Brief Facts/Background
In April 2023, the Supreme Court of Kenya delivered a landmark judgment in the case of Dina Management Limited v County Government of Mombasa & 5 others (Petition 8 (E010) of 2021) [2023] KESC 30 (KLR) (Constitutional and Human Rights) (21 April 2023) (Judgment). This case has significant implications for property transactions and the protection of bona fide purchasers in Kenya.
The case arose when Dina Management Limited purchased a parcel of land in Mombasa. The company claimed to be a bona fide purchaser without notice of any irregularities.
However, the title to the land was contested by the County Government of Mombasa and other respondents, who alleged that the title had been obtained fraudulently. The core of the dispute centered on whether the protection typically afforded to bona fide purchasers should apply in cases where the title was obtained through irregular or illegal means.
Issues for Determination
1. Whether the Protection for Bona Fide Purchasers Applies to Irregular or Illegal Titles:
The court needed to determine if a purchaser who acquires property without notice of any irregularities should be protected under the bona fide purchaser doctrine, even if the title was obtained through fraudulent or illegal means.
2. The Level of Due Diligence Required:
The court also had to consider the extent of due diligence required to support a claim of being a bona fide purchaser, and what steps buyers must take to verify the legitimacy of a property's title.
Court’s Determination:
The Supreme Court in the case ruled that the protection offered to a bona fide purchaser for value without notice does not apply if the title to the property was obtained irregularly or illegally. The court emphasized that buyers have a duty to conduct thorough due diligence when purchasing property.
Conclusion:
This judgement shifts the onus of proving the validity of the land title to the buyer, underscoring the importance of ensuring that the title is free from any encumbrances or irregularities. The court's decision is based on the principle that illegally or irregularly obtained titles cannot be defended under the bona fide purchaser doctrine.
The court highlighted that buyers must take active steps to investigate the history and legitimacy of the title before completing the purchase. This includes checking for any existing disputes, encumbrances, or legal challenges related to the property.
The ruling emphasizes the importance of due diligence, accountability, and the protection of property rights.
Buyers must now take proactive steps to verify the legitimacy of property titles before completing transactions, ensuring that they are not unknowingly acquiring irregular or illegal titles. This landmark judgment has important implications for property investors, legal practitioners, and stakeholders in Kenya's property market.
Full Case available here
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