23/10/2023
PROPERTY RIGHTS - AN UPDATE
The Supreme Court of Kenya recently delivered a landmark judgment in Dina Management Limited v County Government of Mombasa & 5 others (Petition No. 8 (E010) of 2021), which has significant implications for property investors and stakeholders in Kenya.
The case involved the allocation of a parcel of land in Nyali Beach, Mombasa to H.E Daniel T. Arap Moi. Subsequent transfers of the property occurred, leading to its acquisition by Dina Management Limited. The County Government of Mombasa forcefully entered the property, claiming it was public land. Litigation ensued at the Environment and Land Court, followed by an appeal to the Court of Appeal and a petition to the Supreme Court resulting in the Supreme Court's decision in favor of the County Government.
The Supreme Court's ruling represents a considerable departure from the previous position based on the Torrens System, where a certificate of title issued by the Registrar was considered conclusive evidence of proprietorship. Irregularities or illegality in the initial allocation did not affect subsequent transfers if subsequent owners were not party to the illegality. The key points from the ruling are as follows:
1. No sanctity of title:
The Supreme Court confirmed that registered title to property can be invalidated if the process followed prior to the issuance of the title did not comply with the law. This means that innocent buyers cannot rely on the principle of indefeasibility of title if the initial allocation of the land was illegal or unprocedural.
2. Increased caution and diligence:
Property investors, lenders, and other stakeholders are now required to exercise even greater caution and diligence when dealing with properties in Kenya. It is crucial to thoroughly investigate the history of the title, from the first allocation to the current title, to ensure its legality and validity.
3. Burden of proof shifts to the buyer:
The burden of proving the legality and validity of a title rests with the buyer. Merely possessing a registered lease or title is not enough. The entire allocation process must have been lawful and in compliance with the prescribed procedures for the title to be indefeasible.
The implications and conclusion from this ruling are worrisome. The burden now falls on property buyers and other stakeholders to conduct thorough due diligence and establish the legality and validity of titles. This burden is particularly challenging given the parlous state of land records in Kenya and the ongoing digitisation process which has made it challenging to access historical property records. It is essential for the Government to take measures to safeguard accurate land records, both in paper and digital formats, to facilitate proper due diligence and protect investors' interests.
This ruling emphasises the need for caution, diligence, and robust investigations when engaging in property transactions in Kenya. It is not clear what will happen to transactions that have already been concluded. Presumably we shall see more cases of County Governments invading homes and businesses in the name of recovering public land. Very worrying indeed.
