“Supreme Court Ruling: Key Consideration for Property Buyers: Valid Title Acquisition”
In a significant verdict delivered on April 21, 2023, in the case of Dina Management Limited v County Government of Mombasa & 5 others (2023) eKLR, the Supreme Court clarified that the safeguarding of a bona fide purchaser without prior knowledge does not extend to cases where the property title was obtained irregularly or unlawfully.
The dispute revolved around the ownership of Property Title Number MN/1/6053 in Nyali Beach, Mombasa County. The property had been allocated, and a freehold title was issued to the initial owner by the Commissioner of Lands in 1989. However, the County Government of Mombasa later asserted that the land was designated as open space and proceeded to demolish part of the property.
The Supreme Court ruled that a title document alone is insufficient evidence of ownership if its origin is contested. The holder must demonstrate that the acquisition process was conducted within legal bounds. In this case, it was found that the allocation of the property to the first owner lacked essential documents such as the Part Development Plan and a letter of allotment based on the approved plan, rendering it illegal.
As a consequence, subsequent purchasers, including the appellant, did not obtain valid titles. The Court emphasized that a registered proprietor only acquires a valid title if the original allocation was legally sound. The appellant was held accountable for conducting thorough due diligence before making the purchase.
The Supreme Court’s decision establishes the necessity to scrutinize the foundation of a property’s title to ensure its legitimacy. This ruling conclusively addresses the previously ambiguous position of the bona fide purchaser. Although it may challenge the Torrens system, which relies on the integrity of the register, it resolves prior conflicting decisions by the Court of Appeal. This includes cases like Tarabana Company Limited v Sehmi & 7 others (2021) eKLR and Arthi Highway Developers Limited v West End Butchery Limited & 6 others (2015) eKLR, which presented differing interpretations of protection for bona fide purchasers. The Supreme Court now mandates thorough investigations into the legitimacy of the property title before acquisition, with no protection granted for titles with defective or illegal origins.