Supreme Court Spooks land grabbers in Kenya

When the bulldozers came calling Southend
Mall in Nairobi
On April 21, 2023, the Supreme Court of Kenya made a landmark ruling on land grabbing in the country. It ruled, “The doctrine of bona fide purchase for value does not apply where the root of the title to land is challenged.” That short sentence shattered an investor’s dream to own a prime beach property as its root was challenged. An 18 million shilling investment for a 1.2-acre beach plot evaporated.

The ruling by the SCOK is now the law. Moreover, it has spooked land fraudsters. Previously, all a buyer needed was a title Deed to the land to claim legal ownership. Now the root of the title must be clean for the title deed to be valid. This ruling means that the responsibility to carry out due diligence in the purchase of land lies with the buyer.

Shoddy research could bring the buyer to tears. Not only the investor but also financial institutions that could accept titles to such land as security for loans. They will be holding a useless piece of paper. Buyers will have to dig deeper into the history of the ownership of the land before they purchase it

In respect to the land in question, the process of transferring it from a public utility land to private ownership was unprocedural and therefore illegal, the Court found. Anything unprocedural is fraudulent, corrupt, and illegal. It cannot be transferred to anyone else because the seller has nothing to transfer. Yet, that is what happened in this case where the original grabber, the late President Moi, sold it to a third party who in turn sold it to Dina Management, who lost the case against the Mombasa country that reclaimed the plot as a public asset.

Three things stand out from this ruling;

i) Buyers are required to conduct a full investigation into the title to ensure that there is a good root to ensure that the legal and equitable interest in the property is valid.

ii) Where the procedure of initial acquisition of title is deemed unprocedural or unlawful, subsequent transfers of the title are invalid since no legal equitable interest is deemed to have passed.

iii) The doctrine of bona fide purchase for value does not apply where the root of the title to land is challenged.

The ruling stirs a hornets’ nest for chunks of public and even private land have been excised fraudulently and sold to third parties. Public land includes; Roads reserves, Schools, Public offices, Riparian reserves, Forest reserves, and similar public goods. Some parcels were excised by powerful individuals and sold off to developers, who in turn,
have developed them. It remains to be seen how things pan out here.

As a precedent, the ruling opens investors in Land Parcels, whose Tittle Deeds were dubiously acquired to possible losses. Some may be forced to surrender the land to initial owners or where the land has been developed, to purchase it from them.

In the past, some buildings on public reserves have been demolished without a clear legal pronouncement. This ruling, apart from legalizing such demolitions, now opens more parcels in prime areas, to demolition.

The ruling gives teeth to several agencies in the land and building sector to enforce the law. Previously, orders to demolish by the National Construction Authority were frustrated because developers brandished Title Deeds. Now many will have to think twice when ordered to cease construction.

County Governments too have been empowered to claim public lands from grabbers. In some counties, developers, willfully and knowingly extended their plots to include road reserves hindering the development of such utilities as stormwater drainage apart from making motoring in some estates, a nightmare. There are signs that Counties are flexing their muscles in this respect. We have witnessed instances where developers have to pull down structures on public utility reserves. The SCOK ruling could turn the trickles into floods.

Buyers and developers are not the only potential losers in this ruling. Even Financial institutions that accept such Tittle Deeds as security for loans potentially hold the short end of the stick. Of course, the financial institutions could ask for alternative security and vary the loan contract. However, they have also been enjoined in this ruling in terms of doing due diligence to ensure that the papers they accept as security for their loans are worth the ink they are written on. They must ask for the history of the title Deed to ensure that its root is clean.


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