Settling Land Disputes, Part 1

The Constitution of Kenya created the Environment and Land Court bearing the status of the High court and that listens to all disputes relating to land and the environment.[1] There are several land disputes that arise, some more complex than others, and we shall try address common land disputes while looking at previously decided cases.

Innocent Purchaser for Value without Notice.

Suppose a land buyer, let’s call him John, enters into an agreement for sale with, say, Martin, the seller and John is presented with a certificate of title from Martin and conducts a search that reveals Martin to be the owner, however, unknown to John, Martin obtained the title illegally from the original owner of the land, Alice. Alice finds out about the intended transfer of land and moves to court to stop John from taking ownership of the land.

What remedies does John have? What remedies does Alice have? What consequence does John face for his actions? A lot of people find themselves as third parties to a land transaction like John in the above scenario.

The Law provides for such a situation; John is referred to as an innocent purchaser for value without notice. The Kenyan High court has defined an innocent purchaser for value as a person who intends to honestly purchase a property offered for sale and does not intend to acquire it wrongly. The court has previously determined that for someone to prove that they were an innocent purchaser they must prove that; they hold a certificate of title that they believe to be genuine, they purchased the property in good faith, they were not aware of the fraud, they genuinely believed the seller to be the valid owner of the property, and they did not participate in the fraud.

The issues that arise here is that there are two competing claims before the court. Alice, the original owner, and John the person who lawfully, and in good faith bought the land for the purchase price.

The Kenyan Constitution gives everyone the right to own land in Kenya. However, it also provides that this right does not extend to any property found to have been acquired illegally. The Land Registration Act underscores the importance of the registered title. It provides that when a person is issued with a title it is proof that they are the owner of the land however such a title can be challenged on the grounds of fraud or where the title has been acquired through a corrupt scheme.

This provision of law was specifically added to defend people like Alice. In our case, Alice was the original owner of the land until Martin transferred it to himself fraudulently. Using a fraudulent title, he transferred the land to John who bought it in good faith. It is not enough to just own a title deed; it can be challenged by a person who can prove fraud. The courts will always side with the

original title owner who has a right by law to own the land and whose right was defeated by an act of fraud.

This is because, sometimes fraudsters collude with land registry officials to transfer land fraudulently, thereby defeating the rights of genuine landowners who are usually unaware of the fraud until ownership has been transferred.

In the case of Shimoni Resort -vs- Registrar of Titles & 5 others [2016] the parties went to court to challenge the decision of the Registrar of titles that cancelled its title over a land parcel. Apparently, the land was owned by the ruler of the State of Kuwait. It was alleged that the land was fraudulently transferred to the seller and finally to Shimoni Resort. The Registrar of titles cancelled the title because there was evidence of fraud. The court held that it upholds the accuracy of the land register, which is guaranteed by the Government, however, the register may be amended if there is evidence of fraud which was why the Registrar had the right to cancel the title deed. The judge stated that the right to own property under the Constitution does not extend to any property that has been found to have been unlawfully acquired, therefore, any title that is found to have been procured unlawfully is not protected notwithstanding that the person had no idea of the fraud. This court decision seems to indicate that Alice has a claim as the original landowner over John who was defrauded.

However, the law does not just leave innocent purchasers without remedy. The Court in the case of David Peterson Kiengo vs. Kariuki Thuo (2012) determined that the law puts the rights of the original owner over the rights of the innocent purchaser. However, where the fraud was proven, the innocent party can sue for damages. Going back to our earlier scenario, should the case proceed in court, the court will determine in favour of Alice as the original landowner. However, since a land agreement is a contract, then John has the right to sue Martin, the person who provided the false title for breach of contract. In so doing, John can recover the purchase price he paid to Martin

and additional expenses that he may have incurred including filing the case in court. Therefore, the law protects everyone affected by such a fraudulent transaction.

In conclusion, we will again emphasize on the need to exercise due diligence before entering a land transaction. If you can prove that you did due diligence it is sufficient evidence to show that you acted in good faith and did not intend to obtain the property illegally and therefore have a right to sue the fraudster as well as the lands registry for damages for breach of contract. We often advise our clients to obtain a green card search, which is often more difficult to falsify.

Research by Maurine Kerich.