Diaspora Investors Can Minimise Risk of Losing Money to Agents
It is said that Kenyans in the diaspora bring in billions of shillings every year in terms of investments. Most of them use their contacts, including family members, to transact. Of late media reports have highlighted how diaspora Kenyans have been fleeced by their local contacts.
A story that I read last week in a local daily led me to ponder how Kenyans in the diaspora can seal loopholes and minimise the risk of losing their hard earned money.
A woman who works in the US started building her home with the hope of returning one day. She faithfully sent money towards the construction for a number of years.
The frequent updates she received from family members made her believe that the construction was going on smoothly.
She was even shown photos of an almost complete house. Imagine her rude shock when she found out that no construction was going on and that her money had been squandered. According to the feature, this is a common occurrence.
What shocked me about the story was that the investors felt helpless... they resigned themselves to fate.
I therefore decided to write this article to highlight a few ways in which such risks can be minimised.
First, if you identify an asset ensure that the contract and all other title documents are executed in your name.
There have been situations where agents execute contract documents in their own names, leaving investors helpless and with almost no recourse.
This is because our land laws state that whenever a title is issued, the person registered as proprietor is deemed to be the true owner of that property.
The other arrangements that you had with your local agents do not matter, the law is on their side.
Therefore ensure that the documentation is in your name before sending money towards purchase of the property.
A second way to minimise risk is to sign an agreement with local agents before sending them money. The agreement should set out the relationship between the two parties in so far as the investment is concerned.
The agreement should contain a brief description of the intended investment and the manner in which the funds will be sent.
It should also contain obligations and responsibilities of the local agent such that, if he were in breach of his obligations to you then you at least have a document proving the relationship.
While most of the monies sent are premised on good faith, it is also important to keep some written evidence. In the event of default by the local agent, then it becomes easier to recover the investment.
One of the best ways to minimise this risk is to execute a power of attorney in favour of the local agent. There are two types of power of attorneys, a general one and a special one.
The general one enables the agent to do all things required on your behalf. A general power of attorney is not limited to a particular investment but gives the local agent almost unlimited authority.
A special power of attorney, on the other hand, gives the agent only limited powers and is specific to one transaction or even one aspect of the transaction. A special power of attorney is more favourable than a general one as it limits the agent’s authority and is specific.
In the event of any breach by the local agent and if he goes outside his power by doing what he is not authorised to do under the power of attorney, then recovery is easy as the power of attorney is produced as evidence to show that the local agent exceeded his power.
It is also advisable to use a lawyer when making any investment.
Instead of using the local agent, hire a lawyer’s services.
The beauty of using a lawyer is that in the event he does not discharge his obligation well, a complaint can be made with the Law Society of Kenya and it becomes easier to recover money.
Source: Business Daily