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The Demand for Extensive Due Diligence in Property Purchase

A Bona fide Purchaser for Value Without Notice: The Demand for Extensive Due Diligence
in Property Purchase

Introduction requirements for a comprehensive due diligence

that will allow a purchaser to successfully plead
The principle of a bona fide Purchaser for value
this defense.
without notice has long been the preferred
defense of a purchaser who finds him/herself in Who is a bona fide purchaser?
ownership wrangles where there are challenges The Apex Court, in considering this question,
to the Certificate of Title held by him or her. adopted the definition in the Black’s Law
Courts have variously held innocent such a Dictionary, 9th Edition, which defines a bona
purchaser, where it is demonstrated that indeed fide purchaser as:
all necessary due diligence was conducted prior
“One who buys something for value
to the purchase and that he/she had no
without notice of another’s claim to
knowledge of any defects in the title transferred
the property and without actual or
by the Seller and was not party to any
constructive notice of any defects in
fraudulent conduct involved therein.
or infirmities, claims, or equities
However, to what extent can a purchaser rely
against the seller’s title; one who has
on this claim? What would be some of the
in good faith paid valuable
limitations that can be used to defeat this claim?
consideration for property without
And what would amount to sufficient due
notice of prior adverse claims.”
diligence for this defense to be successful?
In adopting this definition, the Supreme Court
The Supreme Court in a decision delivered on
cited with approval the decision by the Court of
the 21st of April 2023 in Petition No. 8 of 2021
Appeal in Samuel Kamere v Lands Registrar,
Dinah Management Limited vs County
Kajiado Civil Appeal No. 28 of 2005[2015]
Government of Mombasa, The Chief Land
eKLR, which provided three critical points of
Registrar, The Land Registrar, Mombasa, The
consideration for one to be considered as a bona
Director of Surveys, The Director Physical
fide purchaser;
Planning and the Hon. Attorney General
“….in order to be considered a bona
(hereinafter the “Dina Case”), carefully
fide purchaser for value, they must
distinguished the extent to which a purchaser
prove; that they acquired a VALID
can plead this defense and set out the
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The Demand for Extensive Due Diligence in Property Purchase

and LEGAL title, secondly, they Where a bona fide purchaser for value is faced
carried out the necessary due with the challenge to his/her ownership, what
diligence to determine the lawful would amount to necessary due diligence
owner from whom they acquired a sufficient to satisfy the Courts? The Court in the
legitimate title and thirdly, they paid Dina Case observes that in establishing that
valuable consideration for the one is a bona fide purchaser for value, requires
purchase of the suit property….” one to go to the root of the title, right from the
first allotment so as to establish the validity
In defining who a bona fide purchaser for value
and legality of the instrument of ownership held
is and establishing that one is actually a bona
by him/her. This is indeed an onerous task
fide purchaser, the Court settled on three key
requiring extreme diligence prior to the
critical elements that must be demonstrated;
purchase and transfer of the property.
a) That the Title acquired is Valid and
Previously, various defenses have been available
Legal,
to property owners who find themselves in the
b) That the purchaser carried out
middle of ownership disputes, including but not
necessary due diligence to determine
limited to;
the lawful owner from whom they
acquired a legitimate title; and a) The absolute indefensibility of the
c) They paid valuable consideration for registered title;
the purchase of the suit property. b) Bona Fide purchaser for value without
notice;
So that, where the registered proprietor’s root
c) Doctrine of laches and indolence and
title is under legal challenge, it will not be
the arguments under the limitation of
enough to dangle the certificate of title as
Actions Act
proof ownership. More has to be shown and
the purchaser will be required to go beyond the Such defenses will not be enough against a claim
instrument of ownership and prove the legality that goes to the root of the title of ownership.
of the title and show that the acquisition was The Constitution under Article 40(6) extends
legal, formal and free from any encumbrance the protection of the right to property only to
including interests which would not be noted in those properties that were legally acquired, and
the register. such legality goes to the process of acquisition.
The doctrine of laches and indolence will not be
What is necessary due diligence required?
available where the property in question is
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The Demand for Extensive Due Diligence in Property Purchase

government land as Section 41 of the Limitation private individual and severally transferred
of Actions Act excludes the application of the until finding its way to the Appellant-Dina
Act on matters concerning government and its Management Limited. In determining whether
recovery. or not the title held by Dina Management
Limited met threshold of indefeasibility and
Due Diligence when Dealing with Public
therefore deserving of protection under Article
Land
40 on the right to property.
In the Dina Case, the Supreme Court re-affirms
The Appellant demonstrated that it had
the position in law that the indefeasibility of
conducted the necessary due diligence by:
title and the right to property are only protected
where the process of acquisition is deemed to a) Conducting an official search of the
have been compliant with the existing law at property which confirmed the
the time. According to the Court, a purchaser of registration details;
a property, particularly one previously classified b) Obtaining Consent to transfer from the
as government land, has the onerous duty of Ministry of Lands who confirmed the
conducting necessary due diligence as to the validity of the title to the Appellant;
alienation, allotment and subsequent transfer c) Obtained a beacon certificate and survey
before proceeding with the purchase. plans to determine the boundaries and
extent of the property; and
From the Courts judgment, it can be deduced
d) Confirmation from the both the national
that an intended purchaser, in conducting
government and the local government at
necessary due diligence, must start by
the time that the title was valid.
answering the question on the type of land they
are intending on purchasing. The Constitution The Supreme Court disagreed with the
of Kenya broadly classifies land in Kenya into Appellant and agreed with the finding of both
three broad categories of Public Land the Court of Appeal and the Environment and
(Government Land), Community Land and Land Court, observing that the Appellant had
Private Land. The type of land one is purchasing not conducted necessary due diligence
informs the extent of the due diligence considering the land in question. The Court
necessary. affirmed the position that when dealing with
government land, a purchaser needed to
The land in question in the instant case was
ascertain that the process of alienating the land
government land that had been “allotted” to a
was duly followed in accordance with the

The Demand for Extensive Due Diligence in Property Purchase
existing law at the time of the purchase. In
summary, one must satisfy themselves as to the
following;
a) Whether the land in question is
alienated government
unalienated government-unalienated
government land is one which has not
been leased to any person or in respect of
which the Commissioner of Lands has
not issued any letter of allotment or
reservation. Courts have held that a
reservation for a particular purpose
renders the land alienated and therefore
not available for allotment.
b) Where the land in question is deemed to
be unalienated, whether the procedure
for allocation was followed. The Court
cited with approval the procedure for
the allocation of unalienated land as laid
out in the case of Nelson Kazungu Chai
& 9 others vs Pwani University [2014]
eKLR, which can be summarized as
follows;
i. There must be a letter of
Application addressed to the
Commissioner of Lands seeking
to be allocated an identified
piece of government land;
ii. A Part Development Plan drawn
and approved
Commissioner of Land or the
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Minister for Lands before any
unalienated government land
could be allocated; A PDP can
only be prepared in respect to
Government land that has not
land or
been alienated or surveyed.
iii. A letter of allotment based on the
approved Part Development Plan
(PDP) is then issued to the
allotees.
iv. The letter of allotment will be
accompanied with terms and
conditions, which must be
complied with, such as payment
of the prescribed fees therein, the
existence of a valuation report of
the land in question etc;
v. After compliance with the terms
of the letter of allotment, a
cadastral survey is conducted for
the purpose of issuance of a
certificate of lease.
In view of the above, the Court stated that it
was not enough for a party to state tat they
have a lease or title to the property, where
the process leading up to the production of
the above title was not followed. The Court
cited the case of Funzi Development ltd
and others v County Council of Kwale,
by the Mombasa Civil Appeal No. 252 of 2005,
where it was stated that;
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The Demand for Extensive Due Diligence in Property Purchase

“…a registered proprietor acquires an previously classified as government land

absolute and indefeasible title if and
only if the allocation was legal, proper
and regular. A court of law cannot on
the basis of indefeasibility of title
sanction an illegality or gives its seal of
approval to an illegal or irregularly
obtained title.”
Conclusion
The finding by the Supreme Court in the
Dinah Management case, settles with
finality the position of the law with regards
to the process of acquisition of properties
and/or reserved for certain government
entities. The existence of fraud or the
participation of the proprietor in any alleged
fraud is immaterial to the test of alienation
and allotment. Where it is demonstrated
that the process, whether by design or
ignorance or for whatever reason, was not
followed, there can only be one outcome-a
cancellation of the title-even if this comes
100 years down the line and several
generations later.
By Alakonya Z.
zack@alakonyalaw.co.ke

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