The Supreme Court Rules That an Allotment Letter is Not a Title Deed and Cannot Be Transferred
The Supreme Court Rules That an Allotment Letter is Not a Title Deed and Cannot Be Transferred
On 22nd September 2023, the Supreme Court delivered a verdict in SC Petition No.5 (E006) of 2022, known as the “Torino case.” The Court ruled that an Allotment Letter is not a title deed and cannot confer any interest in land. It is merely an offer awaiting the fulfilment of specified conditions, including the payment of a Stand Premium and Ground Rent within prescribed timelines. Even after these conditions are met, an allottee cannot pass valid title to a third party until they acquire title through proper registration under applicable laws.
This ruling underscores that an Allotment Letter is not a title deed and cannot be transferred from one person to another. Property buyers must conduct thorough due diligence (#BuyerBeAware) to ensure they obtain a valid title deed. The principle of indefeasibility of title does not apply if the initial land allocation was illegal or procedurally flawed.
The judgment has significant implications, particularly for many Kenyans in the Coastal region, Kajiado, Juja, Nairobi (Embakasi and Starehe), and other areas, who hold #AllotmentLetters and attempt to transfer them as #TitleDeeds. Many buyers end up in court upon realizing their title deeds are invalid. Conducting thorough #DueDiligence is crucial to avoid land fraud. Allotment Letter holders can transfer land through registration via the Ardhisasa platform under the #NationalLandCommissionServices to obtain valid title deeds.
The Torino Case: From Trial Court to Supreme Court
Trial Court: Constitutional Petition No. 38 of 2011
Torino Enterprises Limited vs. The Honourable Attorney General
Timeline of Allocation
On 21st February 1964, a freehold title known as Embakasi L.R No. 11344 (Original No. 41/3), measuring 5639 acres, was granted to Kayole Estates Limited. This parcel was transferred to the Nairobi City Council (NCC) on 22nd November 1971. In 1973, it was subdivided into 8 parcels, including LR No. 22524 (83.910 Hectares), which was transferred to Renton Company Limited in 1999 via an Allotment Letter. Renton then transferred it to Torino Enterprises Limited in 2000 for Kshs.12,000,000. Torino claimed it received a title deed under the Registration of Titles Act on 26th April 2001.
In 2005, Torino argued that the Department of Defence (DoD) unlawfully fenced off 90 acres of its property. Torino contended that DoD’s actions were illegal, infringing on its constitutional property rights under Article 40 of the Constitution, and that DoD failed to comply with #CompulsoryAcquisitionProcedures.
Court Rulings
On 4th July 2011, the trial court ruled in favor of Torino, declaring the suit property a freehold private property and not public land. The court ordered the Respondent to restore possession to Torino or pay Kshs.1,530,000,000, the market value of the land. The Attorney General appealed this decision.
Civil Appeal No.84 of 2012
Attorney General vs. Torino Enterprises Limited (2019)
On 4th February 2022, the Court of Appeal overturned the High Court’s judgment, stating that the suit property was private land and not unalienated government land before NCC’s purchase in 1971. It held that the #CommissionerOfLands lacked authority to allocate it. The court found Torino was not an innocent purchaser, as it should have been aware of DoD’s occupation. Consequently, the #CertificateOfTitle issued to Torino was deemed illegal.
Supreme Court: Petition No. 5 (E006) of 2022
Torino Enterprises Ltd vs. The Attorney General
The Supreme Court concluded that an Allotment Letter cannot confer land interest and cannot be transferred until proper registration is completed. It determined that Torino was not an innocent purchaser and dismissed the appeal.
Similar Verdict in Dina Management Limited Case
In Dina Management Limited vs. The County Government of Mombasa & 5 Others (Petition 8 (E010) of 2021), the Supreme Court revoked a title deed due to non-compliance with legal procedures, emphasizing the #BurdenOfProving the #Legality and #Validity of a title rests with the buyer.
Conclusion
These precedents highlight the necessity for buyers to conduct thorough due diligence before purchasing property. WKA Advocates’ Real Estate, Conveyancing, and Construction Law department can assist with this process, ensuring compliance and reducing the risk of land fraud.
For further legal assistance or more information, contact us at info@wka.co.ke, visit www.wka.co.ke, or call +254 798 035 580. Our Nairobi Hub is located at Parklands, Valley View Business Park, 6th Floor, City Park Drive, Off Limuru Road.
