KENYAN SUPREME COURT HANDS DOWN A GROUND-BREAKING JUDGMENT ON DUE DILIGENCE PRIOR TO PURCHASING LAND.

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Author: Thuo

On 21 April 2023, the Supreme Court of Kenya delivered a ground-breaking judgment in the case of Dina Management Limited vs The County Government of Mombasa & Others. The effects of this judgment will be felt widely, particularly by future landowners and any landowner who acquired or bought land without carrying out appropriate due diligence.

The case originated from a land dispute where the County Government of Mombasa demolished the entire perimeter wall facing the beachfront of a property registered in the name of Dina Management Ltd.

Dina Management Ltd filed a suit in the High Court challenging the demolitions, while the County Government filed a separate case against Dina Management Ltd and other parties seeking declarations that the property is public land. Both cases were consolidated and heard together. The High Court dismissed Dina Management Ltd’s case on, among other grounds, that the alienation of the property was unprocedural and that Dina Management Ltd could not be protected as an innocent purchaser.

On appeal, the Court of Appeal agreed with the High Court's judgment and held that Dina Management Ltd could not enjoy protection under the doctrine of the innocent purchaser. The appellate court further indicated that where property is acquired through a procedure against the law, the title cannot qualify as indefeasible.

The dispute was eventually brought before the Supreme Court, where Dina Management Ltd argued that it was an innocent purchaser because it had sought confirmation from the relevant government registry before purchasing the property. Dina Management Ltd also stated that it had periodically made payments of land rates to the then-local government.

In dealing with the issue of whether Dina Management Ltd was a bona fide purchaser for value without notice, the Supreme Court made the following findings:

• To establish whether a property owner is a bona fide purchaser for value, the court must first go to the root of the title, right from the first allotment by the government.
• The Court cannot sanction irregularities and illegalities in the allocation of public land on the basis of infeasibility of title.
• If the process that was followed prior to the issuance of the title did not comply with the law, then such a title cannot be held as indefeasible.
• If the first allocation was irregularly obtained, the first allottee cannot have a valid legal interest that it could pass to subsequent purchasers.
• If the root of the title to land is challenged, one cannot benefit from the doctrine of bona fide purchaser.

Following the above findings, land buyers in Kenya are now expected to be extremely cautious when buying land. They should carry out thorough due diligence that goes beyond merely obtaining a certificate of search from the land registry.

It is clear that failure to carry out due diligence by buyers before purchasing land in Kenya may lead to the cancellation of the title by the court once it is found the title has rotten roots. As such, land buyers should find the best lawyers to assist them in carrying out due diligence to avoid falling prey to fraudsters who use fake titles or land with hidden encumbrances, or land that is subject to active litigation.

From the information above, it is evident that land buyers require more support from their lawyers and other professionals in carrying out due diligence. Advocate Getter can recommend a lawyer to assist you in carrying out the necessary due diligence with just one phone call.