The Significance of Due Diligence in Conveyancing Transactions
In a recent landmark judgment, the Supreme Court of Kenya tackled the complexities of property rights in Petition No. 5 of 2022: Torino Enterprises Limited vs Hon. Attorney General. Delve into the riveting details that unfolded during the legal proceedings and the critical lessons for the realm of conveyancing.
Key Facts: Unraveling the Property Quandary
The saga commenced in 1964 when a freehold title of 5639 acres was granted to Kayole Estates Limited, eventually leading to a transfer to Nairobi County Council (NCC). The subsequent division of the land and its allocation to Renton Company Limited set the stage for a legal battle. Torino Enterprises Ltd entered the scene with a lease for a portion of the land, only to face encroachment and construction by the Department of Defence (DoD) in 2005.
High Court Verdict: Upholding Property Rights
Torino Enterprises Ltd sought justice by filing a Constitutional Petition, asserting that DoD’s actions constituted unlawful compulsory acquisition without compensation. The High Court ruled in favor of Torino, declaring the acquisition unconstitutional and ordering the restoration of the property or compensation of Kshs. 1,530,000,000.00.
Court of Appeal’s Twist: Admissibility and Property Status
The Honorable Attorney General appealed to the Court of Appeal, challenging the admissibility of evidence and disputing the property’s status. The Court of Appeal overturned the High Court’s decision, emphasizing the private nature of the land and questioning the validity of Torino’s title.
Supreme Court’s Decisive Stand: Validity of Titles and Due Diligence
Undeterred, Torino Enterprises Ltd pursued justice at the Supreme Court, where critical issues took center stage. The court explored the validity of Torino’s title, DoD’s claim to the property, and the intricacies of the Allotment Letter. Crucially, the court highlighted the obligation of due diligence for purchasers, underlining the significance of thorough searches and adherence to regulatory requirements in conveyancing processes.
Legal Insights: Elevating Due Diligence Standards
This judgment reinforces the doctrine of a bonafide purchaser for value, emphasizing the necessity for purchasers to delve deep into property titles. Letters of allotment are clarified as mere offers, requiring strict adherence to conditions and subsequent registration for the conferment of transferable title. The ruling sets a precedent for meticulous due diligence in conveyancing, ensuring the passage of good title and securing purchasers within the republic.
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