenges individuals face in executing judgments compared to their business counterparts.

1. Expedited Resolution for Businesses

The Small Claims Court in Kenya aims to provide a swift resolution to disputes, which is especially advantageous for businesses. In the corporate world, time is of the essence, and protracted legal battles can severely impede operations and financial stability. With this court's accelerated procedures, businesses can resolve disputes efficiently and focus on their core activities.

On the other hand, individuals may not always face the same urgency to resolve minor disputes, leading to potential delays in seeking justice through the Small Claims Court. This discrepancy in urgency highlights the court's inherent bias towards businesses.

2. Financial Resources

Businesses typically have better financial resources and access to legal representation, enabling them to navigate the legal process more effectively. They can afford to hire competent lawyers to present their case and collect evidence promptly. Law firms such as W.J. Maxwell & Associates Advocates provide general counsel services for small and medium-sized businesses such as defending the business's interests, recovering funds and properties for them, buying properties, drafting contracts with customers, suppliers, and creditors, and other legal tussles.

Additionally, businesses often maintain better records and documentation, which can bolster their claims in court.

In contrast, individuals may not have the financial means to engage legal counsel, potentially putting them at a disadvantage during the legal proceedings. Moreover, they might lack the resources to gather sufficient evidence to support their claims effectively.

3. Execution of Judgments

One of the most critical aspects of any court system is the enforcement of judgments. This is where the Small Claims Court's favoritism towards businesses becomes evident. Once a judgment is made against a business, the chances of successfully executing the judgment are significantly higher compared to the execution against an individual.

Businesses generally have assets, financial stability, a permanent physical address and a reputation to protect. As a result, they are more likely to comply with court orders promptly. In contrast, individuals may lack tangible assets or sufficient income to satisfy the judgment. As such, enforcing a judgment against an individual can be a cumbersome and time-consuming process.

4. Business Growth and Development

The ease of utilizing the Small Claims Court can promote business growth and development. By providing a reliable mechanism to resolve disputes, businesses can operate with greater confidence, knowing that they have a legal recourse if disagreements arise. This sense of security can incentivize entrepreneurs and investors to start and expand businesses in Kenya, fostering economic growth.

Conclusion

Small and medium enterprises (SMEs) often face challenges when it comes to securing timely payments from customers, vendors, creditors and suppliers. This predicament can severely affect their financial stability, hindering growth and sustainability. Nearly half of the businesses in Kenya do not see their first birthday. To address these issues and provide a swift resolution, the Government established the Small Claims Court to serve as a formidable instrument for SMEs, ensuring they receive payments promptly, customers and suppliers deliver on time, and invoices are honoured without unnecessary delays. The court's streamlined processes, preference for expedited resolutions, and the relative ease of executing judgments make it a more effective tool for businesses.

[*This article generally explains the law in force in Kenya and does not constitute an opinion or a legal opinion. To find out the rules specific to your situation, write to us at info@wjmaxwell.co.ke or Call/WhatsApp on 0733 610 961]

Imagine you're a landlord, and you have tenants living in your property. They promised to pay rent every month, but suddenly, they stop paying. This can create a big problem for you as a landlord because you depend on that rent money to maintain the property and make sure everything is running smoothly.

What do you do?

You invoke CAP. 293 DISTRESS FOR RENT Act which is the law that is designed to help landlords and property owners when they face a problem: tenants not paying their rent.  

Here's how it works:

1. Notice to the Tenant

Before a landlord can take any of the tenant's belongings, like furniture or valuable items, they must first give the tenant a notice. This notice tells the tenant that their belongings may be taken away if they don't pay the rent they owe.

2. Time to Settle the Debt

The tenant, after receiving the notice, has a certain amount of time to either pay the overdue rent or make an arrangement with the landlord. If they do this within the given timeframe, their belongings won't be taken.

3. Taking the Belongings

However, if the tenant doesn't pay or make an arrangement, the landlord can proceed to take some of the tenant's belongings. The idea is to take enough items that can be sold to recover the unpaid rent.

4. Rules and Limits

The Act has specific rules to ensure that landlords don't take everything the tenant owns. It's important to remember that the goal is to recover unpaid rent, not to harm the tenant. The law limits what the landlord can take to ensure fairness. For instance, The law also prohibits landlords from seizing tools of trade, perishable goods, goods belonging to third parties, clothes and
beddings and pets. 

The seized properties will be taken to a public place and sold at an auction by a licensed auctioneer. This money from the sale will be used to pay the unpaid rent and the costs of taking and selling the things. Any extra money will be given back to the owner.

Why is this Act Important?

This Act is important for a few reasons:

1. Encouraging Timely Rent Payments

When tenants know that there's a legal way for landlords to recover unpaid rent, it encourages them to pay on time. Nobody wants to risk losing their belongings, so they are more likely to fulfill their rent obligations.

2. Helps Landlords

For landlords, this Act provides a legal and fair way to collect the rent they are owed. It's a tool to help them when tenants are not keeping up with their payment promises.

3. Fairness and Limitations

The Act has rules in place to make sure landlords follow the law properly. They can only take what's necessary to cover the unpaid rent. This ensures that tenants aren't unfairly treated.

Conclusion

The CAP. 293 DISTRESS FOR RENT Act is like a safety net for landlords. It helps landlords get the money they are owed while also motivating tenants to pay their rent on time. It's a way to address problems that can arise between landlords and tenants when rent goes unpaid. By setting clear rules and procedures, it aims to make the process as fair as possible.

It's essential for both landlords and tenants to be aware of this Act and understand their rights and responsibilities. For landlords, it's a tool to protect their income and property. For tenants, it's a reminder to meet their rent obligations on time to avoid any distress over their belongings.

Overall, the CAP. 293 DISTRESS FOR RENT Act is about finding a balance between the interests of landlords and tenants, ensuring that financial agreements are honoured, and disputes are resolved fairly and legally.

Disclaimer!

The provision of general advice in this document does not create an advocate-client relationship with any reader. This article's information, content, and material are provided solely for general informational purposes. Readers of this article should contact us on 0733610961 or email at info@wjmaxwell.co.ke if they need legal advice on any specific legal issue.

Did You Know?

You can now register a security right over your movable property online using your e-Citizen account! The Movable Property Security Rights Act, 2017 (MPSRA), which became law in May 2017, makes this possible. The Act was introduced to make it easier for individuals and businesses to access credit by allowing them to use movable property as collateral.

The MPSRA replaced the old Chattels Transfer Act and also made changes to several other laws, including:

• The Agricultural Finance Corporation Act
• The Stamp Duty Act
• The Hire Purchase Act
• The Pawnbrokers Act
• The Business Registration Services Act
• The Companies Act, 2015
• The Insolvency Act, 2015

The law is implemented through the Movable Property Security Rights (General) Regulations, 2017.

Purpose of the Act

The Act was created to:

1. Allow movable assets to be used as collateral for loans.
2. Provide clear and consistent rules on how security rights over movable property should be handled.
3. Make it easier for businesses and individuals to access credit using movable assets.
4. Establish a registry where security rights over movable assets can be recorded.
5. Create the Registrar of Security Rights, who manages the system.

How a Security Right is Created

A Security Right is a legal claim over a movable asset that is used to secure the payment of a loan or the performance of an obligation. This means that if the borrower (grantor) fails to pay, the lender (secured creditor) can take possession of the asset or sell it to recover the loan amount.

A Security Right is created through a written agreement between:

• The Grantor (the borrower who is offering their asset as collateral).
• The Secured Creditor (the lender providing the loan).

To be valid, the grantor must have ownership rights over the asset or the legal power to use it as collateral.

A security agreement can also cover future assets (property that the borrower does not own yet). However, the security right only takes effect when the borrower actually acquires the asset.

For the agreement to be legally valid, it must:

• Be written and signed by the grantor.
• Clearly identify the secured creditor and the grantor.
• Describe the secured obligation (except in cases where the agreement involves the outright transfer of a receivable).
• Provide enough details about the collateral so that it can be identified.

The Securities Registry

The Movable Property Security Rights Registry is an online system that allows lenders (secured creditors) to:

• Check if a movable asset already has a security right registered against it.
• Register their security rights over movable assets to protect their interests.

How to Register a Security Right

Once the borrower (grantor) and lender (secured creditor) have signed their security agreement, they must register a notice in the registry.

Why Register?

• Registration makes the security agreement legally enforceable.
• It protects the lender’s rights over the collateral.
• It notifies other potential lenders that the asset is already being used as collateral.

Good news! Registration is currently free.

Steps to Register Online via e-Citizen

1. Go to www.ecitizen.go.ke and log in to your account.
2. Select "Business Registry Services."
3. Click on "Collateral Registry (MPRS)."
4. Open the application form and enter the grantor’s details.
5. Enter the secured creditor’s details.
6. Provide details about the collateral (the movable asset being used as security).
7. Enter details about the secured loan.
8. Review the application and submit it.

How to Conduct a Search in the Registry

Once a security notice is registered, you can search the registry to check if a particular movable asset has an existing security right.

How to Search

1. Use either the grantor’s identification details or the serial number of the asset.
2. Pay a search fee of Kshs. 500.
3. The system will generate a search certificate, which:
   • Shows the date and time of the search.
   • Displays all matching records or confirms that there are no security rights registered.
4. The search certificate serves as official proof of the search results.

Amendment and Cancellation of a Security Notice

After a security right has been registered, the lender (secured creditor) can either:

• Amend the notice if there is an error or if the security agreement has been changed.
• Cancel the notice if the loan has been repaid or if the security agreement is no longer valid.

Reasons for Cancellation

A registered security notice can be canceled if:

1. The grantor never authorized the initial registration.
2. The grantor withdrew their authorization and no security agreement was signed.
3. The loan has been fully repaid, and the lender no longer has any rights over the collateral.

Who Takes Care of the Movable Asset?

• The movable asset may remain with the borrower (grantor) or be held by the lender (secured creditor).
• The party in possession of the asset must take care of it and ensure it remains in good condition.
• The lender has the right to inspect the asset to confirm its condition.

Read more blog posts here! https://wjmaxwell.co.ke/blog/0/0

Disclaimer: This is not legal advice and should not be relied upon as such.

Contact us for further details.

Email info@wjmaxwell.co.ke || or call/text/WhatsApp 0733 61 09 61

W.J. Maxwell & Associates Advocates

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