REGISTRATION OF TITLE
There
are in place two types of registration systems
1.
Registration of Deeds
2.
Registration of Title
These
two are quite distinct and one ought to have a fairly good understanding of
what each of them deals with to appreciate that distinction. The
registration of deed system entails maintenance of a public register in which
documents affecting interests in a particular registered land are copied.
Such a deed is merely evidentially of the recorded transaction and is by no
means proof of title. The most that can be made out of a deed is to invoke
the records as prima facie proof of the fact that the transaction in question
did occur. It cannot and will not suffice to prove the validity or
legitimacy of such transactions. As a matter of requirement the deed does
not even have to be consistent with any registered transaction which may have
previously taken place in connection with the property in question.
Consequently the deeds system cannot confer any secure title to land in favour
of the person in relation to whom the registration of the deed has been
executed. Accordingly the reliance on the deed system is as risky as
reliance on the unregistered system as it entails a historical deduction of the
title in respect of the property in question if one is to be sure that the
title is good and well rooted. There are not govt guarantee in regard to
deeds and so there is no guarantee as to the accuracy of entries and no
indemnity would be available to take care of any loses arising from omissions
that may be disclosed in the register.
Registration
of Title
This
refers to the maintenance by the state of an authoritative record of all rights
in relation to particular parcels of land such particular parcels as may from
time to time be vested on specific individuals or legal entities and subject to
such limitations as may be disclosed in the register itself save for such
interests as may be of overriding nature (section 30 of the RLA) so in a
sense registration of title provides that convenience and simplicity that
anybody interested in a given property would want the simplicity and
convenience based on principles that are by far quite different from those
applicable under the unregistered system. The case for registration of
title is made out by the fact that it offers cheap and expeditious insecure
methods in property dealings which are in sharp contrast to the position in the
unregistered system which was thought to be costly, disorganised insecure and
complicated. Its principle objective is to replace the traditional and
registered title method with a single established register which is state
maintained and therefore conclusive and authoritative as to the details or
particulars set out therein. It is precisely because of that that it is
credited in eliminating wasteful burden placed on potential purchasers under
the unregistered system which requires them to separately investigate titles to
assure themselves that it is a good title that can pass and which is free from
any hidden claims which may be adverse to their interests. Since it is
state maintained and operated, the title registration system enjoys all the
advantages that are unavailable under the registration of the deed system which
is not very different from the unregistered system. Unlike the
registration of the deed system the registration of title system has the
capability of investing secure titles in all persons in whose favour such
registration may be effected. It is further regarded as final authority
on the correct position regarding any registered land. It is also cheap
and expeditious in terms of facilitating various transactions regarding
registered land. State indemnity is available for any losses that may be
incurred and so it makes conveyancing very simple.
The
register is a very important document as it is the sole authoritative record
wherein lies title to all registered plans. The register is kept at the
lands office, the central registry in the lands office. The register
itself refers therefore refers to the official record containing details of ones
estates, particulars of the property and the interests that affect the property
so it would identify the nature of the Estate whether leasehold property or
freehold or an absolute estate and such records are described by reference to
an official map plan that is maintained at the registry. In another
sense, the register can also be used in reference to the entire index of many
individual registers that comprise the sum total of all titles relating to
registered land in the country. In each case the register has divisions
or sections into which it is divided. There are 3 main sections so that
each register is divided into 3 parts, property section, proprietorship section
and finally the encumbrances section.
The
property section contains a section of the registered property and identifies
such property by reference to a map plan included in this section are details
of the date of first registration of the land. It may also contain notes
relating to any exemptions or other adverse interests to which the property is
subject. In the case of registered lease or land there would also be
particulars of the lease including the title number and a statement to any
prohibitions against alienation of such property without authorisation.
The
proprietorship section states the nature of the registered title, name and
address and other description of the registered proprietor, any restraint if at
all to which is powers of disposition are subject.
The
encumbrances sections gives particulars of subsisting burdens to which the
property is subject and any restrictions that are endorsed have the effect of
preventing such dealings in the property as maybe inconsistent with the
restrictions imposed.
Administration
of registration system are the most crucial department involved here is the
department of lands but under the ministry there are many other departments
including department of survey, physical planning and the land adjudication and
settlement department. The dept of land is by far the most important in
the administrative arrangements so it deserves considerations. It falls
under the Ministry of Lands and Settlement and it is charged with the
responsibilities of carrying out the following
1.
Alienation of all government and trust lands as provided for under the relevant
laws Cap 280 and the Trust Lands Act
2.
It also gives approval of development plans in respect of all categories of
land;
3.
it is in charge of the preparation, registration and issuance of titles for all
categories of land whether under the RLA or the Government lands Act or RGA or
LTA or
4.
It is in charge of considering and improving buildings plans in respect of
government lease of land
5.
consideration and approval of extension of use in respect of all categories of
land including application for change of user as per the requirements of the
land planning act and the Town Planning Act.
6.
It is responsible for establishing and running of various Land Control Boards
across the country;
7.
Responsible for setting up of trust lands this was at the time after
independence b
8.
Extension of government leases
9.
carrying out valuation of both govt and trust lands to facilitate alienation of
such property
10.
It also carries out valuation for purpose of determining stamp duties in
respect of transfers for all categories of land and where acquisition powers
have been invoked
11.
Office of the public trusteeship and running of various affairs that fall with
the office in terms of distributing the estate of a deceased person.
12.
Rating roles for various local authorities on the basis of which rates are
assessed.
CATEGORIES OF LAND
As
early as 1915 all lands in this country were defined as Crown Land meaning that
all public land which was subject to the control of the Crown and that control
was exercised by virtual of protectorate status which had been proclaimed over
this country. The initial stages saw the definition of crown land take a
wide definition as it included land occupied by natives as well as land
reserved for use of any specific tribe. The position in law was that the
indigenous people were incapable of having any title or interest in land as
such they were tenants of the crown with little or no rights capable of
recognition in law. The existence of native land and later trust lands
after independence became a bit ironical because what would happen is that from
time to time there would be a process of defining and gazetting certain special
areas for the use and benefit of the natives of the colony especially from mid
1920’s to early 1930’s and this was in line with the existing political and
economic atmosphere at the time when from 1923 this territory was declared
blackman’s country through the Devonshire White paper of 1923 and thereafter a
number of initiative to reform the Agricultural centre were undertaken.
At
independence a trusteeship system was created which vested the former native
reserves areas in the county councils. This was a constitutional
arrangement and all areas that were to be designated as native areas became
trust areas and customary rights were recognised as the main body of law which
governed issues of ownership until such a time as the areas in question would
be brought under the registration process created under the RLA to give
statutory recognition to the Trust Land concept. An Act of Parliament the
Trust Lands Act which regulated rights or certain activities that could be
undertaken with regard to such land was enacted. Section 53 in particular
confers powers upon the Commissioner of Lands to administer such land as an agent
of the County Councils so for the administrative requirement, it is possible
for the commissioner to effect land reform in such areas by declaring from time
to time all specified areas as registration regions upon which the adjudication
consolidation and registration of parcels of land would result in the issuance
of title documents. The resulting titles would be in the nature of
absolute proprietorship in line with provisions of Section 27 and 28 of the
RLA. This in effect meant that the title holders owned the land
completely and without tracing their title to any higher authority as would
have been the case in situation involving free estates. Things came full
circle because under this concept there is recognition given to the fact that
this land had always belonged to the natives. There was no committed
before but this time around there is recognition that the land had always
belonged to the natives and therefore when they got titles they owned the land
absolutely. By extension this meant that the terms and conditions to
which a lease title holder would be subjected to regulations would not apply in
the case of an absolute title which would be a title held of no role and does
not admit of any controls from outside.
For the areas that still remain unregistered
but part of the trust lands, it remains as trust land and question of ownership
are determined by rules drawn by that domain. The ultimate projection is
that all areas will be brought under registration and therefore governed by the
rules under the RLA and even in the case of titles acquired under other
statutes other titles of a different nature from the absolute title, when it
comes to renewal, they renewal was to be under the RLA to achieve a unified
registration system which is regulated by the same rules as provided for under
the Act.
With regard to private land, what comes
to mind is land or property that is held be individuals in the nature of
freehold estate or a leasehold grant from the government. With regard to
freehold title, it needs to be noted that this represents the greatest interest
that could be possibly be enjoyed by an individual over land and this is
because it confers on that individual who is the beneficiary of a grant from
the government almost what appears to be an absolute ownership except for a few
conditions here and there. One is better of having a freehold title compared
with a leasehold title.
A freehold title gives a lot of
leverage as it has very few conditions as opposed to a leasehold which confers
restrictive ownership of a known duration e.g. 99 years and apart from the
fixed term, there are number of conditions and requirements to be fulfilled so
that at once it becomes obvious that a freehold estate is capable of conferring
perpetual ownership and one can be sure that they will hold it for as long as
rules of requirements. There is an option that is always given to
leasehold title holder which is an option to renew but one has to comply with
all the conditions attached before one can get a renewal or extension.
One is liable to pay the land rent owing in a leasehold but in a freehold, the
moment somebody pays the rates owing to the government or the council and gets
a freehold title, the land crosses into the domain of private land.
Group ownership of private land
Privately owned land where group rights
are protected.
ALLOCATION OF GOVT LAND AND TRUST LANDS
With regard to government land, there
is the advertisement mode where availability of so much of government land is
available in a certain locality and invite interested parties to apply or you
draw their attention to follow it up. This hardly ever happens at least
not in recent times but it is a possible means in which allocation of
government land can be done. It is possible for any individual to make an
application to be allocated government land. The other way through which
government land can be allocated is by means of making reservations and this is
particularly the case when one has in mind public utilities areas that could be
employed in that manner, i.e. public schools, roads, recreation facilities,
churches or places of worship etc. these are usually done by way of
reservation so within a certain plan, room is made for such
eventualities. They must disclose public use element for the utilities to
be justifiable and once designation as reservation of that kind, it would be
irregular to re-allocated them for purposes not consistent with the public ends
that they are meant to meet. Grabbing has become an accepted way of
allocation of government land but this is an example of an irregular way of
acquiring what should be allocated through a regular proper channels. It
is possible to benefit from any disposition of govt land but the rider is that
one must meet the requirements whatever the govt intends them to be.
ALLOCATION OF TRUST LANDS
These can be looked at from two
perspectives
Where one is dealing with trust land
that has already been brought under the ambit of the registration exercise with
titles. There is in effect no difference in terms of allocating such
lands from so called govt lands i.e. through advertising and acquiring a title
without having to wait. In cases where one has completely a
different activity that requires that the land is enjoyed as a group, for
instance the Mara game reserve is under the Narok County Council which receives
rates on behalf of local residents and whatever interests are generated through
tourism are used for the benefit of the Masai, and one cannot have an individual
title to this resource.
In both cases, once allocation has been
done, a number of transactions become open to the opportunities which they open
to title holders, for instance one can lease out such property to anybody with
whom one comes to an understanding subject to a number of conditions which one
may spell out, one may also seek financial accommodation by charging or
mortgaging their land using the title document as security. One may also
dispose the land all these are freedoms that one has when they own such
property.
There are certain procedural
requirements in land transactions that one needs to be familiar with.
There are restrictions as to the user where in certain cases particular areas
may be confined to be residential or commercial or agricultural and some may be
a combination of both. One has to confirm that the requirements of
environmental regulations such as procuring consents and approvals incase of
development, things that are required as part and parcel of physical planning rules.
One needs to advise their client on the need to be cautious in relation to
property to land such as forest land where members of public have an interest
and there would be need for proper procedures to be followed in allocation,
like gazettement and inviting objections from the people who may feel that they
are affected by the allotment.
PRINCIPLES OF REGISTRATION
Regisration of the process through
which interests in land are recorded so as to facilitate the assertainment and
it makes effective any intended dealings or transactions in relation to
property and once duly carried out registration has the effect of passing an
interest in land in favour of the person so registered. Because of those
virtues, registration has been identified with two main functions that of
serving as a documentary manifestation of land as a commodity making it a
commodity to be dealt with in the market while at the same it provides as a
mechanism for providing vital information regarding the quantum of rights held
by individuals with regard to a given property. It vests to you all the
details one may need before they undertake any dealings on a property and
facilitates any transfer thereof.
A system like this needs to be based on
some principles and by far the most important source from which these
principles have been drawn is the so called Torrens System named after Sir
Richard Torrens who formulated the same in 1958 in South Australia from where
it later spread to other parts of the world. Most jurisdictions embrace
this system because of its demonstrable superiority over other systems.
It is significant because it provides a new and improved information system on
property in the form of a register and the register contains all the material
facts about a particular property. Other than that, in such a register
would be entered all such information so that they can be accessed and a
document of title would be issued to the owner upon such property changing
hands through subsequent transactions. The document of title in respect
of property would be surrendered to the new owner and the information would be
effected in the proper register so that the necessary changes can reflect all
the material details and indicate the true status as regards among other things
ownership of the property or any other interests which affect such
ownership. In effect it leads to a creation of a public record on
property full of information of the kind that would be of interest to anybody
wishing to have any dealings in such property. By creating a public
record system there is the element of security of such a title or title
assurance which does offer a measure of protection to the person the purchaser
bona fide purchaser without notice who may wish to acquire such a property in
future. In contrast to an unregistered land system, there is no
risks or uncertainties whatsoever as to the ownership including whether there
are claims acquired, whether it has been charged all these things would be
disclosed in the register. There are guarantees that come with the
registration since it is government maintained.
There are principles relating to the
Torrens System
1.
The mirror principle – this relates to the accuracy or certainty or
conclusiveness that entries in the register in as far as the true status of the
title is concerned. We take whatever is found in the register as accurate
and conclusive on what it purports to inform us about; we expect to get
all material details including true position of ownership, the interests or
other rights to which such ownership could be subject. The history of how
this property has changed hands if at all the first time and at any time
changing hands might have taken place. Mirror principle stands for
transparency in shedding light about what the position is and once we have
accepted the principle there is the element of confidence and assurance that we
are not having any hidden factors or interests that may be adverse to the
interests of the parties concerned.
2.
Insurance Principle – this relates to the fact that since the state has
undertaken to establish and maintain this sort of system, the state by
extension guarantees that there would be indemnity offered to compensate anyone
who may suffer loss as a result of mistakes in the register or merely by reason
of the fact of operating that system itself that in event of injury or damage
arising out of such circumstance, there is a state run system that will
compensate any person who suffers loss to the extent of such loss.
3.
Indefeasibility - This is to the effect that
once registered as the owner of an interest and such interest duly disclosed or
entered in the register the rights acquired cannot be defeated by any adverse
claims which are not disclosed in the register. The register is a public
document and open for inspection by the public so that the presumptive position
is that everyone will be deemed to know. Discoveries can be made of
material details which would affect a person in one way or another and it is
good public policy that the openness allows you to know any adverse interest
before one goes very far with the transaction one can seek explanations.
Once we’ve got all these guarantees, we shouldn’t allow them to be defeated by
any hidden claims and the registers should be open for any one to see.
The idea of public notice provided for by keeping a policy of an open register
should work towards strengthening the rights of an individual with an interest.
4.
Curtain Principle – this relates to the requirement that the register should
disclose precisely the nature of the interests and who are the owners.
There should be no position of where one holds interests in a hidden way and
all trusts should not be kept in the register and where for instance land is
registered on a trust it would be a requirement that such land should not be
held blindly under such a trust and must be registered in the names of specific
persons and subject to appropriate restrictions the names of the owners being
registered.
These were drawn from the system that
Torrens came up with.
THE GOALS OF REGISTRATION
In a way, these goals do not depart
fundamentally from the issues that we have been considering like the issues of
security of tenure. In relation to the RLA in this regard or provisions
of section 27, 28, 29 and 39 they are instructive while in RTA 23 and 24 are
relevant and this is where the safeguards of a registered proprietor and any
person dealing with property are made. the safeguards are against the
eventuality of one losing such an interest. In any case, there is a
guarantee that the government gives as to the reliability on what is disclosed
in the register and there is a title assurance which are central to the
security of tenure given that dealings in such property will not predispose an
individual to any damage. There is bound to be confidence in commercial
business circles with all those participating in the process being unbothered
with the possibilities of incurring losses. Section 24 of RTA provides
that any person deprived of land or estate through fraud or bring such land by
registration or in consequence of any error is covered and so the issue
of losing that title is taken care of by such provisions. No claims
that are inconsistent with a registered title would be entertained so such
adverse interests cannot be treated favourably as against that of the
registered proprietor and the case of Obiero v. opiyo hwere the court observes
that a person who acquires a first registration title acquires an indefeasible
title that is better as against the whole world.
Before one is registered as a
proprietor of a given property, there are preliminary stages that have to be
dealt with and the most important stage is that of adjudicating the claims and
whoever claims to be the owner or entitled to a particular property has to
prove the claim and have to face challenges from interested parties who are
allowed to make representations and those adjudications are conducted with the
help of locals to ensure that only true claimants can acquire the title.
Whoever succeeds on gaining first registration will have shown the most
effective entitlement to the title. If it works out that way, it should
follow that there would be no disputes that one would not wish go to court to
litigate such land. The bulk of the cases are in land related cases and
therefore the theory has not been proved right. there is a lot of litigation
revolving around land which makes one wonder if we have fared any better by
having first registration. The central region happens to have been the
hot bed of a number of things related to land such as the Mau Mau movement who
might have not been there to stake their claims to land and therefore land in
the central region is a touchy issue. The understanding was that if and
when the registration was done, people would be given opportunities to
articulate their claims to avoid disputes.
It has also been suggested that the
other goal is to avoid the old practice of land fragmentation and this was in
fact one of the other objectives that registration sought to achieve through
consolidating smaller holdings into bigger ones. A number of social factors
explain why the land units were fragmented as they believe that every son must
get a share of family land no matter how small the piece of land is and one
ended up with 10 small pieces of land in different place and this was
identified as a militating factor against productivity. Eventually they
decided consolidation would make one end up with one larger unit which could be
more productive due to economies of scale. The provisions that are found
in the RLA prohibit the registration of more than five people and only allows 5
people or less to be registered in one parcel of land.
It has also been suggested that another
goal is to facilitate the tax administration or it is historically the case
that land or levies imposed from land have since time immemorial served as
vital sources of revenue i.e. the feudal systems in England and collective
system in Russia have served as main sources of revenue to the
government. In our situations we have Land Rates and Land Rent, fees to
be paid for a number of reasons, i.e. consent from land boards there are fees
to be paid for transaction to proceed, under the Land Planning Act there is a
planning fee, LGA there are rates that the local government levies on land,
Stamp duty under stamp duty act and fees payable under the RLA.
Registration facilitates the question of administering taxes due by identifying
the way to levy taxes. One has to fulfil a number of requirements which
relate to tax administration based on levies on land before any transaction can
take place.
The other goal is to facilitate
workable loans systems by having a credible registration system in place where
one creates ample securities and adequate checks and guarantees based on land
as a commodity in the market place. One can surrender their title documents
as security in return for financial accommodation through being afforded credit
facilties. This is a healthy phenomenon is it works along the lines that
it should, that it is it is presupposed that one has a development plan and can
take advantage of finances available which one would not have access to in the
absence of title. It is possible to benefit improve one’s property and
pay back the financier. The financier is the one who gambles by giving
the credit in hope that one is going to make good or have the ability to
pay. In the event that one defaults, then the property is liquidated to
recoup whatever is charged. There is a statutory power of sale that vests
on the financier if one does not make good to repay.
The other Goal which legislation
seeks to attain relates to limiting or eliminating all together prospects of
litigation arising from rival disputes by different claimants in respect of
land so reduction of unnecessary litigation is one of the goals set to be
achieved. Land is a very thorny issue especially in our society and
most of the disputes that we have the potential to last for years on end.
The exercises that precede legislation such as the preliminary process of
adjudicating claims and ascertaining rights and interests is conducted,
representations are allowed from various quarters and at the end of that
process the legislation results in favour of the successful claimant who will
have proved ownership of that land including the extent of the land in question
or the size of the holding which will have been verified by those best placed
to undertake that process and in the end it is expected that no further
disputes will follow.
This is not always the case, the
presence of this preliminary exercise has not stopped people from litigating in
court. In any case what would happen in the absence of such a system is
probably having too many cases than we are experience and looked at either way
there is a measure of success to be attributed insofar as this particular
goal is concerned.
Legislation seeks to avoid the
possibility of fragmentation of land and this is an inbuilt mechanism that is
part and parcel of the entire legislation exercise. One of the problems
that was identified to exist within indigenous land holding was one that was
primarily brought by cultural practices that demanded that some things like
sharing land to all those thought to be entitled was applied. Wherever
communal land was found each and every individual that qualified to own a piece
would get a piece and the situation arising was one where a particular person
would end up with many small pieces cropping up all over the place and this was
not economical. The productivity or output from working such holdings was
not making any sense. With the advent of the legislation process this
particular element would be cured once and for all by comparing an amalgamation
of holdings to a number of forms. Those who owned land could be forced to
swap and in the end have the pieces combined in one area to make up a bigger
unit so as to deal with the problem of fragmentation. Consolidation of
units would be encouraged and the result would be that land fragmentation would
be minimised or eliminated all together.
4.
The goal of legislation has been identified to be that of facilitating the
issue of tax administration. This of course is historical land has from
time immemorial offered a basis for levying various forms of revenue. And that
is the practice that has been pursued almost the world over. Feudal
England knew of that practice and the serf system of Russia, closer home the
Kingdoms to be found within present day Uganda had traits of this element of
land serving as the basis of raising revenue. Modern practice thrives on
this albeit in a more refined form and land rates and land rents are cases in
point, charging of stamp duties in the event that property is changing hands,
transfer fees and other levies are all forms of land based taxes and the best
way of administering such taxes is offered is used which identified who should
shoulder land based taxes. Levies levied by the Central government are
other forms of land tax.
5.
The other goal of legislation is that of facilitating the loan problem between
the land owners and financial institutions that extend credit for development
and these are achieved basically by way of enabling property owners to use
their title documents as security and to guarantee credit facilities that may
be extended to land owners. The property may be developed with the help
of credit. The liabilities and obligations of the parties are clearly
spelt out in charges and mortgages and the most important element to the
financiers is the ability to realise their security by way of exercising their
statutory power of sale in the event that property owners default in their
obligations. The same can be said of the property owners who are entitled
to a discharge of their property from the burden once they have completed their
loan repayment obligations.
6.
The other goal of legislation is the making of the entire conveyancing process
easy and more effective and this arises as a result of the keeping of the
records of land through the register which is updated regularly from time to
time to reflect the true position. The noting in the register of any
interest that may be adverse to those of the purchasers or any other party
interested in dealing in the property with the owners. The comprehensive
land information system that results through the legislation process greatly
aids in this exercise because parties are in a position to know what the status
of a property is or material details can be sought through conducting of a
search and so the common problem encountered of having to search through your
own effort whatever adverse claims are raised against you does not arise as it
is all laid out there for all and sundry to inspect. The
introductory of statutory forms which introduce certain categories of dealing
in land through which mechanisms the process of mechanism is greatly improved
and made a lot cheaper, faster and less complicated.
THE DIFFERENT LEGISLATIVE REGIMES OF
LAND REGISTRATION
In this country, one can talk of at
least five different statutory legislation regimes which operate side by side
for good measure you can throw in a sixth one which is rather fringe as it
depends on one of the other five.
THE DOCUMENTS
ACT
This
particular piece of legislation was enacted in 1901 although its history dates
way back to 1896 when the colonial administration then in place felt the need
for a simple registration system to be put in place for this country.
Registration of documents systems was recommended in Kenya based on experiences
that the British had had with it in Zanzibar. What the system creates is
a simple registration of deeds system which are reflected in the register of
documents so created. Under the system, any document can in fact be
registered but especially those relating to transactions in land such as
government grants of land but otherwise there is no prohibition against other
documents not touching on land not being registered under it. The Act
provides for both an optional and obligatory registration regime. For
instance under Section 4 thereof there is a requirement that all documents
conferring or purporting to confer, declare, limit or extinguish any right,
title or interest in land must be registered. Such registration must
occur within one month after execution failing which the same cannot be
called in evidence or adduced in court without first seeking and obtaining a
leave of court to do so. similarly it is a requirement under4 the Act
that documents of a testamentary nature must also be registered under the
Act. Optional registration is addressed under Section 5 which provides
for a non compulsory registration so that it remains to be done at the instance
of the person seeking to register such documents. The registrar is actually
granted a discretion in whether or not to accept any such document which though
not compulsory or registerable may be presented to him for purposes of
registration . All that the registrar will have to do will be to set out
his reasons in writing and furnish the presenter with the same. Examples
of documents whose registration are not compulsory but which may be registered
and the insistence of the owner include Wills, Power of Attorney, Building
Plans and in exercise of this discretion under the Act the registrar of
documents will not accept any documents for registration if the document in
question is not proper or where the requisite registration fee or stamp duty
where applicable have not been paid. The most significant feature of this
registration feature is the fact that the records kept thereunder serves merely
to show that the transaction in question took place but it does not say
anything about the validity or legitimacy of the transaction itself.
LAND TITLES ACT
The background to this particular registration
regime lies in the doubts and the uncertainties that shrouded the question of
individual property ownership within the Coastal Region so individual titles to
land at the coast was in effect what led to its enactment. Under purely
administrative arrangements between the Sultanate of Zanzibar and the colonial
authorities, IBEA part of the sultans dominion was ceded to the British
under a concession agreement and this was the so called 10 mile coastal
strip. The terms of that arrangement bound the British to administer the
area but subject to the rights of the inhabitants which included property
rights such as the inhabitants may be having. The coastal region was
settled by those inhabitants mixture of Arabs and Africans much earlier than the
coming of the British so their property preceded the advent of
imperialism. The registration regime created under this act was meant to
give recognition to those long established claims of ownership and adjudicate
them so that claimants would get recognition under the Act. Before this
arrangement was put in place there had been a lot of difficulties experienced
by property owners and uncertainties about these titles and they worked out
adversely in terms of investments it hindered investments and in terms of development
it hindered development as people could not deal with their properties in the
market. This is what made it necessary for the Act to be introduced in
1908. it was introduced with a view to creating a registration system
that would be applicable only to the coastal region and this was particular
more so given that the hinterland was adequately catered for by the series of
the Crown Land Ordinances beginning with the one of 1902. these
ordinances were meant to facilitate white settlement within the interior and
did not do much for land owners at the coast. The system of
registration under this Act was borrowed from the 1907 Act NO. 3 of Ceylon
present day Sri Lanka where it had proved effective. It provided for a
registration system in favour of individual title claimants within the coastal
region provided that they could prove their claims to the properties they owned
and so an adjudication process became necessary and one was created and a
compulsory registration system was put in place. Property owners were
obligated to present their claims and so they were supposed to lodge their
claims to the land registration court that was created under the Act.
This court was presided over by a recorder of titles and a deputy who were
expected to deal with such claims as may be lodged. Claimants were
required to prove furnish evidence of ownership upon successfully proving such
claims they were issued with various documents of title depending on the nature
of their ownership or certificates of ownership were issued in respect of
freehold property so any successful claimant who could prove the nature of
their holding would obtain a certificate of ownership or certificate of
mortgages would be issued in respect of mortgage of immoveable property whereas
a certificate of interest would issue to those who could demonstrate the
existence of other rights of whatever kind in the land subject matter.
What it set in motion was a process of not conferring as it were any rights or
interests but merely ascertaining and endorsing the same through extending
recognition to such rights through of issuance of various documents of
title. Registration of such interest in the register created under the
Act would in effect bring to an end any rival claims that could evolve over
such land. Title documents would issue with a short description of a
document proving such ownership being noted in the register thereafter all
subsequent documents or transactions relating to the same land would
consecutively be entered in the register in the order in which they were
presented and the effect of creating the register with all the entries was that
it would be conclusive as to the question of ownership so that a certificate of
title would make the owner of the holder thereof have a title that was good
against the whole world. Similarly certificate of ownership would make
the holder thereof as the undisputed owner of all the property, trees buildings
standing on the land as at the date of that certificate unless or a memorandum
noting or having entries to the contrary was produced to contradict that
position. Once the adjudication process was complete the resulting
position was that all unclaimed land or such land as was not subjected to
successful claims would be designated Crown Land and became freehold property
which could be dealt with by the government or the Crown in the normal manner
including being subject to the exercise of powers of alienation or disposition.
GOVERNMENT LANDS ACT
This
was an adaptation of the previous Crown Lands Ordinance, and in effect replaced
the crown ordinance of 1915 that is when it was promulgated. Its
objective was to provide for among other things deed plans and achieve better
administration and registration of government plans in land and of govt dealings
thereof. All grants of govt land and transactions relating thereto were
required to be registered under the Act. The other objective that this
particular legislation sought to achieve was that of offering a remedy to all
instances of defects patent on earlier registration systems especially that
offered by the RTA. The model that the GLA adopts is similar to the
registration machinery that is employed by the Land Titles Act. It is a
requirement under the Act that all future grants of govt land have to be
registered in line with the provisions made under the Act. Similarly all
past documents relating to govt land previously registered under the RDA have
to be re-registered under the provisions of the Act so as to b ring them under
the ambit of the govt lands Act as provided for in the Act. Of course
this is consistent with the objectives set out under the Act to cure
registration defects under the earlier registration statutes especially the
RDA. It is also the intention under the system to introduce a fairly
advanced system of registration of deed plans and procedures touching on a wide
range of activities or transactions relating to land such as the leasing out
regulating and other disposal of govt land. It also accommodates other
dealings in relation to such lands such as the need for more scientific plan
through accurate surveys so that one can have in effect a land grade of govt
land reflected under this particular registration system. The overall
effect that this introduction had was that of ushering in an English type of
conveyancing which is dependent more on registration rather than an
unregistered system especially when it comes to govt grants and other land
dealings in relation thereto.
REGISTRATION OF TITLES ACT
This is a 1920 Act introduced with the
purpose of facilitating the process of transfer of land through a registration
of transfer system and essentially its purpose was to introduce in this country
a title registration system based on the Torrens principles. This is a system
that was introduced in Australia but which worked there so well that it
achieved widespread acceptance in other jurisdictions. Our own Act is
modelled on the 1897 Registration of Titles Act of the Federal Malay States
present day Malaysia as well as on the 1890 Transfer of Lands Act of the
Australian State of Victoria and it gets aspects of both legislation. In
terms of features the main point of departure implicit on this particular Act
is opposed ot the earlier ones and especially the GLA is that whereas the
earlier ones before it merely provide for a recording of documents system
without conferring any additional benefits, the registration arrangement under
this Act confers on the land owner what is expressly identified as an
indefeasible title which is state guaranteed.
The other Acts or earlier Acts as we
have seen in the case of the RDA provide for a registration of a
documents which envisages the occurrences but is silence on the issue of
validity leave alone the indefeasibility of such a title. In the case of
the LTA, we have noted that it does not confer anything it only recognises and
records a fact that is borne out on the ground but in the case of this
particular registration the intention is not only to issue grants and note them
through the recording system but to guarantee a title as incapable of being
defeated once duly granted. All future grants of govt land and
certificates of ownership of land within the coast be registered under it ,
remember Govt land is subject matter of the GLA whereas the arrangement of the
Coast involves issuances of certificates to recognise the situation of land
ownership that preceded any registration regime. If there is a
requirement in subsequent Act, in effect the legislature is saying that we do
not wish to repeal what was done under the earlier acts such as the GLA but we
want you to redo it and it makes it a conversion process to bring the land at
the coast under the ambit of GLA and it is from here that we head closer to
getting all the registration processes under one Act.
Any land owner who has had his title
registered under the GLA is required under the Act to apply to the registrar to
have the same registered under the provisions of the Act and this comes with an
advantage as it enables the landowners to enjoy the benefits of state
guarantees of the resulting titles. It is not strictly a requirement that
conversion be compulsory but the projection is that with certain advantages
floated under this Act, eventually we would embark on the route whereby
registration under all previous Acts would be phased out to enable us achieve
the ultimate goal of having in future all land in the country brought under the
umbrella of a single registration statute. The desire to stop that
multiplicity and work towards a single registration statute began with this
legislation. The truth is that it never advanced that course as far as
expected but it was a recognition that there was need for a unified rather than
multiple registration system in this country.
One who wishes to take advantage of the
provisions of the Act will present the original title for endorsement at the
same time submit subsequent documents relating to the title so that what in
effect happens one abandons registration one opts out of the earlier
registration that they fell within and from that point on they become part of
the this registration without losing sight of the fact of where the
title emanated from.
REGISTRERED LAND ACT
The quest for a unified registration
system of course can be argued to have started in earnest with the enactment of
this particular statute. This was not the only objective that it had in
fact its introduction is closely connected with the African Land question in
the face of the existence of what amounted to an elitist system of title
registration under the earlier Acts which appeared to cater only for the
interests of white settlers and coastal Arabs to some extent with regard to
private claims to land. Throughout this period it is instructive to note
that no thought and no provision was made for registration of title to land
owned by indigenous people or land falling within the so called native areas or
special reserves. It is not until the run up to independence that serious
thought was given to introducing a number of initiatives that would address
this particular omission i.e. the failure to bring native occupied areas under
the ambit of registration. Prior to its introduction THERE WAS SPECIAL
AREAS ACT OF 1960 which started of the process which preceded the enactment of
THE RLA Cap 300.
It is with the coming of independence
and the struggle that preceded this that alerted the indigenous people to the
fact that they could agitate for rights after serving in the 2nd
world war and the demand for independence culterised the speedier process of
addressing the African Land Question which came through recognising that they
needed to guarantee titles to indigenous people in regard to the land that they
occupied. With a wide range of reforms in mind, the grievances by
indigenous people regarding land or the shortcomings attendant to that could be
attended to through the an ambitious registration system that was the RLA which
sought to introduce for the first time registration in the native areas.
The Act also sought to provide a conversion process whereby titles that had
issued under previous registrations would be re-issued at whatever appropriate
time under the provisions of the RLA in more or less the same issues that RTA
had sought but achieved very little of. It also sought to achieve
individualisation of title to customary law since in any case the area to which
it first applied was with regard to indigenous occupied areas where communal
mode of ownership was the rule rather than the exception.
It sought to provide not just a
registration system per se but also a code of substantive law which could
regulate all matters relating to land ownership as provided for under the Act
as well as simplifying the process of conveyancing such land so that unlike other
registration which were merely a registration code, here was a move away from
that so that substantive law as well as a code for conveyancing was found in
the same place. For the other registration regimes the substantive
law is to be found in the Indian Transfer of Act of 18,..
Native lands were supposed to be
registered and the constitutional arrangement was that the title was vested in
the local authorities within whose jurisdictions those lands fell. The
land communally occupied by the native which could be other the Act could be
declared adjudication regions and thereafter claimants would prove their claim
or title to that land and where consolidation was desirable it would be done
before the land finally registered. The land consolidated and adjudicated
would then be registered to individuals and in any event not to more than 5
persons and absolute ownership is created under the Act.
In the case of land registered under
the previous statutes, if it fell under the trust lands and fell due for
renewal, the renewal would be exclusively done under the registration system
created by the RLA and those that had not expired would still be deemed valid
until such a time that they fell due for renewal then the conditions of the RLA
would apply. Through this arrangement the conversion process ensured that
through a gradual process,
The Act introduces the highly advanced
system of indexing of property showing all the registered land within a
particular area and all the information including size, title numbers, any
claims, encumbrances or burdens which may affect such land. The RLA
registered is regarded as conclusively and final authority on the issue of
ownership of land infact first registration is expressly provided for as being
unimpeachable, it cannot be impugned on any grounds whatsoever. title
Deeds are issued as prove of absolute ownership under the Act and this is for
the land in the country side. In the case of township properties
certificate of lease issues for these properties. Both are evidence of
ownership. It has been doubted given the wide scope of objectives or
goals that the Act sought to accomplish, whether these goals or objectives are
predicated on sound principles, i.e. the goal of guaranteeing sanctity of title
regardless of how it is procured. The objective of having a unified
registration system without providing for a first tract method of achieving
that and leaving it to the events contemplated under the earlier registration
Acts to play to the full before it is evoked. The very element of
individualising title of land that has been corporately owned, the wisdom of
doing that and all these have raised disaffection in how the statute with its
provisions has worked out so far, whether to discredit it and call for a
radical overhaul is an issue that occupies the minds of most people
today. As of now we have it alongside others and until al properties
including those that are valid for 999 years, then we have to wait for much
longer before the conversion process sees the light of day and that is why some
people have rubbished the whole process and are advocating for an overhaul.
SECTIONAL PROPERTIES ACT
The Sessional Properties Act NO. 21 of
1987 this is not a distinct and independent registration system because it is
clear that any registration carried out under this regime should be deemed to
be carried out under an RLA registration. It introduces a vertical
dimension to the issue of property issue. It makes it possible for an
owner to own a property on a floor without owning the ground on which the
property stands. The old notion of property is one that is novel in the
sense of that a vertical dimension rather than the traditional notion of owning
the physical ground is
Regardless of the fact that it does not
own the ground on which such a unit stands. Classic example is like a
scenario of a block of flats i.e. Delamare Flats are a good case in
point. You can have a highrise building with many floors and each floor
has separate units that are distinct from each other and one can own a unit on
any floor without having to trace the owner from the owner on the ground
floor. You can own the property suspended up in the air. There are mutual
rights and obligations that arise under such an arrangement because if it is a
highrise building it will have common stairway, parking, garden pool, runway
and therefore rights and obligations have to be carefully balanced so that
everyone can share equally in the common amenities. It is the case that
such proprietors would enjoy their own units subject to the rights of all
others.
The requirement under the Act is that
if there are burdens like costs to be shared out equitably amongst the various
proprietors. The requirement is that for these sectional properties
notion to apply to any property it can only be effective where the residual
term is not less than 35 years since Sectional Properties appeals only in major
towns where scarcity of land is experience. The residual charm of the
grant should not be less than 45 years and any property that is affected
by the provisions of the Act are deemed to be registration under the RLA.
The fact that we have mutual rights and obligations on which the enjoyment of
the sectional property unit depends means that there are certain limitations
that will have to be imposed as a matter of necessity if the concept is to
work. Mutual rights and obligations precludes owners of the units from behaving
unfairly as all owners expect the right of support.
Natural law school of thought advances
the thought that no legislature would have intended to create consequences so
severe as those which flow from a positivist interpretation of the Act.
To their mind the entire process of legislation after adjudication and
consolidation has taken place was intended to clarify the issue of land held
under customary law and the idea was to ascertain the question of ownership of
such land as these particular areas had not been subjected to a registration
regime and the idea was to bring them under a registration regime.
The rights created in the course of
implementing the process were rights based on customary law. In terms of
determining their application and scope, one necessarily needs to fall back on
the customary law domain to inform the task of ascertaining the enjoyment and
exercise of these rights and it is only through customary law that one can
determine that particular issue. What this school of thought subscribes
to is the view that registration was never intended to make landless certain
groups of people who had always depended for their livelihood on property
communally held. The intention of parliament could not have been that
people depending on communal property be thrown out and the property registered
in the names of a few people.
The idea remains that of preserving
those rights and interests and one of the most ardent proponents of this
particular view is Mr. Justice Muli in the case of Samwel v. Priscila Wambui
HCC 1400 Justice Muli makes a case for natural law
interpretation by arguing that registration of titles is a creation of the law
and one must look into the circumstances surrounding each case as well as
customary law and practice with regard to land holdings in force at any given
time in order to determine whether or not you can infer in the process of
registration the existence of a trust. The institution of a Trust comes
in handy to mitigate some of the inequities or harsh consequences which a
positivist …. Would lead to in situations that involve communities that are
essentially land based and very must dependent on land for their
livelihood. The purpose of registration must in all cases be understood
to be preservation of family land and not to disenfranchise other members of
the society who may not have gotten their names registered. Consequently
any person who is registered as an absolute owner of family land will unless
the surrounding circumstances establish otherwise would be taken to be a
trustee. Registration of family land leads to the person entrusted with
the title being the trustee on behalf of all who depend on that land for
survival.
Two forms of trust can be inferred, customary
trust view which is found in almost nearly all African communities,
property ownership is that land is owned by everybody, the living, the dead,
the unborn and cannot therefore be converted into an absolute proprietorship
merely through the tick of registration. Land being a commodity of property,
generations, it cannot be the case that merely by applying a stroke of
registration that you can change that position so as to make it the property of
one or a few people. The process of registration against this background
should not be considered to have been intended to expropriate family land and
leave it in the hands of the individuals. The process of registration
appears to have been to guarantee the rights of all members with a stake in
that property and hence the customary law trust view. Accordingly the
individual registered as proprietor holds the same as a trustee and not an
absolute tile holder. This trustee arises from the customary law view
which says that all family members are entitled to a share or right of access
and therefore you cannot kick them out by a tick of registration.
There are cases that have held that
particular view, Mwangi Muguthu v. Maina Muguthu, unreported CA 337 OF 1968
this case specifically mentions that according to the Kikuyu customs, the
notion of trust is inherent and so even where a person is registered as a sole
proprietor of family land without the express mention that he is registered as
a trustee in the register, it will not befit the influence of a trust in that
sort of arrangement because the Kikuyu customary law has the notion of trust
inherent in it.
Hosea Njiru (1976 E.A.L.R) Simpson J.
recognized existence of a customary trust and ordered the defendant to execute
a transfer in favour of the plaintiff notwithstanding that this was in respect
of unpeachable absolute first registration title.
Limuli and Sabei case unreported H.C. C
222 OF 1978
where the court noted that unless a contrary intention is shown a customary
trust is to be presumed under S. 27 and 28 of RLA once it is shown that land in
question is family land.
The other notion of Trust is invoked in
the so called English Trust View. English law has express trust,
constructive trust, implied trust and resulting trust. All these are
well-defined doctrines under English common law. The general principle is
based on the English trust view was stated in the Limuli case by Cotran
J. he observes that it is now generally accepted by the courts of Kenya
that there is nothing in the RLA which prevents the declaration of a trust in
respect of registered land even if it is a first registration and there is
nothing to prevent the giving of effect to such a trust by requiring the
trustee to do his duty. Those duties are of course fairly well defined
under the English Notion of a trust. The court is adverting that those
principles will apply in our situation even where a first registration is the
subject matter of litigation.
ALAN KIAMA V. Ndia Muthuma (unreported) 176 of 1973 where
Justice Law went so far as to find the existence of a constructive and express
trust based on the same set of facts and in the opinion of the court this was
necessary to mitigate the harsh consequences of the positivist interpretation
of the provisions of the RLA in conditions which pit members of a family in
some kind of war with one another in a society which is predominantly land
based. To articulate the natural law theory is to abandon the express
letter as worded in the statutes and emphasise more on the spirit rather than
the letter of the law, the important point being that what would parliament
have intended. The answer in the opinion of the natural law school is
that parliament could not have wanted to render people landless and the interpretation
must be consistent with that understanding. The bottom line is that
parliament has not taken any legislative initiative to intervene and clarify or
enact or introduce provisions to get rid of the confusion and until they do the
position remains that we have the two different positions.
INTERESTS IN RIGHTS OVER LAND
ENCUMBRANCES:
These are rights in aliena solo
rights enjoyed in the land of another person other than the one entitled to
enjoy such rights. The exercise of ones rights over his land,
1.
Mortgages:
2.
Charges;
These are a creation of statutes and
have the effect of subjecting the property so burdened to some limitations
which have the potential to defeat the registered proprietor rights of
ownership with regard to such property. In our case, mortgages are a
creation under the Indian Transfer of Property Act whereas Charges apply under
the RLA exclusively. The ITPA and related statutes that draw from it is
what we associate with mortgages whereas charges apply in the case of
RLA. Both serve the same purpose and are in the nature of encumbrances
that play a significant role in the capitalist mode of production. They
feature prominently in borrowing transactions and it has been suggested that
they perform certain functions in a capitalist economy which include allowing
people in the periphery of the production process to be integrated into such a
process.
It has also been suggested that it is
one way through which those desirous of owning homes can find an appropriate
institution to enable them realise such ambitions so as an institutions it
facilitates that kind of desire. It serves as a way of reallocating
property rights in the society in the sense that probably in the case of a defaulting
party where a loan has been advanced, the property becomes available to be sold
in the common market as well as guaranteeing that the person advancing the loan
does not lose out but it makes available the money to acquire rights over
property subject of sale.
The circumstances under which mortgages
and charges can be said to be encumbrances is what entails. Anybody
desirous of borrowing money has to offer security and land is one of the
recognised means of offering security and you have the property mortgaged or
charged by drawing a special instrument that conforms with the respective
requirements of the law and you have it registered against the property you put
up as security. Provided that you benefit from the financial
accommodation you must perform all the conditions you sign up to and there are
duties placed on the financier but the fact remains that your interest in the
property has not been done away with and you retain a bit of that. When
the debt is paid you are entitled to a clean title and you are discharged from
liability. As long as you have not paid, there are activities that one
cannot engage in because of the burdens that the property suffers from under
that arrangement.
In terms of genesis and revelation of
mortgages and charges, we have to note that we get the concept from the English
law regarding that aspect which is very similar to the position under Roman Law
where the mortgage institution is thought to have first evolved. Under
Roman law, it took the form of what was known as fiducia and this was a form of
fiduciary arrangement or relationship between a lender and borrower, property
in question was given to lender in return for financial accommodation that had
been sought and if the borrower defaulted, the party’s obligation, there was
forfeiture to the lender regardless of the value of the property in question.
The institution also manifested itself
in pigmus and entailed transfer of possession of property in question but
without the element of forfeiture that is part of fiducia. When there was
default, the property in question was merely sold and not forfeited and the
idea was to recover any sums that were outstanding and the accrued
interest. There was no forfeiture.
The third form which exemplifies this
institution under Roman law was the Hypotheca and this entailed making a pledge
with reference to a specified property but without the effect of the borrower
having to deliver possession thereof. The creditor had vested in him
power of sale which he could exercise in event of default by the borrower and
the catch was that upon exercise of power of sale there was a requirement for
the creditor to render accounts as to how the proceeds realised had been
applied and the borrower had to know how much had been realised and any sum
realised in excess of what was owing had to be turned over to the
borrower. This brings us to modern day practice in respect to mortgages
and charges.
Development of this institution was
linked to the doctrine of Estate and it was manifestly in form of usury as far
back as in the 13th and 14th century and it entailed
lending money to those who were in need but under very unreasonable conditions
which for instance called for payment of high premium rates in form of interest
and had the trappings of a certain default on the part of the borrower because
the element of high interest returns ensured the outcome and consequently
borrowers in almost all cases hardly ever met their repayment obligations and
the lenders ended up taking over the property. It became unpopular with
the people and the English parliament had to outlaw the practice all together
but English lawyers are never short of tricks and evolved yet another
institution of a pledge shortly after usury was outlawed and the basic idea was
to offer land as security for a loan. Two forms of a pledge, the so
called living pledge and a dead pledge. Under the living pledge, lender
took possession of property in question and received any benefits accruing such
as rents and profits and the arrangements lasted till the repayment and
interest was fully paid. Under dead pledge lender only received rents to
be applied towards offsetting the interest accruing and
continued until interest was offset.
The notion of conveyance by 19th
century had been introduced whereby the borrower’s interest would be conveyed
to the lender on condition that upon full payment of debt there would be a
re-conveyance of the interest back to the borrower. Such re-conveyance
would be defeated if there was a default on the part of the borrower for this
would lead to forfeiture of his interest in the property. Through or
reinventing the old institution, replacing usury with pledge and refining it
further, the practice outlawed by parliament was back with the blessing of the
law as no one found contracting wrong. The rest of it is what we added to
under various statutes.
PROVISIONS
FOUND IN ITPA, RLA AND OTHERS
The Mohammedan law frowns on the
element of charging interest and finds it alien and oppressive and as a direct
reaction, their own form that closely associates to the mortgage institution is
one supposed to be free from the element of charging interest. The
Byebilwafa which closely appears to be the equivalent of the English law
institutions and apart from their aversion to charging interest, what is
required is that the borrower is to pledge the property to the lender, and
undertake to make good the debt in return the lender is vested with the right
to take benefits such rent from property with no requirements to account but to
apply such benefits towards offsetting the principal amount owed.
Question of interest accruing does not arise, once that has been done the
borrowers obligation ceases and he is entitled to have his property back.
CREATION OF
MORTGAGES & CHARGES
There are certain general principals
that apply and they are essentially statutory requirements.
1.
A Charge/Mortgage must be evidenced in writing under Cap 23 and any purported
instrument that is intended to pass as charge/mortgage is ineffective unless it
is in written form;
2.
Mortgage/Charge must be in a prescribed form or instruments provided for under
various legislations which allow for creation and they must be registered under
section 59 of ITPA and 65 of RLA
3.
Instrument must contain acknowledgment signed by borrower to the effect that he
understands the effect of the transaction in particular the fact that upon
default in repayment, the property will be subject to sale as applied under S.
74 of RLA.
4.
where the repayment date is not fixed within the instrument creating the
particular encumbrance, it is the case that the date arising in the case of a
mortgage created under ITPA shall be payable within 6 months after receipt of
demand notice and in the case of charge created under RLA within 3 months after
receipt of demand notice.
The obligations of the parties are
standard and the lender is confined to having the security and realising it in
case of default or reconveying the property back to borrower if security
offered has been dealt with. The bulk of obligations are with the
borrower if the transaction is to work along the rules created. The
borrower must honour his obligations which may have arisen prior to the
charge. The borrower must also pay all rates and taxes because the
question of ownership remains with him and he must ensure that the property is
in good repairable condition a requirement meant to safeguard the lender’s
interest so that it does not lose value. Property value is central to the
institution since for the statutory powers of sale bank on the property being
the same or better than when the transaction was done.
SERVITUDES:
Doctrine of Servitudes
The questions of servitudes are closely
related to encumbrances in the sense that they are rights in aliena solo and
effectively burdens upon land belonging to another person. Various
categories of servitudes that are enumerated as follows:
1.
Easements;
2.
Profits a prendere
3.
Restrictive Covenants
EASEMENTS
S. 3 OF RLA defines easements as a
right attached to a parcel of land which allows the proprietor either to use
the land of another in a particular extent but does not include profit.
This essentially makes easements to be capable of being either positive where
they allow use of another’s land in a particular manner or negative where they
introduce an element of restraint and restrict an owner from using his land in
a particular manner.
Under the ITPA there is no definition
of Easement the reason being that there is an easement act the Indian Easement
Act which provides adequately for this aspect.
Under provisions of S. 30 it is clear
that easements qualify as interests of overriding nature examples envisaged are
a right of way or right to natural right and therefore essentials to be met for
the existences of an easement there are 4 essential elements for one to talk of
valid easement.
1.
There must be a dominant tenement and a servient tenement. The dominant
tenement is the one for the benefits of which the easements in question exist
and the servient is the one over which the easement is exercisable or the one burdened
by the easement;
2.
The tenements must be owned by different persons, the definition of easement
necessarily points to the fact that one cannot have an easement over his own
piece of land and there has to be a situation involving different
proprietorship. There is no unity in terms of ownership.
3.
Easements must be capable of accommodating the dominant tenement, i.e. the sort
of rights arising should be rights capable of being normally enjoyed and should
not require carrying out of extra ordinary measures to ensure that they are
enjoyed e.g. a right of way it should suffice that one can traverse to and from
across the land and does not require one to be built for extra ordinary things
it should be at no extra effort at the party that is burdened. It should
accommodated in a
4.
Easement must be capable of forming the subject matter of a grant and here what
is required is that the ownership of the servient tenement should be such that
an owner can lawfully grant rights and similarly the person receiving the
granted rights must be capable of receiving and enjoying the benefits that go
with the grant. The right must be certain meaning that the extent or
scope should be possible to draw and know how much in terms of rights can be
exercised.
Easement are created by statutory
grants through an instrument in the prescribed form or by reservation under
Section 74 of RLA. They may be acquired by the operation of prescriptive
laws such as adverse possession and the provisions of S. 32 and 38 of
Limitation of Action Act are relevant.
Section 97 of the RLA enumerates
various modes of terminating including executed release in the prescribed
form. Occurrence of some condition precedent can also bring an end to
enjoyment of an easement, through a court order or where the easement in
question has ceased to have any practical benefit. An easement is meant
to confer a right to a person other than the owner of the property so if the
benefits cease, it should not exist.
Termination occur where no injury occur
to the beneficiary of such a right.
PROFITS A PRENDERE
Referred to under Section 3 of RLA
which defines profits as a right to go on right of another, to take a
particular substance from that land whether it is the soil or products of the
soil. At once it becomes clear that unlike in easement, a profit entails
the taking of something from another’s land, something capable of ownership
that is taken from the servient tenement. The right may also exist in relation
to specified piece of land. In terms of nature, we may say that the point
of departure between easement and profits is whereas easement must be pertinent
to servient and dominant tenement at the same time, a profit need not be as it
is a right that does not need the beneficiary to be the owner of the dominant
tenement and can come all the way from wherever and all it entails is the
taking away of something and off he goes.
In terms of creation, profit may be
created either by an express grant or by prescription. Where it is
created by an express grant the provisions of S. 96 of RLA the section provides
that an owner of land may grant a profit. When that is done the
instrument granting the profit must specify how the profit is to be enjoyed,
whether it is to be enjoyed alongside with other similarly placed
beneficiaries.
Prescription may also lead to
acquisition of the profit just like in the case of easements and for that to be
effective it has to be formalised by way of registration in accordance with S.
96 (3) the requirement of registration is mandatory unless the right was
acquired before a first registration.. if acquired before a first
registration, what happens is that it acquires or assumes the nature of an
overriding interest in terms of S. 30(e) of the RLA.
Termination
There are 3 ways in which a profit can
be brought about
1.
Unity of seisin which involves acquisition of ownership or the servient
tenement by the owner of the profit at which point the question of enjoying the
profits ceases. Enjoyment of profit presupposes going to another person’s
land. (unity of seisin is ownership of two plots of land by the same
person. Easements and other rights of servient tenement for the benefit
of a dominant tenement are extinguished if both tenements come into the same
ownership).
2.
Where profit is pertinent to land it terminates through unity of both
tenements.
3.
Release that is duly executed and evidenced in writing,
4.
Alteration of the dominant tenement in such a way that it cannot support the
exercise of such a right so the alteration must be such that it alters the
nature the dominant tenement and is completely overhauled and there is a
presumption that any right that existed must be distinguished.
RESTRICTIVE COVENANTS:
These are often referred to as negative
easements to the extent that they restrain the activities of the registered
proprietor as to what he can possibly do within his land. In the event
the place curves on the free exercise of the proprietors powers and freedoms in
relation to his land, they in effect introduce an element of curtailment of
enjoyment of ones rights in relation to his own property and that restraint is
intended to benefit all persons other than the proprietor himself.
Examples which give rise to restrictive covenants may include situations as
landlord/tenant relationship or situations involving owners of adjoining
properties or estates. What happens is that the restrict on ones
activities in regard to his own property are such that if they are in relation
to the (if it is a neighbourhood that is peaceful, there may be a covenant that
precludes one from doing or initiating certain forms of developments which
would be inconsistent with the general use to which that particular
neighbourhood is earmarked. As long as the restrains are in place, one
should enjoy rights of use and abuse, or even destroy, right of support that
ones property that the neighbour expects from you, you cannot for example tell
the neighbour that you will destroy your land because you might interfere with
the natural right of support that the neighbour accepts by reason of being your
neighbour.
Areas
that can be subject matter of restrictive covenant are many. The landlord
has a lasting stake in ensuring that the property is maintained in some form
and the tenant will have a number of covenants and conditions binding the
tenant to observe certain things.
INSTANCES INVOLVING NON-REGISTRATION
JUDICIAL RESPONSE:
In relation to the law of registration,
to documents it is clear that registration plays a number of roles in property
system. The passing of interests and rights from one party to
another. It serves as a documentary manifestation of land as a
commodity. It provides information regarding the quantum of rights in
land. It also gives us a framework for easy transferability of such.
What happens in an event of failure to
register a transaction which is compulsory registerable? Our registration
provides for compulsory and obligatory registration.
The functions that registration as a
process provides cannot be overemphasized. In the event of failure to
register a transaction which is by law compulsory registrable, it should follow
that a number of set back or adverse consequences could be attracted. We
have noted that our registration system provides for both a compulsory
registration regime as well as one that is optional. In those situations
where registration is obligatory as a matter of law and what would be the fate
of transactions carried out without complying with the requirement to register.
We all know the law as laid down
emanates from the legislature. In terms of interpreting the same it is to
the courts of law that we look to and therefore the sentiments expressed by
courts in those instances become relevant at least in that connection and
indeed the courts are from time to time had occasion to consider the effects or
consequences of non-registration in situations that require compulsory or
registration of instruments and in the process they have evolved what in effect
amounts to judge made law in the form of a set of rules with regard to this
particular aspect.
The English position in this regard is
exemplified by the decision handed down by the courts in the case of Walsh
and Lonsdale (1892) 21 CHD 9 – (in this case, a landlord contracted in
writing to let a mill to a tenant for 7 years. The parties agreed to
execute a formal deed of lease. At any time the landlord could require
the tenant to pay a year’s rent in advance. The tenant had entered into
possession, paid rent quarterly in arrears but did not execute a formal
lease. The landlord demanded a year’s rent in advance, the tenant refused
to pay and the landlord attempted to distrain for it. The tenant argued
that he was merely a tenant from year to year and that no lease had been
executed and thus, he could not be required to pay 12 months in advance.
The tenant’s contentions were rejected by the court which said that a tenant in
possession of premises under a specifically enforceable contract for a lease is
in the same position in Equity as if a formal deed of lease had been executed
and so the landlord’s use of distress was lawful. This case represents the
locus classicus in regard to this particular issue or in the same manner that
one talks of Ryland V. Fletcher with regard to liability. It is in
Walsh that the English Law courts formulated the applicable rules. What
was in issue in this case related to a case of an unregistered lease which was
otherwise by law required to be compulsorily registrable and the matter which
came up for determination where no interests could be conferred relying on an
unregistered instrument and after the court considered the issue at length it
came up with the following pronouncement in terms of the applicable rule
Where a tenant has taken possession
under an unregistered lease agreement, which is capable of specific performance
such a tenant is deemed to hold under the said agreement as if a proper valid
and perfect lease had been granted. In this particular case the court was
concerned with the efficacy of the arrangement rather than the legal
technicalities and so where the transaction was one of the kind that could be
implemented it did not matter at least in the opinion of the court that there
were flaws in as far as formalising arrangements was concerned. The court
was guided by the equitable principles.
The Kenya position is a bit different
although not completely different. We have a statutory intervention which
specifies the categories of leases which must as a matter of law be submitted
for registration. There are others that are exempt beyond that the
requirement of registration comes into operation and in our position the
general principle under property law is that no interests or rights or estate
in land can be passed, effected or otherwise created by way of an unregistered
instrument where this is a legal requirement. By the same token no
burdens or covenants that adversely affect the enjoyment of rights and
interests in land can be created by way of an unregistered instrument.
The
above position has not restrained our courts from applying what is to all
intents and purposes the principles enunciated in Walsh and Lonsdale and
this has been necessitated by the need to dispense justice and so the
application of that doctrine has been somewhat sneaky and circumscribed by
reason of statutory limitations which we have in this country. In
situations involving non-registration of instruments which ought to be
registered as a matter of law the courts have strived to give effect to the
arrangement as far as the period where there is no requirement of compulsory
registration. Where for instance there is a lease that is created for 4
years and under our laws a lease that is less than 12 months need not be
registered, but any period above that for which registration must be effected
has not survived and it has been possible for parties involved in an imperfect
arrangement i.e. where one is required to benefit from the regime that does not
require registration, it has not been favourably looked upon by the
courts. It is clear from the number of decisions that our courts have
handed down. We have limits placed by statutes and we have to observe the
maximum period for which registration is not required as a matter of law and
give effect to that disregarding any period over and above that. A number
of cases illustrate the Kenyan position.
Bains &
Chogley (1949) EACA 27
The issue here was that the landlord
purported to lease out certain premises for manufacturing purposes for a period
lasting 5 years through an unregistered instrument and a dispute arose ending
up in court. In the opinion of the court the lease though not registered
was valid as a lease from year to year which does not attract the requirement
of compulsory registration and was therefore subject to the provisions of the
ITPA including that of giving 6 months notice where there is desire to
terminate the arrangement. In spite of the fact that there was no
registration it was possible for the rights and interests conferred to be
enjoyed by the tenant but purely on the understanding that that arrangement
would be confined to a year to year tenancy and not the whole duration of
tenancy.
Merali V. Parker (1956) 29 KLR 26
The issue was one involving the effect
of non-registration of a sub lease for which there was a legal requirement for
registration. In the observation of the court and with regard to the
provisions with sections of the GLA the effect was that whereas evidence could
not be adduced in court from such an unregistered document to prove existence
of a lease for more than one year, such a document could be relied upon to
prove the existence of an agreement for a lease from year to year and the
effects of this created and the couple being in possession created what could
be regarded as year to year tenancy which could only be terminated in
accordance with the provisions of ITPA in line with Section 106 and 116 which
makes it mandatory for 6 months notice period to be issued.
CLARKE &
SONDHI (1963) E.A. 17
The lessor purported to lease out
certain premises to the lessee for a period of 3 years at an agreed annual rent
which was to be paid in specified monthly instalments. The lessee had
possession of the premises and in the course of time fell into rent arrears
thereby forcing the Lessor to bring an action for recovery of the same.
In his defence the Lessee introduced or contended that the Lessor had no valid
cause of action owing to the fact that the lease was not registered as was by
law required under the provisions of the RTA and it was this position that on
account of this fact that the entire arrangement was void or unenforceable and
that such an arrangement was incapable of passing any legal estate in
land. In the opinion of the court, the unregistered lease could operate
as a contract inter parties and consequently the Lessee could not escape to pay
any rents due.
The imperfection caused by failure to
register does not necessarily defeat the rights and obligations of the parties
as between themselves. The approach has been to save whatever can be
saved and disregard that which cannot be saved. This case went to the
Court of Appeal which reiterated the same position that an unregistered lease
could operate as a contract inter parties and consequently could confer on the
Lessee the right to confer the contract including the right of demanding
specific performance which in any effect would lead to obtaining the effect of
a registrable lease.
SOUZA FIGURIDO & CO. LTD V.
MOORINGS HOTEL LTD (1960) EACA 926
A landlord sought to recover rent
arrears from a tenant on the basis of an unregistered sub lease which was by
law required to be registered. In his defence the tenant raised the
question of the validity of such an arrangement on account of
non-registration. He further contended that in view of the
non-registration of the transaction that the same was ineffectual to create any
interests in land or any Estate therein and that in the result any covenant to
pay rent could not be enforced. Whereas the court of appeal agreed with
the tenants contention that no interests could be created by way of an
unregistered instrument and that no covenants could create liability if the
instrument was unregistered, the lease could nevertheless be regarded as having
created a contract inter parties which is enforceable as between the parties
and therefore the parties could not escape their respective obligations and
duties including that of paying rent.
The case being made out appears to be
that a lease which is registrable as a matter of legal requirement but which
for whatever reasons is not registered will not create rights in
rem. They can create rights in persona but not rights in rem.
Interest in land which need not be
registered
This is principally a preserve of the
RLA and in particular S. 30 thereof which makes interests in so called
overriding interests. The position in law is that overriding interests
need not be reflected or shown in the register for them to be effective.
Such interests as listed under S. 30 include rights of way, water, profits
subsisting at the times of first registration, natural rights of air, water and
support, compulsory acquisition rights, resumption entry such and user
conferred by any written law, leases and agreements for a lease not exceeding 2
years.
Section 30 in effect gives examples of
rights or interests that can be broadly categorised as being of an overriding
nature. The proper construction of that section is that there is no time
to give an exhaustive list of what could be regarded as overriding rights and
the items listed do not mean the end of what could be considered as overriding
rights. There could be added some other aspects such as rights that such
as prescriptive rights that accrue to an adverse possessor by having availed
himself with such rights as effective occupation of land without consent continuously
openly and for the period of 12 years in which case the rules relating to
adverse possession would entitled the adverse possessor to be declared the
owner of such piece of land under his occupation.
Those interests which are of overriding
nature such as the ones reverted to under S. 30 need not be in the
register. This is an exception to the sanctity of registration and the
fact that nothing outside the register can be entertained in terms of defeating
the rights that specifically appear in the register.
PRIORITY OF REGISTRATION
The question of registration is treated
different under various statutes. It is imperative in as far as giving
preferential treatment to competing interests of land. Under RDA Cap 285
it is provided that under Section 27 that the day on which the document is
presented for registration shall be deemed to be the date of registration with
this comes the significance attached to the time. Under GLA Cap 280 S.
140(1) provides that every doc shall be registered in order of time at which
the document is presented and it is with reference to this that preferential
treatment is dealt with.
The time when the document is prepared
and the date shown on the document will not play any role in as far as matters
of according priority to those documents are concerned what is crucial is the
time and date of presentation.
STAY OF REGISTRATION
This is a preserve of the RLA S. 43 no
other statute devotes any time to this. Where one proposes to deal with
registered land, and has taken certain steps towards that end i.e. like
carrying out an official search and at the same time declared particulars of
such land and has a written consent of evidence of the existence of such a
transaction from the registered proprietor, he may make a transaction ..
the reason is that any acceptance of such an instrument could have the effect
of defeating the intended transactions and he can stay any other transaction
for 14 days from the date of applying for such a stay or from the date of
applying for an official search. The idea is that if there are
rights about to crystallise arising from the initiatives of the parties, it is
fair and just to preserve the status quo so that the intended transaction are
not in any way undermined by any rival transaction that may serve to jeopardise
the disclosed transaction. For 14 days what is preserved is the
possibility of there being interference with the transaction to preclude any
possibility of defeating the transaction and if after 14 days the transaction
is not finalised the applicant can apply for a further 14 days until the
transaction is completed. This is known as the suspension period in which
time no other transaction will be acceptable for registration.
RECTIFICATION AND INDEMNITY
There are bound to be mistakes from
time to time and so there are provisions that take care of such things.
In RLA rectification can be done at the insistence of the registrar or through
court intervention. Section 142 empowers the registrar to correct formal
matters which do not materially affect the interests of the registered
proprietor. The registrar can invoke similar powers to rectify
registration affecting the registered person which the permission of the
affected parties. Dimension of areas after a survey has been done can be
rectified if there are mistakes. In all cases where rectification has to
take place, notice has to be given stating the registrar intention to effect
changes and the registrar may also rectify to reflect aspects such as change of
name. Those formal changes are subject
Under S. 143 the court may order
cancellation of the order of an entry of registrar where he is satisfied that
the entry was by way of fraud or mistake. The power to effect such
changes by the court is confined to subsequent registration other than the
first registration. A first registration cannot be rectified even where
fraud or mistake has been disclosed by an interested party. S. 143 can be
regarded as being intended to cure all manner of ills as far as endless
litigation or disputes regarding property is concerned and it brings some kind
of finality to the process of registration.
S. 143(2) provides that there should be
no rectification of the register where the effect would be to adversely affect
the owner who has acquired the interest in question for valuable consideration
and had no notice of fraud or mistake in so acquiring the interest and was not
privy to the fraud or mistake that is being alleged. It is not automatic
that rectification would follow even in subsequent registration where
circumstances are proved to be in place. The court’s powers are limited.
Section 144 of the RLA is relevant
because it provides for indemnity, any person who suffers damage by reason of
rectification has a right to be indemnified by the state and the person seeking
the indemnity must do so within a reasonable time. Such a person must not
have had any hand in causing the mistake of perpetrating the alleged
fraud.
Registration by virtue of prescriptions
and rights attached thereto.
This is purely a question of law and
the provisions of the Limitations Act Cap 22 apply. One may plead as a defence
the doctrine of limitation so that for his occupation of land the law would
come to his aid. Effectively occupying land continuously without
corruption the doctrine of limitation can confer upon one a right. under
provisions of Cap 22 such a person is entitled to approach the High Court for a
declaratory order that he is now entitled to land under occupation. The
exercise involved in seeking a declaratory order is not in itself intended to
confer the rights sought, it is merely an exercise in recognition of the rights
that have vested in a person by operation of law. An adverse occupier who
sits tight his entitlement is not based on a declaration but is based on the
fact that the entire prescriptive course has run its course and has
crystallised in his favour. As the owner of the land he can approach the
court for a declaratory order under Section 38 which empowers the court to
declare that the land in question belongs to the person.
RECTIFICATION AS PROVIDED FOR IN OTHER
STATUTES
These lack elaborate provisions such as
the ones we have seen in the RTA for instance which provides that if a
non-existence person is named as a given parcel of land, upon the order of a
competent authority, the name may be cancelled and a competent authority should
be understood to refer to the court and so a court order should suffice.
The registrar can rectify common errors which have been occasion purely by
inadvertence or through mistakes where such can clearly be said to be the case.
Section 60 of RTA empowers the
registrar to rectify errors which have occurred due to fraud or mistake. He has
to give notice to the interested parties concerned. Section 121 of
the GLA provides for cancellation of entries in the register in the same manner
and under the Civil Procedure Act there is a clause or procedure prescribed
which one can adopt to reach out to the court by way of originating summons to
correct any mistakes under Order XXXVI of the Civil Procedure Act.
DEVOLUTION
OF RIGHTS AND INTERESTS IN PROPEORTY THE LAW RELATING TO LEASEHOLD TRANSACTIONS
Devolution
of rights and interests in property are purely a question of law and
accordingly the same is determined by operation of law. The appropriate
term to be employed in reference to issues related to devolution of rights and
interests is transmissions which refers to the process of passing of such rights
and interests in property from one person to another as by law prescribed.
Any form that property can take can be
the subject of transmissions whether it is land, shares in a company provided
that there is an interest or a right that one is entitled to the same can be
devolved. Ways through which such devolution can occur are transmissions
manifest, or can manifest itself through a number of forms
I.
Inter vivos transfer i.e. transfers made in the lifetime of the person who owns
the property. These can occur wherever somebody purchases something at
which point they are entitled to have the rights in that property pass to
them; Property in the form of gifts can be the subject of a transfer as
well.
II.
By operation of rules of prescriptions. This refers to instances when we
have the law of limitation extinguishing somebody’s right in land and at the
same time giving somebody rights through adverse possession.
III.
Upon the demise of the proprietor or owner of a property an occasion will
present itself for the purposes of dealing with his property and how they are
to be shared and managed. This can be said of both testate and intestate
succession. The questions as to who is entitled to hold the property or
money or benefit from the Estate of the deceased person becomes one that is
purely governed by law.
IV.
Insolvency whereby a company or a legal entity runs into problems probably
through bad management or lack thereof such that it cannot meet its day to day
financial obligations in which case there would arise ground to appoint either
a receiver or a liquidator to manage the affairs of such an entity an effect of
which is to vest all property belonging to such an entity in the person so
appointed. Bankruptcy would present a similar scenario i.e individuals
who have been adjudged bankrupt. Compulsory acquisition can also lead to
rights and interests in property passing or changing hands.
In all these situations, the common
denominator is that the proprietor or the persons entitled to rights and
interests in questions suffer from some legal disabilities or are the subject
of some disability by reason of which they cannot continue enjoying or holding
and exercising the powers that are consistent with their fact of ownership of
the property concerned. When that is the case, due to such disability the
rights and interests concerned would have to pass in accordance with the
law.
On the basis of such disability the
rights and interests concerned will devolve from one person to another by
operation of law.
Examples of the applicable statutes
which regulate those instances are the RLA Cap 300 the RTA, GLA, the Companies
Act Cap 486, the Bankruptcy Act Cap 53, the Limitation of Actions Act Cap 22
the Law of Succession Act Cap 160 is relevant as well as the 1968 Compulsory
Land Acquisition Act. All those pieces of legislation offer good examples
of regulation under which those instances would fall. The Companies Act is
relevant in matters involving insolvency of companies, the others are all
relevant and provide good examples of what would apply. The Limitation of
Actions is relevant to issues of adverse ownership etc.
The law of succession Act and some
provisions in the RTA would be relevant when somebody dies. Under the
provisions of the RTA and GLA it is the position that upon the death of a
registered proprietor his personal representatives become as a matter of law
entitled to be registered as proprietors of such assets as may form part of the
Estate of the deceased person and that registration is achieved by endorsing
the names of such representatives against the title or the title of the
property after the personal representatives have met the necessary requirements
to prove their status as provided for under Cap 160. Cap 160 requires
that personal representatives must take out probate or letters of
Administration to empower them to step onto the shoes of the deceased person
and assume the powers that such a deceased person would have otherwise had in
dealing with all matters relating to this property. It is on the strength
of probate which is talked about where there is a Will and the Court process
has enabled you to prove the Will or letters of administration where there is
no Will left and you follow the procedure prescribed under Cap 160.
Section 52 of the RTA is clear that a
personal representative that has been duly approved by the court is deemed
under Section 52 of the RTA to be the proprietor of the lands or part thereof
which has remained undisposed as at the time of the registered owner’s
demise. Any land which had remained in his hands up to the time of his
death passes to the personal representative.
Section 54 requires that personal
representatives should own such property according to the dictates of equity
and good conscience and are subject to any trust which may exist in relation to
that property which the proprietor would have held such property would be
equally binding and for purposes of dealing in such property the personal reps
are deemed to be possessed of all powers or rights which enable them to
absolutely deal in such property as if they were the owner of the same.
In other words there is no distinguishing between what the deceased would have done
on one hand and what the representatives will do.
Most of those representatives would not
be the sole beneficiaries and they may not even be beneficiaries of the
Estate. The legal position that is involved in the passing of these
rights and interests is that in the first instance it would help them
administer any part of the Estate to those who are beneficiaries. This
could be persons other than personal reps or where the reps are themselves
beneficiaries but the purpose is to temporary vest the rights on personal reps
before they are passed to the beneficiaries under the Will or those who can
approve the entitlement.
There are statutory forms that must be
used when a personal rep intends to transfer the rights to the beneficiaries.
Under the RLA you must execute a form known as the RL17 and the process
is completed by registration. If a personal rep is also a beneficiary he must
use Form RL1 or must execute a transfer in his favour suing RL1 whenever
he intends to transfer the property to himself. The fact that the
personal rep has proved his status and gotten the endorsement of the court
precludes the involvement of any other players being involved in the management
of the Estate in question. Only the Executor and Administrator who are
entitled to deal in such property to the exclusion of anybody else including
the beneficiaries. The Rider is that they occupy a position of Trust the
interests that must at all times remain paramount is that of the individuals or
persons entitled to a share of the Estate. Where the proprietor of the
property dies without a Will, an administrator must be appointed thro the
stipulated process and must be confirmed as such and must be issued with a
Grant of Letters of Administrations in line with S. 70 of the Succession
Act Cap 160. It is on the strength of this that the administrator would
be entitled to deal with the property forming part of the Estate.
There is a problem that arises in
situations of co-ownership, i.e. joint tenants and tenants in common both of
which are forms of co-ownership. In line with requirements under Section 118 of
the RLA if one of the two or more joint proprietors dies, the position is that
the name of the person or persons who have so perished have to be deleted from
the register because the applicable principle under joint tenancy is that there
is a right of survivorship meaning that the interests of the deceased would
pass to the remaining proprietors and would not pass to the personal reps and
consequently to the issues of such a proprietors. This position contrasts
sharply with what is involved under tenancy in common because where property is
held in common the position is that the interest of each of the tenants can be
severed so that where one of the tenants dies, the interests and rights do not
pass to the other tenants instead it passes and vests in the beneficiaries of
such a tenant. In other words there is no right of survivorship under the
GLA and RTA it is a requirement that the certificate of death of the deceased,
proprietor must be registered against the title of any property previously held
by such a proprietor if all the requirements that bring into place the personal
representatives be they executors or administrators if all the requirements are
complied with, it sets the stage for property to devolve to the beneficiaries.
INSOLVENCY AND BANKRUPTCY
Whereas the first one involves
corporate entities bankruptcy is purely concerned with individuals. The
proprietors in this instance are equally placed in the sense that they are more
or less in their inability to meet their financial obligations and for the
individual the inability to pay up on what is expected of them or what they
owe. Both the Companies and the Bankruptcy Act provide the mechanisms for
dealing with those situations. A company can be placed under receivership
in which case the liquidator or official receiver whichever is the case would
be entitled to deal with the company’s property. The owners of the company
would be effectively disenfranchised in terms of any powers that they may have
over the company and its affairs. There are two stages and a distinction
to be drawn between receivership and liquidation. A company that
still has hope a good management can still turn it around would expect
receivership appointed by the debenture holders or the court to manage the
assets of the company and pay any outstanding debts and give back the company
to the owner if this is successful. A receiver can be bought out if the
company can raise finance to regain control. Liquidation is where there
is intention to wind up and there is no likelihood that the company will
turnaround no matter how long so it is more draconian than receivership but in
each case you have rights and interests passing to somebody else other than the
owners of the company. A person who is adjudged bankrupt also suffers
disabilities from the amount of the money one can have on them and a trustee is
appointed to manage ones affairs and if the court order is still in place you
remain an undischarged bankrupt until you are discharged from such an order.
COMPULSORY
ACQUISITION
Compulsory
Acquisition Act of 1968 is part of the doctrine of eminent
domain and is evoked by the Public purpose test. That the acquisition must not
be for satisfying private interests and the public purpose test is the basis
for acquisition. The other fundamental requirement such as making prompt
payments have to follow. The rights and interests devolve from private to
public domain in that instance.
THE LAW RELATING TO LEASEHOLD GRANTS
AND TRANSACTIONS
This involves tenancies or relations
between a landlord and a tenant. A leasehold interest is one that is held
in land under a leasehold title. The interest in question can be the
subject of an assignment and it is capable of surviving the parties to that
arrangement. The RLA defines a lease as a Grant with or without consideration
by the proprietor of land of the right to exclusive possession of his land and
includes the rights granted, the instrument granting it, a sub-lease but does
not include an agreement for a lease. This is found in Section 3 of the
RLA. The RLA gives an encompassing wide definition and we shall examine
the significance to be attached to this definition
Section 105 of the ITPA a simple definition
approach defines a lease as the grant of a right of exclusive possession of a
defined piece of land for an uncertain or ascertainable period. One can
contrast between the two definitions e.g in the first one quite a lot is
included which mentions instruments, sub-lease as part of lease and the
deliberate approach to make it clear what does not amount to a lease in this
case an agreement to have a lease arrangement does not amount to a lease.
Consideration can be necessary or unnecessary under the RLA but under the ITPA
it is a pertinent component of the definition. Both of them of course
revert to exclusive possession and the ITPA further spells the essential
requirements that the exclusive possession must relate to a defined premises
and that the period in question should be certain or capable of being
ascertained so that in terms of the essential elements of a lease, one can
easily come up with the following i.e. a leasehold arrangement must confer the
right of exclusive possession, that the arrangement must be an intention to
create a lease and nothing else; that the subject matter of such a leasehold
must be some defined premises and not of one that is not identified and that
the period for which that arrangement is to last must be that there must be a
commencement date and the termination of such an arrangement. It must be easy
to ascertain when the arrangement commences and when it ends.
On the requirement that it must confer
exclusive possession, this translates to the fact that a tenant must acquire
the right of possession to the exclusion of the landlord and all other persons
claiming under him. That includes relatives, spouses who have no business
interfering or sharing possession with the tenant if a leasehold arrangement is
what is in issue. In the case of London Northwestern Railway Co. V
Buckmaster (1874) 10 L.R. the importance attached to exclusive
possession precludes interference from the landlords gives new meaning to the
arrangements.
Exclusive possession does not
necessarily mean that where one falls into possession he becomes a
tenant. It is quite possible that one may be placed in exclusive
possession without being a tenant as explained in RUNDA COFFEE ESTATE V.
UDDGAR (
In
this case the purported lease was ambiguous and it had very funny
clauses. The actual parties to the arrangement were not clearly spelt out
and described tenants as paying guests so that the court was at pains to point
out whether a grant amounts to a lease or only a licence. The general
circumstances surrounding the entire transaction would come into play.
Between a lease and a licence there is a world of difference the most
significant being that a licence is much more inferior in terms of rights and
interests that it can confer. A licensee would suffer from setbacks that
would not necessarily affect one holding a lease. A licence is granted by
the proprietor to occupy and gain something for some consideration but for a
limited period and cannot be assigned and that is the principle difference
between a lease and a licence in that whereas a lease confers much more in
terms of rights and interests a licence offers far much less, it cannot be
assigned and does not confer rights and interest. What may be proclaimed
as a lease need not be what it is purported to be if it fails to meet the
essential requirements as it might turn out to be just mere privilege to
occupy. There is also simplicity to terminate a licence and one can
revoke it easily.
There must be an intention to create a
lease so that whether an agreement is a lease or a licence is an issue that can
properly be gauged based on the intentions of the parties where the process can
be greatly assisted by looking at the conditions at which parties entered into
the arrangement. In Hecht V. Morgan 1957 E.A 741 the rule as laid
down by the court was that there must be a clear-cut intention to create a
lease on the part of both parties. The intention can be inferred from
those surrounding circumstances and once the intention of the parties have been
gauged, it should be clear that what was intended was a leasehold grant and in
the event that there is failure to ascertain that intent on the part of the
parties and where surrounding circumstances do no point towards the creation of
a lease the courts have been inclined to hold that a licence rather than a
lease is what was created.
DEFINED PREMISES
No lease can be created or talked of
unless the property in question is concretely defined or is such that one can
have the means of delimiting the boundary of the premises so that no lease can
be created where the frontiers of the property cannot be identified. That
position has won the approval of the court in Hebatulla Brothers Ltd and
Thakore V. The court in this case stated that no tenancy could be
created where the property to be let out could not be described in
precision.
PERIOD TO BE ASCERTAINED
Period of the lease must be defined or
expressed and where it is not so expressed there should be a fairly easy way of
knowing both the commencement and the time at which the arrangement comes to an
end. This requirement is satisfied if the commencement or expiry
date can be ascertained with reference to whatever defined events that the
parties may think of where the date of commencement or expiry is uncertain, it
has been held that such a transaction would be void as was the case in Lace
and Chandler where the arrangement was to last for the duration of the war
the court held that this was not sufficient of making it capable of
ascertainment as when it was to last.
RLA LEASES
Sections 45-64 emphasise that a lease
must be for an ascertainable time, periodic leases provide one form of such
leases under the RLA and they belong to the realm of leases under the
RLA. In terms of meeting those essential requirements a periodic tenancy
would be from month to month or quarter to quarter and this would be to
ascertain the period that the lease is to last. It can also be
ascertained by payment whether monthly or quarterly. Periodic tenancy is
capable of conferring a right in a person’s favour and such a right is capable
of protection. One could be entitled to lodge a caution Section 131 of
RLA confers a right protected in periodic tenancy. Any lease for
more than 2 years must be registered to be valid. It would not be void
for purposes of certainty of duration to express a lease in terms of being a
lease for the life of tenant or landlord because these people will die at one
point and it is in this reference that the arrangements would cease and the
courts have held this to be sufficient for meeting the requirement of certainty
of duration.
In computing the term of a lease, the
date of commencement is to be excluded from the date of lease and where there
is no date it is understood that time will ran from the date of execution of
that instrument. It is also possible under
RLA to create future leases for a period to commence on a future date and this
is the subject of Section 51 were future or reversionary leases can be
created. If so created such a lease must commence within 21 years from
the date of execution failing which it must be void and one has to complete
certain arrangements by registering the instrument. It is also possible
to talk of a lease in possession. This is an attempt to regularise what
previously had been an informal relationship not regulated by any clear cut
terms and conditions. This type of lease will have its terms
expressed in terms or will commence on a date that is past or from the date of
the lease but the fact is that the tenant or the parties may have entertained
this relationship. A lease is given to one who is already in possession
of the premises.
RIGHTS AND OBLIGATIONS OF PARTIES TO A
LEASE
The first thing to emphasise is that a
lease agreement falls in the same category as another contractual arrangement
between parties and the general rules of contract will apply. The statute
provides for what would in any even be the basic minimum so that the rights and
obligations to a leasehold arrangement are such that you cannot dilute them
through your own agreement. You cannot take the basic minimums as spelt
out in the statute. You can only add and supplement but cannot derogate.
Even where parties fail to provide for those rights and obligations the
statutory obligations and rights will come into operation. The implied
rights and obligations whatever is a right to the tenant is an obligation on
the landlord and vice versa.
A tenant having a leasehold grant is
entitled to quiet possession of the premises so it is incumbent on the landlord
to ensure that the tenant has quiet enjoyment of the lease premises as long as
the tenant is making good on his obligations including paying rent, he is
entitled to peaceful occupation of the premises and that is an obligation on
the landlord. The sense of quiet enjoyment is that there should be no
interference from persons claiming there should be no disturbance.
The landlord will have breached this
particular covenant if in an effort to get rid of the tenants he removes
windows, doors and disconnects electricity. The court in Keraira V.
Vandyan 1953 Vol 1 WLR 672
In
Jones and Lavington (1903)1KB 253 the court held that the landlord could
not incur any liability with regard to this particular right where the culprit
was not the landlord but the superior landlord. (there was subletting in
this case)
IMPLIED RIGHT OF TENANT
Non derogation from grant which
requires that the landlord does not and must not use or permit to be used the
adjoining or neighbouring premises of which he is the proprietor in such a way
as to adversely affect the tenants use of the leased out premises. That
requirement is specifically there to ensure that the landlord does not defeat
ones declared intentions as to why one requires to take up the premises in the
first place and the court in Birmingham Dudley and District Banking Company
V. Ross (1888) 38 Ch. D 295 summed up the essence of this obligation as
follows
“A granter having given a thing with
one hand is not allowed to take away the means of enjoying it with the other
hand.” What this boils down to is that if one has leased out premises for
rent, to defeat ones purpose and that of ones family from living in a dignified
neighbourhood, the landlord should not allow brothel services for example if
the premises are for residential purposes. One cannot run a disco or pub
just next to the residential as this would amount to derogating from the
grant. The tenant it is assumed will have declared the user to the
landlord and the landlord is then bound to the right of non-derogation from the
grant.
The premises as leased out must be fit
for habitation that the tenant seeks to use the premises. Subject to Cap
300 and subject to the provisions of Cap 293 Rent Restriction Act it is an
implied term in all leasehold transactions that where a dwelling house is let
out especially if it is furnished there is an implied undertaking that the same
is fit for habitation at the commencement of that particular arrangement.
This is only found in the RLA and there is no equivalent in the ITPA; Leases
that involve premises that are let out furnished are subject to this
requirement.
Implied right of a tenant that the
landlord will disclose material defects in the premises which is an ITPA
feature. The Landlord under ITPA is under an obligation to disclose all
defects in his knowledge and of which the tenant is not aware but ought to be
informed of and due regard must be had to the tenant’s declared purpose for
which he intends to take up the premises. It is an implied right for the
landlord to carry out repairs Section 53 of the RLA requires that where only a
part of the premises is leased out the landlord must keep the roof, common passages
and common installations in a good state of repair. This is so
fundamental that a breach thereof is enough ground for the tenant to repudiate
the leasehold arrangement all together besides being in a position to institute
legal proceedings for recovery of damages, there is no similar provision in the
ITPA and it remains an RLA phenomenon.
Implied rights of the landlord that
translates into tenants obligations
1.
obligation to pay rent – a tenant must pay rent as a general principle Section
54(a) of the RLA and the duty to pay rent subsists for some time even in
situations where an event or catastrophe has occurred which has the effect of
rendering the premises unfit for use for the purpose to which it was leased
out. Only if there is failure of the landlord to restore the premises
within the periods stipulated by law will the duty to pay rent cease.
This is principally due to the fact that a leasehold arrangement creates an
estate in land that supersedes simple contracts so that the rights and
interests created are not bound to be defeated by certain contractual flaws
that may be found in simple contracts as opposed to a lease. The estate
is a much more substantive right which is not subject to being defeated merely
by some of these incidents. It remains vested in the tenant and therefore
the obligation to pay rent continues even in such situations except when there
is failure to make good on the damage within the stipulated period of
time. Rent is payable in advance or arrears whichever is agreeable to the
parties.
2.
Section 54(b) implied obligation on the tenant to pay rates and taxes for which
the landlord is not directly liable.
3.
Section 54(c) and (d) There is the obligation to repair the leased premises
4.
Tenant to keep the premises in goods state of repair. Repair is defined
under S. 54 as what would reasonably do
5.
Obligation to repair or replace items of furniture under S. 54(c) where
premises are let out furnished to keep the furniture in the same condition as
was in the commencement of the lease arrangement. In case any item is
lost or destroyed or beyond repair, there is an implied obligation on part of
the tenant to replace the item with similar ones of equal value.
6.
the obligation not to sublease, charge Section 54(h) the tenant is obligated
not to transfer, charge or sublease unless the landlord agrees in writing which
does not rule out the possibility the tenant engaging in this if the permission
has been procured. The landlord consent should not be unreasonably
withheld when it is sought. In Premier Confectionary Co. V. London
Commercial
consent was held to have been reasonably withheld where the transferred property
would have been used for detrimental purposes with reference to the landlord’s
own interests. Similarly in Pimms Ltd V. Tallow Chandlers the
court held that transfer consent was reasonably withheld where the sole object
of the tenant was that the transferee should require statutory tenancy.
In all situations the reasonableness or otherwise of withholding the consent is
a matter for the court to determine. It is for the court to determine and
to be guided by the facts of the case and surrounding circumstances.
Obligation of tenant to allow landlord
or his agents to inspect his premises. In the event that the landlord
wishes to exercise this landlord the examination has to be at reasonable hours
and prior reasonable notice is to be issued to the tenant and the right is not
exercisable at any time that the landlord wishes and has to be reasonable hours
and advance notice has to be given. Similar obligations by virtues of S.
108(b) basically gives the landlord the same rights.
Leases can be the subject of assignment
Assignment is possible so that a tenant
who is put in exclusive possession by virtue of a lease for a specific period
is at liberty to assign his lease and what remains with the landlord is the
right of reversion. The property is temporarily the property of the
tenant by virtue of the estate which vests on the tenant. The landlord
retains the reversionary interest at the end of the lease. The correct
position is that each party can assign their interests in the property provided
that there is due compliance with contractual rules regarding privity of
contract as well as privity of estate.
THE GLA
The general approach is that
obligations and rights are the same. Sections 32-34 are instructive and
relate to implied covenants as to development of the property on the part of
the Lessee who is obliged to effect such improvements on the land leased out
within the first 3 years of the lease and to maintain the said improvements at
all times to effect additional improvements as specified in the 1st
schedule to the Act and is obliged to maintain the improvements so effected
after expiration of the first 5 years of the lease.
Section 34 imposes restrictions not to
sublease without seeking and obtaining consent from the commissioner for lands.
Under a leasehold arrangement
enforcement can be looked at the standpoint of tenant or landlord. From
the landlords point the enforcement is through
1.
By way of distress for rent;
2.
Action for recovery for rent arrears;
3.
Forfeiture of leasehold or grant
4.
Action for injunction of damages.
Distress is carried pursuant to the
provisions of Cap 293 Distress for Rent Act and the right avails
to the landlord and empowers him to go to the premises leased out for purposes
of removing therefrom all the times in the possession of the tenant to compel
payment of rent. There are goods not capable of seizure and those capable of
seizure. Property that cannot be taken include tools of trade, perishable
goods, goods belonging to third parties, items in actual goods, clothes and
beddings and pets. Other than those other types of property may be seized
and if not sufficient to meet the required sums there is a 2nd level.
Sheep, beasts of plough or donkeys instruments used in trade or profession.
In levying distress a certified bailiff
must be engaged and no more than 6 years of rent can be distrained. Cap
22 bars claims if there are more than 6 years old.
Action for recovery of rent arrears is
an other way to distress for rent, you file a suit in court and the
requirements for limitation of actions act applies no more than rent of 6 years
is recoverable.
The 1st and 2nd
options are not exercisable simultaneously and it would be illegitimate to
proceed for distress when you have already filed in court for rent arrears.
Once you file a suit you wait for it to be dealt with.
Forfeiture – the lease on the
ground is effectively terminated under Section 56, 57 and 58 of RLA.
Forfeiture is draconian and should only be resulted to where one is faced with
a breach of a fundamental requirement on the lease. Where conditions of
Se
Actions of damages mean that one does
not want to terminate the relationship and there is an ongoing breach that one
intends to stop and in the process has suffered injury that one needs to be
compensated for then one can file for an action for damages.
Enforcement from the tenant – the tenant can
institute a suit for damages where there is an invasion on the right to quiet
enjoyment, if it is interference, disturbance or interruption by the landlord
the tenant can seek an injunction. If there is loss suffered due to the
landlord derogation from grant and business has suffered, a tenant can claim
special or general damages. In case of such breaches, the tenant has
options to seek redress. In extreme cases the tenant would have the
option to walk away from the relationship altogether. Where fundamental
breaches are in issue and all efforts have been made to bring to the attention
of the landlord it would be in order for the tenant to repudiate.
Termination of a Leasehold Grant and
the Consequential effects that flow there from
A lease may be terminated in four
principle ways
1.
Proper Notice
2.
Effluxion of time through surrender and finally through frustration Section 46
(i) (a) and 64 of RLA. Section 113 of ITPA with regard to notice.
What notice serves is to put the party
concerned in a position of knowledge of the intention to vacate a notice is
required where the lease is for a fixed term. Where it is not reserved, a
party may give notice to expire at the end of the leasehold created under the RLA
a notice must be given in case of all periodic tenancies and the notice period
should be equal to the duration of the tenancy. Under the ITPA six months
notice is required for agricultural or manufacturing tenancies and for
protected and controlled tenancies.
In all cases where notice is required
it must be given in the proper form and failure to do that will render invalid
such purported notice.
The significance attached to giving
notice lies in the fact that parties may at some point wish to litigate to
challenge the legitimacy of the arrangement and where the notice is legitimate
it has to be in line with the requirements of time.
Effluxion of S. 43 of the RTA
114 ITPA are instructive that there is an automatic termination of the
arrangement upon the period for which it was created comes to an end or if
there is a particular event on which the arrangement was predicated, upon the
occurrence of that event, or the event upon which the lease was supposed to
come to an end, the arrangement will cease e.g. when you talk about a lease for
life, when the lessee dies, the lease ceases. There is not
requirement to serve notice because it is adequately taken of where the period
is certain or capable of being ascertained.
SURRENDER
Surrender is another away to terminate
a lease provided for under Section 63 of RLA and 114 of ITPA
The tenant gives up the property to the
landlord and surrender may be expressed or implied. It may take place
prematurely before the lease runs its full course. It is expressly done
under RLA and RTA by executing a registered instrument of surrender or by
endorsing the word surrender on the lease document or its counterpart in which
case the document must be completed by executing the instruments by having it
stamped and registered. Under GLA surrender can also be registered.
Implied surrender would be judging from
the conduct of the tenant that everything that he has done or in all his
actions are inconsistent with the requirements under the grant i.e. if the
tenant does not pay rent, vacates the property without notice, this can be
considered as implied surrender.
FORFEITURE
This
happens where the landlord takes back the premises upon showing cause, that
terminates the arrangement. It is an initiative that the landlord takes
and Sections 56, 57 58 of the RLA, 111, 112 114 and 115 of the ITPA.
Under S. 56 the Lessor’s right of forfeiture lies where the lessee is adjudged
bankrupt or being a company goes into liquidation, it is possible for these
rights to be waived and the Lessor may do so by continuing to accept rent from
the Lessee or by any other conduct which would point or indicate that he
regards the relationship as intact. Wavier of right to forfeit is possible
under Section 56(3) right to forfeit cannot be exercised unless there is due
notice specifying on what grounds the lessor is pursuing that right.
Forfeiture is undertaken by peaceful
re-entry of the premises and where the tenant is in occupation and has not
resisted re-entry, or through a court order. The effect of exercising
this right terminates the lease and with that all rights and interests
cease. There are exceptions where these rights would not avail and that
is where forfeiture is procured through fraud or where relief is granted in
situations involving sub tenancy and the courts have stopped the arrangements
FRUSTRATION
Under Section 108(e) ITPA a lease is
frustrated if any material part of the property is destroyed and rendered
wholly substantially and permanently unfit for purposes it was let out for and
the effect is to render the lease voidable at the option of the lessee.
Under RLA where such destruction occurs, rents payable may be wholly or
partially suspended until the property has been rendered fit for occupation and
use. Where this does not happen in 6 months the tenant can repudiate the
arrangement.
MORTGAGES
& CHARGES AND THE LAW RELATING THERETO
Mortgages
and Charges are borrowing commercial transactions whereas mortgages apply to
such transactions created under the ITPA charges are a feature of similar
transactions carried out pursuant to the provisions of the RLA to the extent
that the obligations and duties created restrict the powers of the registered
proprietor from dealing freely with his property. Transactions in
mortgages and charges amount to burdens on land or on property offered as
security and in especially a capitalist economy they have assumed great
significance as a way of accessing credit facilities from financial
institutions or with the help each property owner may develop their properties
using their titles as security in consideration for the loan or credit
advanced.
The
transactions involved require that property owners desirous of accessing funds
approach financial institutions who are willing to accommodate them financially
to a certain level agreeable on the footing of security to be offered by
property owners in the form of the titles that they hold.
The
idea of mortgages is said to have originated from ancient Roman Law and
practice although it has also been accepted that Mohammedan Law as well as
common law has traits which point to these forms of transactions. Under
ancient Roman Law two forms of Mortgage transactions can be identified the
first aspect of the mortgage institution to develop under this law was the form
that was known as the Fiducia as a form of mortgage this involved a
fiduciary relationship between a lender and a borrower whereby the property in
question was given to the lender extending the facility in return for a loan
and it was a condition under this arrangement that upon default such property
would be forfeited to the lender regardless of the value comprised in it.
The
second aspect of the mortgage institution under Roman law was identified as the
Pigmus which entailed a transfer of possession of the property pledged
as security but without the element of forfeiture as was the case in the first
example. Upon default the property in question was merely sold and not
forfeited so that there was a possibility of the borrower getting back
something that in the event that the property fetched something more than was
owed.
There
was a third realm distinct from the first two with different rules being
applicable though it is not very clear how it worked but the Hypotheca
involved a pledge without the need for the property being delivered instead
what the creditor had was a kind of power of sale which could be exercised in
the event of there being a default. When such a power was invoked the
duty to render accounts for the proceeds from such a sale arose and it is a
much stricter requirement than the practice involved in the Pigmus.
Under
Mohamedan Law the starting point is that the idea of charging interest or
having any gain over and above what has been extended as the principal amount
is offensive to the Islamic religion. Mohamedan law does not accommodate
the element of charging interest. Their equivalent of mortgage institutions
is what they call the Bye-Bilwafa and this is what comes close to a
mortgage institution and the borrower pledges his property to the lender for
the money for sums advanced with the promise of repayment for the
principal sum that is advanced. The lender has a right to take any
benefits such as rents and profits that accrue from such a property until such
a time that the amount advanced will have been fully recovered even though
there is no duty to render accounts the fact that this is a religious arrangement
and is premised on religious doctrine, the expectation is that utmost good
faith is expected on the part of the lender to make this system work so that he
will take no more than his entitlement after which he will turn the property
over to the owner.
At
Common Law, the institution of mortgage took the form of the pledge of a
property to the lender coupled with the transfer of possession rather than
title. Originally the mortgage institution at common law manifested itself by
way of pledge of a property to the lender but not the title thereto. This
eventually developed into what is known as the English mortgage which is a form
of conveyance of the property in question with the understanding that the
mortgagee will reconvey the property in question to the mortgagor upon payment
of the principal sum and any interest that may have accrued. Over the
years the institution developed in various forms so that by the 12th
century two forms of pledges evolved e.g. a living pledge and a dead pledge.
The
living pledge otherwise known as Vivum Vadium which was an arrangement
requiring the lender to take possession of the property recover what was owed
in the form of principal sum advanced together with interest on such loan and
thereafter discharge the property.
In
the case of the dead pledge (Mortum Vadium) the lender received benefits from
the property towards the discharge of the element of interest only leaving the
principal sum to the responsibility of the borrower so that any benefits to the
property was to be applied towards discharging interest accrued rather than the
principal amount advanced. Because of the practice as embraced
under common law a lot of injustice and unfairness characterised the operations
of the mortgage institutions and due to this equity intervened to reign in on
the perceived harshness of the mortgage institution as operated under common
law for instance under common law upon a borrower defaulting in his paying
obligations the element to forfeiture of the property which had been offered as
security for the loan was very much the preferred remedy and this meant that
the borrower would lose his interests and rights in the property regardless of
its value and this in situations that involved very low levels of credit
represented injustice and so equity intervened to put straight the underlying
concepts behind these forms of mortgage transactions and in doing so it was
guided by the principle that once a mortgage always a mortgage and in seeking
financial accommodation the property owner is not saying that he has given up
his rights and interests and is ready to forfeit. On the contrary the
understanding is that here is somebody who has property but lacks credit with
which to develop his property and is merely seeking some funds to develop his
property with the understanding that the property will be turned over to him as
soon as he makes arrangements to repay and common law should not make this
hard. Equity intervened to proclaim the principle that once a mortgage
always a mortgage meaning the right of the property owners should not be
trampled on.
The
interests and rights in the property were merely confined to that of affording
security that the lenders principal sum would be repaid and not that he would
seize and take possession and deprive the property owner of the property and
this was the starting point for the courts of chancery. They developed
certain rules which guided the activities and powers or the limits within which
the parties could exercise their respective rights in connection with the
arrangements. Failure for the borrower to pay on the agreed date did not
extinguish their interests in the property and therefore it did not necessarily
have to cause the borrower to forfeit his property to the lender and by applying
these rules the courts of chancery developed the equity of redemption and the
Equitable Right to Redeem.
Equity
of Redemption
gave the mortgagor a general right to redeem his property on or before the
actual date of redemption whereas the equitable right regime gave the borrower
what was a form of grace period which extended long past the actual contractual
date of redemption for the borrower enjoyed a right to redeem the property even
long after the expiry of the agreed date of redemption. A borrower did not
have to live in mortal fear of losing his property merely because he had failed
to meet the deadline as set in the contractual date of redemption.
THE LAW OF
MORTGAGES AND CHARGES IN KENYA
A
number of statutes could be applicable in this regarding i.e. the RLA and the
ITPA, the Banking Act, Central Bank of Kenya Act, GLA and the RTA are all
relevant. They have specific provisions which apply in the event of there being
such transactions between the parties i.e. under the Central Bank of Kenya Act
there is a requirement that lending institutions must take security in the
course of advancing loans to borrowers. The banking Act Cap 488 initially
appeared not to accommodate this particular requirement of insisting of
security before any loans are advanced and prior to an amendment where Section
2 provided that the lending was to be done at the risk of individual banks but
this was altered by Act NO. 9 of 1999 which made the security mandatory and the
change came after traumatising experiences when a number of indigenous banks
went under or collapsed without having anything to turn to or to enable them
realise their security so that particular loophole has since been sealed.
The
statutory definition of mortgages and charges are found in the ITPA and the RLA
Section 58 of ITPA defines mortgage as a transfer of security in immovable
property for the purpose of securing payment of money advanced by way of a loan
in existing of a future date or the performance of an engagement which may give
rise to a pecuniary liability.
Charges
are defined in S. 3 of RLA as an interest in land securing payment of money or
moneys worth or the fulfilment of any condition and includes a sub charged and
the instrument creating a charge.
Section
65(4) of the RLA is clear that a charge shall not operate as a transfer but
shall have effect as security only and that is a fundamental distinction which
the RLA tries to draw between the character of a charge vis-Ã -vis a character
of a mortgage
The
principle difference is that in a mortgage the title to the property is the
security
Under
section 58 of the ITPA there are four classes of legal mortgages and Section 58
(5) lists those classes as follows
1.
Simple Mortgages – these can be created by delivery of possession of the
property which is the security and further to that the mortgagor binds himself
to personally pay the mortgage money and agrees that the mortgage property will
be sold in the event of his default so that the proceeds realised therefrom can
be applied towards discharging the mortgage debt. It is also possible to
create what is known as the USUFRUCTUARY and this requires that you deliver
your possession to the mortgagee further to that such a mortgagee should be
authorised to retain the property in question until such time that the mortgage
debt will have been fully repaid. The mortgagee has rights to receive
benefits accruing from that property and apply such benefits towards repaying
of the mortgage debt.
2.
There is also the benefit of creating Mortgage by Conditional sale and here the
mortgagor ostensibly sells the mortgaged property to the mortgagee subject to
the condition that the sale will become absolute as the specified date in the
even that the mortgagor defaults in his payments. In the alternative upon
the remapyment of the mortgage debt the ostensible sale becomes void at which
point the mortgagee is obligated to transfer the property back to the
mortgagor.
The
English Mortgage – here the mortgator binds himself to repay the mortgage money
on a certain date and actually transfers the mortgage property absolutely to
the mortgagee subject to a proviso that in the event of the mortgagor repaying
fully the debt there will be a retransfer of the property back to him. It
is imperative to understand the points of departure between those classes of
mortgages under Section 58.
It
is also possible to talk of Equitable Mortgages – these are creatures of equity
rather than statutes especially in the UK where much of our lawa comes
from. In Kenya we have statutory provisions for creation of mortgages
i.e. the provision of the equitable mortgages act Cap 291, we have something
tin the GLA Section 102 which suggests that we can create equitable mortgages
by deposists of title deeds with the mortgagee and the Registation of a
memorandum of such a deposit to formalise such transactions.
Sectuib
98 of the ITPA provides for a creation of some form of mortgages which are not
adverted to under Section 58(5) because that provision provides for creation of
a mortgage based on the contractual understanding of the parties which then
defines the rights and obligations under that arrangement. In other words
it gives the party a free hand in shaping the sort of arrangement that they
want to have when drawing the mortgage instruments and has been refered to as
anomalous mortgage to the extent that they do not have any attributes that are
similar to what is offered under S 58 of that Act.
Section
59 requires registration of mortgages securing a sum in excees of KShs. 200
those must be effected by wayt of a registered instruments and must be duly
executed signed by the mortgagor and attested by at least 2 witnesses.
where the amount is not in excess of 200 the transaction may be effected by
delivery of the property concerned and the option remains open to the parties.
Section
100(a) of the ITPA provides that such instruments if duly registered
confers onto the parties the powers and remedies that are available to them
under the Act. There is an attempt to relate such transactions with
charge transactions reached under the RTA and the relevant provisions which
talk asbout powers and remedities under the GLA. There is an attempt to
equate parties concluding transactions under the ITPA with those that become
chargees under a charge created pursuant to S 46 of the RTA. There are certain
essentials of a charge that is alluded to under Section 100 of the ITPA, there
must be under S 46 of RTA a chargor, a disclosure of the nature of the
property being charged whether it is freehold or leasehold a statement
regarding the land reference number and a description, there must be an
indication of the amount advanced, the lender must be named and described,
there must be an acknowledgment of the receipts of the loans advanced, a
covenant for repayment of the advanced loans and the rate of the interests to b
e paid must be specified any special arrangements agreed by the parties must be
disclosed and there must be a charging clause which binds the borrower to repay
the sums involved plus interests. The charging clause should take the
form of e.g. for the better securing of the said facility or loan, I so
and so charge my property etc.
REMEDIES
There
are remedies that are available to both parties under these transactions
Remedies
available to a Mortgagee under ITPA
1.
Remedy of foreclosure;
2.
Remedy of judicial sale;
3.
Remedy of statutory power of sale;
4.
Remedy of appointment of a receiver;
5.
Other remedies which can be resulted to include that of a right to
consolidation
6.
right to take possession of property in question and
7.
a right to institute civil proceedings on the footing of a personal covenant
duly executed by the mortgagor.
The
exercise of these remedies under THE ITPA are closely regulated with very clear
cut procedures prescribed and any departure from such procedures as laid down
would of necessity vitiate the process and render it liable for challenge at
the option of the offended party.
The
essence of foreclosure is that the mortgagee on the strength of a court order
is enabled to absolutely debar the mortgagor from exercising his right to
redeem the property so that a successful order of foreclosure operates to
extinguish the mortgagors right to redeem the property subject matter of the
transaction. There is the procedure which one must go thorugh before this
particular remedy accrues. Two stages are involved
1.
There must be an application for an order of foreclosure nisi and this order
gives the mortgagor time within which to repay the debt owed and essentially
allows him to exercise his right of redemption;
2.
An application for foreclosure order absolute so that where one is completely
unable to comply with the terms of the foreclosure order nisi it becomes open
for the mortgagee to move back to the court and make the interim order absolute
with the result that the mortgage property will have been foreclosed and the
moirtgagor permananetly debarred from exercising his right to redeem.
One
cannot invoke those procedures, except when the folloiwing conditions are in
place
(a)
The mortgage debt has become due and payable and that a decree has not been
made and that the right of foreclosure is not expressly excluded from the
mortgage instrument, that is there is no agreement in the mortgage
instrument to the contrary in which case it would be open for the mortgage to
approach the court and avail himself of this pazrticular relief.
Foreclosure
is rather harsh and that is because of the very draconian nature that it
assumes. It deprives a mortgagor of his most fundamental right to redeem
and courts are reluctant to give mortgages orders of this nature. The
courts tend to frown upon requests for an order of foreclosure because of its
far reaching implications on the owner.
Judicial
Sale requires the blessing of the court if it is to be validly exercised.
What is involved is not the exclusion of the mortgagor from exercising his
right to redeem and instead what is sought is for the courts to give the green
light for the security to be realised. S. 67 ITPA provides for this pzarticular
remedy. If and when the mortgagee opts for this arrangement, it
must be as an alternative to the order of foreclosure as one cannot go for
both, as the court grants the order, every creditor would be paid what is
owing and due to them based on the priorities that each of them may have.
A very complex procedure is provided for under S. 69 of ITPA which has to be
complied with before the court can issue such an order. It is a
preferable form of remedy from the one of foreclosure especially where the property
is worth more than the mortgage debt.
Statutory
power of sale does not require the blessing of the court and is available to
the mortgagor independent of a court order provided the mortgagor complies
fully with all the procedures laid down under the Act. The remedy accrues
after the contractual date of redemption has passed or after a specified event
has occurred which has the effect of rendering the money due unpayable
immediately. It may accrue where the mortgage instrument was executed after the
commencement of the ITPA amendment Act 1959 or where the power has been
extended to a pre 1959 mortgage transaction in line with the provisions of
Section 69 of the ITPA. Similarly it may arise where power of sale is not
expressly excluded under the mortgage instrument and finally it will accrue
where the borrower has signed the mortgage instrument and has had his signature
duly attested as by lawa required and there is a certificate by an advocate
certifying tha the has explained to the borrower the full effect of Section 49
of the Act and the borrower understood the same as required by Section 69 (4)
(a) of that Act.
What
this really seeks to instil in parties engaging in mortgage transactions is
that it must be a conscious process with all risks and obligations being
understood and appreciated by the party that is most vulnerable i.e. the
mortgagor and at the point where the transaction is completed he is left under
no illusions as to what will happen if there is non-compliance.
Before
this right can accrue, the following conditions must be satisfied
In
terms of procedure, this is elaborate and non compliance would render the
exercise of this power liable for challenge at the option of the
mortgagor. The procedure is that the lender has to give statutory notice
required under the Act. The property must be disposed of by way of public
auction having been advertised in preferably mass circulating dailies so that
everyone knows about it. If public auction is not viable, the mortgagee
may approach the court for an order allowing him to dispose of the property by
way of private treaty or contract that of course requires you to make a proper
case.
In
the carrying out of such an exercise the lender has a wide discretion but
having said that it is subject to certain conditions i.e. must act in good
faith, exercise reasonable care to realise the best price in the market that is
available at that time and turn over any surplus amount that may be realised
from the proceeds and in his exercise of this power of sale he must due regard
to the interests of the borrower in all respects.
The
courts have nevertheless observed that in the exercise of his statutory power
of sale, the lender is not acting as the borrower’s agent or his trustee and
all that is required is that he acts in good faith and gets the best price for
the property and give any surplus to the borrower whose interests he must have
at heart.
REMEDIES OF THE CHARGEE UNDER RLA
There is an impediment as regards the exercise
of such power of sale as envisaged under the Act. The Amendment impedes
the exercise of such powers and leaves in doubt the reliability of this
particular remedy especially when it is subjected to a continuous interruption.
Under the RLA a chargee has fewer
remedies than would avail to a mortgagee under ITPA, infact the RLA severely
restricts other remedies apart from the statutory power of the sale.
Section 80 declares that a chargee may not enjoy a right of entry therefore
there can be no taking of possession neither can a chargee proceed by way of
foreclosure. Similarly under S. 84 of RLA a Chargee has no right of
consolidation unless his sale is expressly reserved in at least one of the
charges. One is better of dealing with this particular transactions under
the ITPA than under the RLA from the perspective of the person providing the
The Judicial approach to the exercise
and/or enjoyment of the Right of Redemption.
At common law, failure to make
repayment of the amounts advanced and any other interests accrued automatically
led to extinction of rights so if at the legal date of redemption no repayment
has been made, common law treated the right of redemption to have ceased.
Through intervention of equity this position has been substantially altered in
the sense that indulgence is granted to the borrower even long after the expiry
of the actual date, the legal date of redemption. That is premised on the
understanding that the basic character of the transaction i.e. that of a mortgage
transaction should not be undermined and once a mortgage the transaction
remains a mortgage.
Both the ITPA and theh RLA grant the
right to redeem which is granted in absolute terms and there is no element of a
fetter or clog even from a statutory standpoint and accordingly the borrower
may move to redeem his property at any time after the principal sum has become
due and payable an dthere is no requirement to issue a notice of such
intention. Section 72(1) of the RLA makes it clear that any agreement
between the Chargor and Chargee to deprive the Chargor his equitable right of
redemption shall be void for all purposes. Under both legislation the
right of redemption is inviolable. In any case if no date of redemption
is specified in the instrument of the charge it is the position in the RLA that
the sums shall be deemed to be payable 3 months after a demand in writing from
the Chargee to the Chargor seeking for repayment of such an amount as may be
due. In the event that the Chargor wishes to express his right of
redemption after 3 months following the demand, there is a requirement that he
shall serve 3 months notice or pay 3 months in lieu thereof at the time of
redeeming the property. Based on this points the courts have approached
the issue of guaranteeing this right and protecting it wherever it is
necessary to do so.
There are a number of case law to
support that situation.
In Saleh V. Eljofri (1950) 241
KLR the court held that a borrowers equity of redemption was an essential
element of every mortgage transaction and that failure to repay the mortgage on
the agreed contractual date of redemption did not debar the borrower from
exercising his right to redeem the mortgage property.
Similarly in Indstrial and Commercial
Dev Corp V. Kariuki and Gatheca Resources Ltd the court underscored the fact
that the right of redemption subsists until such a time that a transfer has
been duly registered. Accordingly anytime before such an exercise is undertaken
in exercise of this equity of redemption, the Chargor can proceed and make good
on the amounts due in exercise of this particular right. this is guided
by the understanding that the borrower both under the ITPA and RLA is entitled
to redeem his property unconditionaly at any time after the principal amount
has fallen due and that right cannot be impeded. There is an exception to
this under S. 91 of the Companys Act we have a situation where the rights of
redemption can be precluded if one enters into an arrangement involving
irredeemable debentures. Creation of these debentures would appear to
offer some sort of departure from the holdings of the courts that this right
cannot be displaced.
In the case of Fairclough and Swan
Bakery Co. Ltd (1912) AC 565 there was a clause that purported to postpone the
right to redeem on the part of the mortgagor for about 20 years in the
estimation of the court this particular clause rendered the property virtually
irredeemable and that was a violation of the mortgagor’s right of redemption
and accordingly such a clause could not stand and the court agreed that the
borrower had the right to redeem at an earlier date other than the one stated
if he was in a position to solve his debts. In the words of MacNaghten J.
equity will not permit any device or contrivance being part of the mortgage
transaction or contemporaneous with it to prevent or impede
redemption.
In the case of Lewis V. Frank love Ltd
(1961)the arrangement was that the borrower and the personal reps of the lender
agreed that if the said personal reps did not demand for the repayment of the
mortgage debt for a period of 2 years, the borrower would grant them and option
ot purchase part of the mortgage property. In the opinion of the court
this agreement constituted a clause that amounted to a fetter on the borrowers
redemption of equity and could therefore not stand and accordingly it was void
since it amounted to a clog on the equity of redemption.
In Davies and Simmons 1934 Ch. 442 the
court declined to uphold an agreement by virtue of which the mortgage
property would belong absolutely to the Mortgagee in the event that the
borrower died before him because that sort of condition tended to fetter and
clog the equity of redemption the idea being that the mortgage transaction
essentially retains its character as such and anything that is introduced which
would substantially alter this character would not be upheld by the courts
because it undermines that the institution.
There
are instances where the courts have upheld existences of terms and conditions
which would appear to assume the character of a fetter or clog but for the fact
that they are collateral advantages that subsists alongside such terms and
conditions which effectively alter their nature so that they are not seen as
fetters and clogs but rather reasonable. The courts jealously guard the
mortgagors equity of redemption and anything inconsistent with enjoyment of the
mortgagor’s rights is resisted. The other side of the coin is that in
situtaitons where ssuch conditions that would appear to be fetters and clogs,
are there but it is the understanding that provided that these conditions and
terms are not oppressive or unconscionable the courts will disregard the
clauses and give them effect. There are a number of judicial decisions
which represent this standpoint
In Knightsbridge Estates Trust Ltd V.
Bryne (1940) AC 613 the agreement was to the effect that the mortgagors would
repay a loan advanced to them amounted to Pounds 360 for a period stretching 40
years. They later changed their stand because they had found an
alternative lender that would give preferential interest rates and wished to
borrow from that other source and sort to do that before the other period
ran. In any event the stipulation in relation to the forty year period
postponed the exercise of their right of redemption. This was
unreasonable and therefore void. The court held that there was nothing
oppressive in this particular arrangement and the mortgagors has been indulged
and accommodated based on very fair terms and Lord Green observed that equity
does not reform mortgage transactions because they are unreasonable but it is
concerned to see that essential requirements of such transactions are observed
and unconscionable terms are not endorsed.
In Krellinger V. New Patagonia Meat and
Cold Storage Co. Ltd, (1914) AC 25 the arrangement was that the Respondents
would be provided with a loan which was to be secured by a floating
charge. A further stipulation in the mortgage instruments was to the
effect that for a period of 5 years from the date of the mortgage the company
would not sell sheep skins to persons other than the lenders provided that the
lenders paid the best price obtainable in the market within the material
period. When the matter became contentious it reached the courts and in
the opinion of the court the agreement was valid because the stipulation that
was restrictive was in fact a collateral contract outside the main mortgage
transaction and conferred collateral advantages and so the courts would not
interfere.
In Multi Service Bookbinding Co.V.
Marden 1978 Vol 2 WLR 535 the court was categorical that a collateral provision
in a mortgage which does not clog the equity of redemption would stand and can
only be objected to on the grounds of it being unfair or unconscionable.
Such a transaction would not be impeached.
In Noakes V.Rice the court stated that
if provisions in a mortgage transaction though unreasonable are not
unconscionable in any way, no subsequent events will operate to invalidate the
transaction. The court declined to intervened in the commercial
transaction foreseeing a drop in the value of the British pound.
In the clearest of cases, where there
is an impediment in the right of redemption the courts will strike down the
transaction for being void on the other hand in those other situations where
the parties bind themselves to terms to terms that amount to clogs and fetters
but include collateral advantages would be saved.
There are some doctrines which are
significant with regard to transactions in charges and mortgages, the doctrines
of Tacking, Marshalling and Contribution.
TACKING: - this doctrine allows a
subsequent lender to insist on the repayment of this loan before repayment is
made to prior lenders. That right where it obtains has to be specifically
reserved in the mortgage instrument if it is to be exercised. Failure
would mean that the right is lost altogether. It is a doctrine that
allows for priorities in terms of who should be sorted out or paid first and
the effect of reserving it in the instrument is that you supersede the
mortgagee reserving such a right supersedes other mortgages in realising their
dues.
MARSHALLING – this arises where there
are competing mortgages. It is a principle of equity which is given the
force of law through the provisions of the ITPA Section81 basically each
property out of several properties mortgaged to secure one debt is in the
absence of the contract to the contract is made liable to contribute to the
debt which has been secured by the mortgage property subject to any prior
encumbrances which may affect the property in question as at the date of
creating the mortgage.
The priority is based on the date of
registration, mortgages and charges have to be formalised through the
registration process so that the general rule is that the charge or mortgage
which is first registered would be discharged in line with that order so that
in situations where a subsequent borrower exercises the right of redemption
there is a duty taxed on such a person to pay off the prior encumbrances before
he can have his property discharged under the mortgage and priority is based on
such times as the particular transaction creating the encumbrance would have
been registered. Accordingly the Charge or Mortgage first registered
would have priority over all transactions of such a nature.
The exercise of statutory power of sale
is a significant relief that avails to a mortgagee or Chargee both under RLA
and ITPA. This relief has attracted a lot of litigation over the years.
There are notable judicial pronouncements with regard to statutory power of
sale. The courts have had to make pronouncements to clarify under what conditions
the power of statutory sale arises. These pronouncements should not just
be taken in passing but these are issues that make a difference on whether the
On the issue of notice that required
under S. 69(a) of ITPA that notice is significant since the courts have held
that it is of no consequence if the instrument fails to state that the
Trust Bank Eros Chemist and Widestrong
Auctioneers Civ Apo 133 Unresported
The court was unequivocal that failure
to express the estate in clear terms the period whtihn which the power would be
carried out would be invalidated on the notice. In making clear this
point the court took some time to explain the purpose to be served by the
notice and observed that the notice is to guard the rights of the mortgagor because
if the power of statutory power of sale is exercised, the mortgagors interests
would be extinguish and therefore the notice should serve to warn the mortgagor
of the intended sale for the statutory right of sale to accrue a 3 months
notice to lapse is provided. A notice seeking to sell the charged
property must expressly state that t he sale shall take place after the 3
months notice and to omit to say so, as by law required is to deny the
mortgagor a right conferred upon him by statute and this must render the notice
invalid.
There are instances where you need to
serve notice before you can exercise a statutory power of sale.
This was clarified by the court in the
case of James O Oketch V. E A Building Society
Where the court of Appeal stated that
the law on the question as to whether statutory notice ought to be given by a
chargee to the chargor are as follows: Section 69 of ITPA.
In relation to when property passes, or
vests, to the purchaser following the exercise of the mortgagee’s statutory power
of sale and in the cause of deliberations in the same case, the court of appeal
took time to state the law in the following terms that the purchaser acquires
title to the suit property upon the fall of the hammer subject to the payment
of the price so where the sale is through a public auction property falls at
the fall of the hammer.
In restating this principle of law the
court cited the provisions of the ITPA as amended by Act NO. 19 of 1985 the
mortgagors rights stood extinguished upon a contract of sale or after an
auction came into existence i.e. the title to the property is acquired and the
right to redeem is distinguished following such a process. This position was
retaliated in Sajab V. Amre Liwalla 1956 EACA 71 the court stated the position
of a bona fide purchaser for value as follows provided security is offered the
bona fide purchaser security for title therein cannot be impeached and the only
remedy available to the Chargor lies in ac claim for damages against the
Chargee.
Mbuthia V. Jimba Credit Finance &
Another the court emphasised that what that means in terms of the
position of the purchaser is that the mortgagors right of redemption is lost as
soon as the mortgagee sells the property by auction or enters into a private
contract in respect thereof.
This is the position under the ITPA
which stated that the title obtained by purchaser is good as against the whole
world. Under RLA sale of property would be subject to impeachment if
fraud as a ground can be established provided this particular relief is done
properly based on the fact that the chargee has been guilty of fraud, then the
title can be questioned and that was the position as amplified in Patrick
Kanyagia V. Damaris Wangeci and 2 others Civl Appeal 150 of 1993 unreported.
the court would be inclined to grant a
stay that would restrain the exercise of the mortgagee’s statutory of sale and
courts will be inclined to do so where the chargor or mortgagor has ably shown
that he/she does have a prima facie case. This was the holding of the
court in Lavuna and others V. Civil Servants Housing Co. Ltd and Savings and
Loans Ltd. Where it is found that a proper statutory notice of intention
to realise security in the property subject of the charge has been issued and
where the mortagor is unable to show that he/she has a prima facie case, no
such stay can be granted and that is the view expressed by the court in the
case of GEORGE GIKUBU MBUTHIA & OTHERS V. SMALL ENTERPRISES the application
for stay was found to be a mere delaying tactic and lacked merit. No
prima facie case was disclosed and no stay would issue.
Aberdare Investments V. Housing Finance
and Another the application for stay was based on the assertion that the
Chargee ought to exhaust other remedies available to him before taking recourse
to his right to statutory power of story and the court held that the choice of
remedy for recovery was up to the borrower, who could proceed to realised
security under any of the available remedies.
WHEN THE COURT WOULD BE INCLINED TO
GRANT AN INJUNCTION
The courts will be inclined to grant a
stay for a
1.
Where the amount due and payable is disputed
2.
Where the mortgagor has commenced an action to pursue a right of redemption;
3.
Where the mortgagor has challenged the procedural requirements as adopted by
the mortgagee in conducting the sale.
The effect of a stay is to restrain or
put in abeyance any such process and the being injunctive as it were, such an
order will only be granted where the applicant satisfies the conditions
present. A stay is a matter for the discretion of the courts and the
remedy may be declined or granted depending on the strength of the applicant’s
case. There are instances where the courts would be inclined to
injunction the mortgage role or the chargor. Where there is a threat to get rid
of the security, when the mortgagor or chargor have relieved the chargee or
mortgagee of the security offered for the financial accommodation that has been
given. In such cases they will be deprived of a fundamental ingredient of
the mortgage or charge transaction on the basis of which they will or they are
entitled to realise their security and so the chargee can successfully stop the
chargor from dealing with the property charged in such a manner as would
deprive him of the security. Isaac Kamau Ndirangu V. Commercial Bank of
Africa Ltd. That was the holding.
It should be clear that through these
transactions, the mortgagor or chargor are at a disadvantage and since in any
arrangement that involves unequal parties there is bound to be excesses, or the
overall transaction would tend to favour more the advantaged party that has
been recognised as the nature of mortgage and charge transactions. In
Verno V Bethel the court stated that necessitors men are not truly speaking
free men but to answer a present exigency will submit to any terms that the
draftee will impose upon them. This then explains the underlying attitude that
the courts have had towards cushioning or protection to the mortgagee or
chargee in all these forms of transactions. It is recognise that the
parties are not of equal bargaining power.
CONTROLLED TRANSACTIONS:
Controlled transactions are
In much of what we have seen, parties
are left to their own devices and regulation is limited or restricted to such
provisions as may be made under the relevant legislation. In a lot
of those instances that we have seen , there is no direct intervention from
outside in the sense that an administrative or quasi judicial organ comes in to
practically supervise the sort of relationship that they have. The
controlled transactions therefore assume the form of administrative or quasi
judicial interventions in appropriate situations because of the perceived weaknesses
that one of the parties involved suffers from or because of the imperatives
that are placed in protecting certain special interests or values.
The case for control would have been
appropriately made if firstly it is recognised that property owners ought not
be allowed to enjoy roving and unfettered powers over their property in certain
situations for such a state of affairs may militate against a general public
interest. Secondly the case for control can be made where in situations
involving proprietary transactions there are fundamental grounds that imply
interventions to safeguard special interests. There is the
consideration of the social as well as the economic values which merge to make
a very strong case for control. There are basically 3 example which can
be cited to elaborate the phenomenal control
1.
In the case of landlord tenant relationship residential
2.
Landlord tenant relationship business;
3.
Agricultural Land;
What forms do the controls effected in
these areas take?
With regard to dwelling houses the Rent
Restriction Act Cap 296 sets out tenancy standards below which voluntary
agreements are not to fall and the aim of the Act is to protect tenants of
premises which are let out for not more than what is described as standard rent
from arbitrary increases of rrent or dispossession by greedy landlords or from
any alterations that would adversely affect their well being. This is a
social as well as economic value giving ground for effecting control. The
Act goes on to designate the categories of people that qualify, any dwelling
house let standard rent is defined as of July 1989 at 2500 is a protected
tenant. In the event that it is not rent out as that date it falls to the
Rent Tribunal to determine what rent is payable. Sub tenants as well as
tenants are equally protected.
In Desai V. Shah there are exceptions
if the tenants are paying 2500 per month, they don’t automatically become
protected tenant and the Act explains the exceptions such as accepted dwelling
houses include property lent out by govt, local authorities or rent out to
service tenants these tenants are outside the armbit of protection. S. 11
provides that rent can only be increased where the landlord has to pay increased
rates or where he has improved the premises and where this has to be the case,
it is not open for the landlord to do this unilaterally but must seek
authority. It is only through the rent restriction tribunal that the
terms can be altered by the Landlord.
The tenant enjoys protection since the
landlord cannot unilaterally increase rent.
There are grounds that may be relied
upon by the landlord when they want to throw tenants out which grounds must be
sort for within the Act. Anything outside the Act is invalid, the Act
restricts the sort of leverage that the landlord may have over the tenants and
the idea is to restrict those powers that the landlord has over his property
for the benefit of the tenants. The tribunal is incapable of enforcing
its own orders and when it pronounces them they have to be enforced through the
ordinary courts.
With regard to Business premises
tenancies, the relevant statute is the Landlord and Tenants (Business Premises)
Cap 301 which sets out standards below which voluntary agreements cannot avail.
Protection here depends on the duration of the tenancy and on the purpose for
which the tenancy is created. S. 21 defines controlled tenancy as the
tenancy of a shop hotel etc which has not been reduced into writing and is not
for a period extending for 5 years …
An essential feature, there is a
requirement that termination of terms and conditions can only be carried out
with the express provisions of the Act which are elaborate i.e. any party
wishing to terminate must give notice and such notice must be channelled
through the tribunal and the grounds to be cited must be from the Act and not
extraneous and the elaborate procedure described applies. Any party
wishing to challenge the others intended initiative must go through the
tribunal and if there is a contest the matter must follow the laid down
procedure. Tribunal enjoys wide ranging powers and like the rent
restriction tribunal it suffers from inability to enforce its own orders which has
to be through ordinary courts.
AGRICULTURAL LAND
In the first 2 instances, there is an
attempt to cushion the tenant from the perceived injustice in the absence of
intervention of the tribunals and the landlord is being put through a rigorous
procedure if he is to exercise any of his power and the tribunal has the
ultimate say safe for enforcing the order. That is a social realisation
that we have weaker parties members of society who need protection and their
means is limited and level of rent has to be regulated.
With regard to agricultural land, the
fact that in our society which is dependent on agriculture, agricultural land
means a lot that the persons with the legitimate expectations on that land go
beyond the registered proprietor especially in the rural areas where land is
registered in the name of the nominal head of the family. In the absence
of intervention the people depending on the land need protection. The
land control Act Cap 302 sets a judicial body known as the Land Control Board
Section 3-5 a controlled transaction is defined under the Act as “any
transaction specified in Section 6(1) and not exclusded by S. 6(3) of the Act
and these are leases, sale transfers and any other dispositions or dealings in
regard to agricultural land which is situate in areas known as a land
controlled area of the minister concerned. There are certain transactions
exempt from control which include transmission in land, where the govt country
council is one of the parties in the transaction. The law is that such
transactions shall be void for all purposes and of no legal effect whatsoever
unless the necessary consent is sort and obtained from the Land Control Board
as under S. 7 of that Act. There is a procedure to be followed in the
event that one was to carry out dealings in respect of agricultural land, there
has to be a lands control board meeting at which both parties have to appear
(seller and purchaser) the meeting should be sufficiently advertised to enable
any interesting parties refer to family members who depend on such land for a
livelihood and they have a right of representation before the board and can
challenge the intended transaction on any ground especially if it may leave
them landless. The Board enjoys a wide range of discretion and can decline
the consent or give the same after hearing representations including any
objections. A number of consideration are in relation to possible
difficulties that may be visited on those who depend on the land, and if the
purchaser has too much land they can deny consent to purchase more. If
the proprietor has alternative land and the sale would not jeopardise the
status of his family then they will grant consent.
The consequence of a transaction
involving agricultural land is that in the absence of consent, the transaction
is null and void and of no consequence and by virtue of the provisons of
Section 22 of the Act can be ordered to vacate the property however any sums
that may have exchanged hands are recoverable as a debt by way of a civil suit
and an order may issue for a refund.
Application for consent must be
procured within 6 months of the intention to purchase. What is required
is that within 6 months of commencements of the transaction, one must procure
the land board consent.
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