Recent court jurisprudence has created the need for more thorough due diligence by buyers when purchasing land in Kenya.
The general maxim that “one cannot give what one does not have”, means that a seller of an illegally or fraudulently acquired document cannot pass a good title to a buyer.
Unfortunately, some parcels of land acquired fraudulently or illegally have passed hands several times, leaving innocent buyers unaware of the defect in the title.
Lawyers now have to think outside the box when it comes to protecting the buyer’s interests in purchase transactions.
Here are a few pointers I came up with as to how innocent buyers can protect themselves.
One is doing an in-depth historical search of the property.
Two is drafting sale agreements that strongly protect the buyer. They should include proper dispute resolution and indemnity clauses.
I recommend the adoption of warranty deeds where possible. Warranty deeds are commonly used in the US, where the seller gives the buyer a warranty on the soundness of the title that one is passing to the buyer.
I believe that a warranty deed, being a contractual document, can also be adopted in the Kenyan jurisdiction to protect buyers from defective titles.
A warranty deed is a legal document that protects the buyer and ensures that the seller holds a clean title to the land.
By issuing a warranty deed, the seller gives the buyer a strong warranty about the property such that if it is defective, the seller would be liable to the buyer.
A warranty deed holds the seller liable for any defects discovered in the title even after the official search.
At times, the official search may yield a clean result. However, much later the buyer discovers that the title is defective. For example, the official search may indicate that the seller is the owner of the property, but it will not show that the property is on a road reserve.
By issuing a warranty deed, the seller remains liable for the defect in title despite the clean result from the search.
Two main types of warranty deeds used in the US are general and special warranty deeds. A general warranty deed is preferred as in it, the seller gives a warranty that the title has no defect and that he has a clean title to the land. It covers all historical transactions about the land.
A special warranty deed is limited as the seller gives a warranty of good title for only the time he held the title. This is from the time the seller purchased the land to when selling it. Special warranty deeds do not cover historical issues.
A warranty deed can be drafted by your lawyer and annexed to the sale agreement.
If the buyer later discovers that the title is defective, then one can enforce the warranty. I prefer arbitration as a means of settling this type of dispute. Therefore, the warranty deed and sale agreement should have a dispute resolution clause.
The courts can intervene where specific orders pertaining to land are sought.
Under a warranty deed, the seller may be forced to refund the buyer and pay general damages even after the title changes hands.
In a normal purchase, once the title is registered to the buyer, the seller’s liability ceases. However, with a warranty deed, the seller remains liable even after the buyer acquires the title.
Ms Mputhia is the founder of C Mputhia Advocates | [email protected]
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