Property due diligence is a critical process that involves thorough research and investigation of a Property before purchasing it under conveyancing laws in Kenya. The burden to establish validity of the property Title falls on the purchaser. It is therefore essential to ensure that you are making a sound and informed decision. There are several processes that are undertaken during due diligence to confirm the status of not only the Property you intend to purchase, but also, of the party who is selling the Property to you.
The Supreme Court in, Dina Management Limited v County Government of Mombasa & 5 others (Petition 8 (E010) of 2021) [2023] KESC 30 (KLR) (21 April 2023) set the leading precedent in Kenya touching on due diligence. It held that, “indeed, the title or lease is a product of a process. If the process that was followed prior to issuance of the title did not comply with the law, then such a title cannot be held as indefeasible. The first allocation having been irregularly obtained, then “the seller” had no valid legal interest which he could pass to “the buyer”.
This piece by the law firm, will focus on the property due diligence in Kenya and some legal principles governing it.
Historical Principles of Property Due Diligence
Section 26 of the Land Registration Act, No. 3 of 2012, provides that, “certificate of title to be held as conclusive evidence of proprietorship”. This meant that Titles were considered as prima facie evidence that the individual recognized as the proprietor on the Title document, was the absolute and indefeasible owner. Consequently, any irregularities in the initial allocation did not affect subsequent property transfers if the subsequent property owners were not privy to the irregularities.
Current Legal Principles of Property Due Diligence
The current legal precedent, as aforesaid, changed the historical principles of property due diligence.
In, Dina Management Limited v County Government of Mombasa & 5 others (Petition 8 (E010) of 2021) [2023] KESC 30 (KLR) (21 April 2023), the matter was litigated up to the Supreme Court. The Petitioner (“Purchaser’) instituted a suit against the County Government of Mombasa & 5 others (“Government Bodies”) for forcefully entering the Purchaser’s registered beach property, located along Nyali Beach, Mombasa. It was alleged that the Purchaser had a Title over the Property, which made it a bona fide “good faith” purchaser.
It is alleged that the government bodies challenged the validity of the purchaser’s title because the initial property owner, obtained the title through illegitimate means. It was also alleged that the beach property was irregularly allocated, as it was always regarded as public property, designated only for use as a public road.
In deciding whether the Purchaser was a bona fide purchaser for value, the Supreme Court deemed it necessary to go to the root of the title. They took into consideration how the initial proprietor, ended up owning the title in 1989.
The Apex Court referenced, the Court of Appeal in Samuel Kamere v Lands Registrar, Kajiado Civil Appeal No. 28 of 2005 [2015] eKLR which stated as follows:“…in order to be considered a bona fide purchaser for value, they must prove; that they acquired a valid and legal title, secondly, they carried out the necessary due diligence to determine the lawful owner from whom they acquired a legitimate title and thirdly that they paid valuable consideration for the purchase of the suit property…”.
The Supreme Court also referenced, “the Court of Appeal in its judgment, while finding that the title was irregularly and illegally allocated in Republic v. Minister for Transport & Communication & 5 Others Ex Parte Waa Ship Garbage Collector & 15 Others Mombasa HCMCA No. 617 of 2003 [2006] 1 KLR (E&L) 563 where Maraga J. (as he then was) stated that: “Courts should nullify titles by land grabbers who stare at your face and wave to you a title of the land grabbed and loudly plead the principle of the indefeasibility of title deed…It is quite evident that should a constitutional challenge succeed either under the trust land provisions of the Constitution or under section 1 and 1A of the Constitution or under the doctrine of public trust a title would have to be nullified because the Constitution is supreme law and a party cannot plead the principle of indefeasibility which is a statutory concept.”
Due Diligence Processes that Ought to be Completed before Purchasing a Property
It is essential for a prospective purchaser to investigate the root of the title they intend to acquire. Among the due diligence processes that ought to be concluded include:
- Conducting a historical search of the property at the relevant Lands Offices;
- Requesting for letters of allotment;
- Confirming that the property is not listed in any of the published Volumes of the Ndung’u Report on Illegal/Irregular Allocation of Public Land in Kenya
- Seeking a confirmation from the National Land Commission (NLC);
- Seeking confirmation from the Kenya Urban Roads Authority (KURA) /Kenya Rural Roads authority (KeRRA), as may be applicable.
- Undertaking a search at the Survey of Kenya office, over the intended property.
- Confirm that the property you intend to purchase complies with the zoning laws of that particular area and/or such other county directives that may be applicable.
Final Thoughts
It is not enough to claim that you are a bona fide “good faith” purchaser for value. The Supreme Court has established through its decision in Petition 8 (E010) of 2021 as above that, the Purchaser is responsible for undertaking sufficient due diligence over any property they may wish to acquire. The due diligence should aim to investigate the root of the Title. It is no longer enough, to only investigate the party selling the property to you. Remember, the burden of proving a title’s validity rests with the purchaser. It is advisable that you consult with a property lawyer/law firm in Kenya, prior to purchasing a property in Kenya.
Disclaimer: This piece should not be regarded as legal advice, nor should it be considered as a substitute for legal consultation and/or legal advice from the best law firm in Kenya. Feel free to contact us by calling on +254703124871 or click here book an appointment with us.
