FIRM_31-ASSIGN-TYPES_OF_OVERRIDING_INTERESTSIN_LAND[1]-1.pptx

Overriding interests In land kenya

1. FIRM 31ASSIGNMENT: TYPES OF OVERRIDING INTERESTS ON LAND AND HOW THEY ARE CREATED

2. MEMBERS-FIRM 31 Jackson Ngure Wanjau - 20241552 Cindy Beth Alogo - 20241779 Richard Kamau Wekesa - 20241834 Peter Gathecha Njoroge - 20241921 Michael Waweru Gitau - 20241796 Sophy Truphena Oluoch - 20241826 Joseph Siror - 20241736

3. Contents of presentation Introduction (a) spousal rights over matrimonial property - 2024 (b) trusts including customary trusts - 2024 (c) natural rights of air, light and water - 2024 (d) rights of compulsory acquisition - 2024 (e)leases or agreements for leases for a term not exceeding two years, periodic tenancies and indeterminate tenancies - 2024 (f)charges for unpaid rates and other funds which – 2024 (g) Charges for unpaid rates and other funds which, without reference to registration under this Act, are expressly declared by any written law to be a charge upon land - 2024 (h) rights acquired or in process of being acquired by virtue of any written law relating to the limitation of actions or by prescription - 2024 ( i ) electric supply lines, telephone and telegraph lines or poles, pipelines, aqueducts, canals, weirs and dams erected, constructed or laid in pursuance or by virtue of any power conferred by any written law – Joseph Siror - 20241736

4. Introduction The Land Registration Act creates a way in which all interest in land must be registered. Evidence of registration is borne in the title document. The title document is therefore the evidence of the ownership of land with interests indicated in encumbrances section of the title. Rights borne in the title document are enforceable Overriding interests are however an exception

5. Introduction cont. Overriding interests refers to rights that are enforceable without being protected on the register and bind a registered proprietor and his transferee even if he does not know of their existence 4 . If the overriding interests are expressly inculcated in the registered document then its protection under this category is superfluous and redundant…. it ceases to be considered an overriding interest  and as such ceases to bind as an overriding interest and its protection is as thus left for enforcement as a right or interest expressly encompassed in the agreement 4 . Overriding interests detract from the principle that the register should be the mirror of the title 4 . They consist of third party rights which on policy grounds, should bind the registered proprietor and any purchaser even though they have not been registered 4 .

6. Introduction(cont .) Overriding interests are interests that are not protected on the land register but which nevertheless bind any person who acquires an interest in registered land and any purchaser. Overriding interests are created in section 28 of the Land Registration Act 4 and section 30 of the Registered Land Act Chapter 300 5 ( with exception of (a) spousal rights over matrimonial property and (b) trusts including customary trusts) . In The Supreme Court of Kenya at Nairobi, Isack M’inanga Kiebia v Isaaya Theuri M’lintari & another [2018] eKLR (Petition  No. 10 of 2015) the learned Judges ( Maraga , CJ & P, Ibrahim, Ojwang , Wanjala & Njoki , SCJJ) : held that : The provisions of Section 30 of Cap 300 were re-enacted as Section 28 of the Land Registration Act. However , Parliament introduced two new categories of overriding interests , the first category is what are now called “ spousal rights over matrimonial property ”; while the second category is what are, rather curiously called  “trusts including customary trusts ”

7. Introduction(cont .) The said sections state that unless the contrary is expressed in the register, all registered land shall be subject to the following overriding interests as may for the time being subsist and affect the same, without their being noted on the register 4 .   It is impossible to discover overriding interest by a mere search at the land registry . It is therefore important that due diligence goes above the search 4 . Section 28 of the Land Act 2012 provides that: Unless the contrary is expressed in the register, all registered land shall be subject to the following overriding interests as may for the time being subsist and affect the same , without their being noted on the register —

8. ( a ) Spousal rights over matrimonial property The drafters of the constitution had envisioned the need to preserve matrimonial property by giving the mandate to parliament to come up with legislation that incorporates the provisions of article 68 (iii) through the Land Act 2012 and the Land Registration Act 2012 that have both given provision for the requirement of spousal consent for disposition of land Article 27 (1) of the constitution provides for the right of equality between parties to a marriage by virtue that every person is equal before the law and have the right to equal protection and benefit of the law. This provision of the law has reflected in disposition of Matrimonial property

9. Cont. Section 28 (a) of the Land Registration Act establishes spousal rights over matrimonial property as an overriding interest. Spousal consent is therefore required before a spouse can sell Matrimonial property and in the absence of consent , the sale becomes null and void. The consent is given in writing by the non- owning spouse . In the absence of such consent, the sale becomes null and void as seen in the case of KADZO MKUTANO V MKUTANO MWAMBOJE KADOSHO & 2 OTHERS [2016] Eklr , it was held that section 28 of the Land Registration Act recognizes spousal rights over matrimonial property as an overriding interest .

10. CONT. Section 93 (3) of the Land Registration Act cross references section 12 (5) of the Matrimonial property act which puts a requirement for the consent of a spouse if the other spouse wants to charge or transfer property which he or she holds in his or her name individually. Section 79 (3) of the Land Act provides for the requirement of spousal consent in regards to charges to the matrimonial home . There is a rebuttable presumption that property acquired during the subsistence of a marriage is held in trust for the other spouse whose name does not appear as the owner of the said properties as set out in section 14 of the Matrimonial Property Act. This presumption can be rebutted if evidence is brought before a court that proves the contrary .

11. Purpose of spousal consent To ascertain that the spouse: Has been given independent legal advice and is aware of the consequences of giving their consent to the sale. Is aware of the sale and has consented to it. Has knowledge that the property is registered in the name of their spouse. Knows the subject property exists.

12. (b) Trusts including customary trusts Customary trust is an encumbrance on land . These are non-registrable rights which run with the land. They are overriding and they subsist on the land 3 . Section 25 (2) on the (Rights of a proprietor) of the The Land Registration Act No. 3 of 2012 Laws of Kenya provide that : ( 2) Nothing in this section shall be taken to relieve a proprietor from any duty or obligation to which the person is subject to as a trustee

13. Trust cont. Further, section 26 (1) of the The Land Registration Act No. 3 of 2012 Laws Of Kenya provide that: The certificate of title issued by the Registrar upon registration, or to a purchaser of land upon a transfer or transmission by the proprietor shall be taken by all courts as prima facie evidence that the person named as proprietor of the land is the absolute and indefeasible owner , subject to the encumbrances , easements, restrictions and conditions contained or endorsed in the certificate, and the title of that proprietor shall not be subject to challenge , except— ( a) On the ground of fraud or misrepresentation to which the person is proved to be a party; or ( b) Where the certificate of title has been acquired illegally, un- procedurally or through a corrupt scheme .

14. Trusts cont. In the case of Muthuita –vs- Muthuita [1982 – 88] 1 KLR 42, the Court of Appeal held that customary trust is proved by leading evidence Trust is a question of fact, which must be proved by whoever is claiming a right under customary trust 3 Case of absolute necessity 3 Absolute necessity might be defined as truth at absolutely all possible worlds without restriction 1 In Peter Ndungu Njenga vs. Sophia Watiri Ndungu [2000] eKLR , the Court held that 1 : “It is only in case of absolute necessity ; the Court may presume a trust But such presumption is not to be arrived that easily The Courts will not imply a trust save in order to give effect to the intention of the parties The intention of the parities to create a trust must be clearly determined before a trust is implied 2 ”

15. Cont. A trust can NEVER therefore, be implied by the Court, unless there was intention to create a trust in the first place The legal burden to prove the existence of the trust rests with the one who is asserting a right under customary trust To discharge this burden, the person must proof that 2 : - (a) The suit properties were ancestral clan land; (b) During adjudication and consolidation, one member of the family was designated to hold on behalf of the family; (c) The registered persons were the designated family members who were registered to hold the parcels of land on behalf of the family In essence, one had to lay bare the root of the title to create the nexus or link of the trust to the title holder and the claimant .  

16. Supreme Court Decision Customary trust was well explained by the Supreme Court in the case of Isack Kieba M’inanga v Isaaya Theuri M’Lintari & another [2018] eKLR where it held as follows 2 : “ Each case has to be determined on its own merits and quality of evidence . That it is not every claim of a right to land that will qualify as a customary trust . That if the said holding is for the benefit of other members of the family, then a customary trust would be presumed to have been created in favour of such other members, whether or not they are in possession or actual occupation of the land 2 ”. That some of the elements that would qualify a claimant as a trustee are 2 : 1. The land in question was before registration, family, clan or group land. 2. The claimant belongs to such family, clan, or group 3. The relationship of the claimant to such family, clan or group is not so remote or tenuous as to make his/her claim idle or adventurous. 4. The claimant could have been entitled to be registered as an owner or other beneficiary of the land but for some intervening circumstances. 5. The claim is directed against the registered proprietor who is a member of the family, clan or group.”

17. (c)Natural Rights of Air, Light and Water Brief introduction Many of us take the right to air, light and water for granted until it is suddenly obstructed. The right to light, can easily result into a conflict if an establishment be it a building in the densely populated cities or a tree in the idyllic village that is left unchecked causing permanent shade. The right to air is of importance to most landowners and developers . These groups of people, most that lack urban space, their only way is up. For example if a homeowner has an easement over their neighbor’s property , the neighbor cannot build a tall fence or large building that would block sunlight to the homeowners property, and vice versa. The natural right to water is of great importance . The water crisis has brought numerous litigation cases in many not only in Kenya but in many other parts of the world as well

18. Legal Framework Constitution of Kenya, 2010- Right to water is under article 43 and that of air and light can be adduced to article 40 read together with article 24. Land Registration Act, 2012- Section 28(d ) For example in the Limitations of Actions Act- Section 32- ( Acquisition of Easements) provide that: Where — (a) the access and use of light or air to and for any building have been enjoyed with the building as an easement; or (b) any way or watercourse , or the use of any water, has been enjoyed as an easement; or (c) any other easement has been enjoyed, peaceably and openly as of right, and without interruption, for twenty years , the right to such access and use of light or air, or to such way or watercourse or use of water, or to such other easement, is absolute and indefeasible .

19. CASELAW Eastern Produce Kenya Limited v Chepsire ( Savani ) Farmers Co-operative Society Limited [2017] eKLR Facts The Plaintiff used a hydro power generated to pump water for the use in the factory villages, Kapgoros Division villages, as well as for the use by the neighbouring community, including Chepsire Primary School and others The defendant forcibly, illegally and wrongfully accessed the furrow and obstructed the free and uninterrupted flow of water through the furrow to the plaintiff’s site consequently preventing its operation . Held The applicant demonstrated a prima facie case with a probability of success and that he was likely to suffer irreparable harm if injunction was not granted. The application was allowed .

20. (d) Rights of compulsory acquisition, Brief introduction Private Land can be acquired compulsory by the Government where the land is needed for public benefit or where it is in the interest of the public. A person can be deprived of his right to private land on condition that he is promptly compensated in full and the acquisition is for public purpose or public interest . The compulsory acquisition power of the state is explained by the doctrine of eminent domain (radical title ) where the state as a sovereign has radical title to all land in its territory . The process of compulsory acquisition is an administrative process and the persons or owners of the land must be given a chance to air their views or object to that process. The National Land Commission (NLC) is mandated under section 107 of the Land Act to acquire land compulsory on behalf of both National and County Governments .

21. Process of acquisition In a decided case of Patrick Musimba vs National Land Commission 2016 Onguto J. set out the process of land acquisition as provided in the Land Act. Cabinet Secretary or a County Executive committee member submits a request for compulsory acquisition of the land to NLC . NLC ascertains if the request does meet the requirements of Article 40(3) of the Constitution namely acquisition for public purpose or in public interest . One the NLC is satisfied that conditions for compulsory acquisition are met, it published a notice in the Kenya Gazette, the Land Registry and to everybody who appears to be interested in the land. The notice is per Section 107 of the Land Act.

22. CONT. Persons interested in the land after publication of the notice has an opportunity to challenge all or some aspects of the intended compulsory acquisition. Interested persons include people whose interest appears in the land register, their spouse(s) together with persons occupying the land targeted for acquisition. In Commissioner of Lands & Another vs Coastal Aquaculture Limited. Held The court held all procedures related to compulsory acquisition must not only be strictly pursued, but must also be so on the face of inquiry .

23. Aspects considered when assessing compensation payable as per Section 111 of the Land Act 2012 Market value of the Land This is the probable price that a property should be sold for in a competitive and open market and also consider loss of future earnings . In the case of Harp Investco Limited vs NSSF Board of Trustees and others Machakos ELC NO. 616 of 2010 the Court held that the Plaintiff was bound to be paid the current open market value of the property at that time. Compensation for disturbance . The NLC is required to add a sum equal to 15% of the market value to the amount of compensation on compensation for disturbance . In Horn vs Sunderland Corporation (1941) the court held “word “ compensation” almost of itself carries the corollary that the loss to the seller must be completely made up to him on the ground that unless he receives a price that fully equaled his pecuniary detriment, the compensation would not be equivalent to compulsory sacrifices.

24. CONT. Reasonable expenses related to relocation . Where a person whose land is compulsorily acquired will be compelled to change residence or place of business as a consequence of the acquisition the payment made to him should include reasonable expenses incidental to relocation . Damages Some notable aspects of damages that NLC should consider are ; Damage likely to be sustained by person(s) interested in the property where acquisition of the land results in severing it from other land owned by the interested person. For example land acquired to construct a railway line which leaves the person with two distinct parcels of land on either side of the railway . The land may be inaccessible and the land left may be of no economic viability . Damage sustained where acquisition affects persons, other property or his earnings . For example where the acquired land comprises of a natural water source sustaining agricultural activities.

25. Compulsory acquisition of community land This is provided for under Part V of the Land Act. Section 5 (4) Community Land Act lists compulsory acquisition of community land as one of the ways community land may be converted to public land. Where NLC fails to give adequate consideration to the above aspects then its decision on compensation can be challenged in court/tribunal. There is in place Land Acquisition Tribunal to determine appeals from decisions of the NLC in matters relating to compulsory acquisition . In a land mark decision (the Endorois case) adopted by the African Union on 02/02/2010 , The African Commission declared the expulsion of Endorois from their ancestral lands illegal. NLC should consider many aspects in acquiring lands even if it is for wider public interest and adequately consult the affected people or community and adequately compensate them considering their rights, religion and cultural aspects .

26. (e)Leases or agreements for leases for a term not exceeding two years, periodic tenancies and indeterminate tenancies; In Kenya, the overriding interest for leases or agreements for leases for a term not exceeding two years, periodic tenancies, and indeterminate tenancies is governed primarily by the Kenyan Land Act of 2012. This act provides protections and regulations for various types of lease agreements. All registered land is subject to overriding Interests “ Under Section 28 of the Land Registration Act , all registered land is subject to overriding interests without being noted on the register or in the process of being acquired by virtue of any written law relating to limitation of actions or by prescription and any other rights provided under any written law.” Court of Appeal at Eldoret in WILLY KIMUTAI KITILIT vs. MICHAEL KIBET (Civil Appeal No. 51 of 2015; [2018] eKLR

27. 1 . Leases or agreements for leases for a term not exceeding two years Regarding leases or agreements for leases for a term not exceeding two years, these are typically considered short-term leases. Section 58 of the Land Act 2012 that provides This provision ensures that short-term leases are protected without the need for extensive legal formalities. This means that even if the landlord's title to the property is subsequently registered, the lease remains valid and binding on the landlord .

28. 2. Periodic tenancies Periodic tenancies refer to lease agreements that renew automatically after a certain period, such as month-to-month or year-to-year. Provides regulations for periodic tenancies, ensuring rights and obligations for both landlords and tenants. Regardless of changes in property ownership , tenants under periodic tenancies maintain their rights and occupancy. These tenancies are regulated under the Section 57 of the Land Act 2012, ensuring rights and obligations for both landlords and tenants.

29. 3 . Indeterminate tenancies Indeterminate tenancies are lease agreements without a fixed duration or termination date. While less common, they still fall under the purview of the Land Act, which provides guidelines for their enforcement and termination. Section 57 also applies to indeterminate tenancies, providing guidelines for their enforcement and termination. These tenancies continue until terminated by either party and are protected irrespective of changes in property ownership . One significant case law related to leases in Kenya is Wanjiru Njuguna & another v James Mwangi Njuguna & others [2014] eKLR . This case addressed issues related to the termination of a tenancy and highlighted the importance of adhering to the legal requirements and procedures outlined in the Land Act, 2012, when terminating a lease.

30. (f)Charges for unpaid rates and other funds which, Section 28(g) provides for charges for unpaid rates and other funds which without reference to registration under the Act, are expressly declared by any written law to be a charge upon land. Section 101(a) of the Land Act provides for amount to encompass the money to be received by the chargee on priority basis which is the core to consider any rates which in this case shall be the land rates, rents, taxes, charges etc.

31. a)Land Rates These are levies imposed on all parcels of land by the county government except those outlined under Section 27 of the Rating Act. They include public religious worship, educational institutions, cemeteries, crematorial , charitable institutions , librarues , museums, national parks and hospitals . Rates must be paid whether the property is a freehold ora leasehold as espoused under Section 3 of the Valuation and Rating Act which enables the County governments to cause roll valuation at least ten years with the approval of the Minister within their jurisdictional areas . Land rate is imposed by the county government within their area of jurisdiction . It could be in relation to water, sanitation among others It is governed by the land Act, Rating Act, Land Registration Act, Law Society of Kenya Conditions of Sale and Valuation for Rating Act . Rates are usually levied after the local authority concerned has undertaken valuation and opened up a valuation for a rating roll.

32. CONT. Section 15 of the Rating Act provides that every rate levied by the rating authority and the Act shall become due on the first day of January of the financial year for which it is levied and shall become payable on such day in the same financial year as shall be fixed by the rating authority. A proprietor may object to valuation. However , if no objection is raised , the rates are confirmed after some time. Upon full payment of all requisite rates one is issued with a Rates Clearance Certificate which is conclusive evidence that all rates due and interests accrued have been paid fully. Once a certificate is obtained , land may now be charged or disposed off to a third party.

33. b) Land rent This is tax payable to the lessor which in most instances is the government or state authority such Kenya Ports Authority or Kenya Railway Corporation . The rent is payable to the lessor every January . It is only payable on leasehold property.

34. c) Stamp Duty It is governed by the Stamp Duty Act Cap 480 . The tax is payable on various instruments relating to the land such as leases on land, transfers and charges. Stamp duty rates are based on the user of the property instrument and time of payment . (d)Capital Gains Tax and Tax on Rental Income Are the main taxes payable in land . Capital Gains Tax is taxable on gain on tranfer of land The Income Tax Act provides for imposition of taxes on income to which land is included ..

35. Legal framework for unpaid rates and other funds Both the county and national governments hold land in trust of the people as provided by article 260 of the Constitution of Kenya 2010 . Both governments have legislated laws that create charge for unpaid rates and other payments. a)The Government Land Act Section 7(1) states that if any money due in respect of any rent principal royalty, installment or any payment referred as " the principal debt " in the section under any lease, agreement or license under this Act or any Act repealed by this Act, remain unpaid after due date , late payment shall include an interest of 10% per month as it may be specified by the minister from time to time . Subsection 2 requires that any payment made after due date shall cover for the interests first in full before reduction of the principal debt . The commissioner will make notice demanding for such interests in addition to any other moneys then due.

36. b) The Land Act 2012 Section 22 provides for a number of c harges for unpaid rates and funds penalty . It mandates the Commission to declare a license granted under Section 20 to be forfeited if; i) the fees payable under the license is unpaid for one month after it becomes due. ii) Any tax or taxes imposed upon land structures or buildings erected upon land or upon a licensee, remains unpaid for two months after becoming due. iii)If the occupier of the land fails to abide by the license conditions iv) not withstanding the forgoing of the provisions, the commission may waive the whole or part of any late payment if the person provides good reasons for late payment. v) the commission shall publish and publicize annually any waiver or remission made under subsection 4.

37. c) The Rating Act It provides for imposition of rates on land and buildings in Kenya . Section 16 provides for payment of rates discount and interests . Sub-section 3 of the Act requires the rating authority to charge simple interest at the rate of 3 per centum per month or such other rates as the minister shall prescribe in the gazette . Section 19 provides for the rates chargeable on property. Any rate due and other interests is to be calculated in relation to Section 16 . Incase any charge is registered on the land and notification is issued to the registrar by the rating authority in the prescribed form, the registrar shall register it against the tittle . The charge shall take priority in accordance with such law upon which the land is registered.

38. d) County legislations Counties have also enacted legislations to manage rates, rents and other funds against land . The Kakamega County Rating Act, 2016 for example, discusses unpaid rates and concludes that they constitute a charge on land. Section 15 states; a) Any rates due and unpaid together with interests are to be calculated under Section 16 and shall be a charge against the land in question. b) The receiver of the revenue may, in prescribed form, deliver notification of a charge to the registrar who registers the same against the land. c) Upon registration the charge shall take priority over any other charge in accordance with the law under which the land is registered.

39. ( h) Rights acquired or in process of being acquired by virtue of any written law relating to the limitation of actions or by prescription; Section 7 of the Limitation Actions Act (Cap 22) provides that :- “ An action may not be brought by any person to recover land after the end of twelve years from the dateon which the right of action accrued to him or, if it first accrued to some persons through whom he claims, to that person. In the Court of Appeal decision in Janet Ngendo Kamau vs Mary Wangari Mwangi , the Court observed as follows : “ The suit land is and has been at all material times registered under the Registered Land Act, Cap 300 Laws of Kenya.

40. Section 30(f) of the Limitation Actions Act (Cap 22) , Provide that: Rights in the process of being acquired under the Limitation of Actions Act, are in the nature of overriding interest and go with the land and not the registered proprietor. Change of ownership does not affect those rights as they attach to the land. In the circumstances as the Plaintiff’s occupation started long before the defendant became the registered owner, his rights were in the nature of an overriding interest over the land and could be enforced at the expiry of the limitation period.”

41. Section 38 of the Limitation of Actions Act Provides that :- “ Where a person claims to have become entitled by adverse possession to land registered under any of the Acts cited in Section 37 of the Act ….he may apply to the High Court for an order that he be registered as the proprietor of the land or lease in place of the person then registered as proprietor of the land.”

42. (i) Electric supply lines, telephone and telegraph lines or poles, pipelines, aqueducts, canals, weirs and dams erected, constructed or laid in pursuance or by virtue of any power conferred by any written law; Section 28(i) of LRA provides electric supply lines, telephone and telegraph lines or poles, pipelines, aqueducts, canals, weirs and dams erected, constructed or laid in pursuance or by virtue of any power conferred by any written law; and

43. Wayleaves Act (WA) (Cap 292) The Government may carry any sewer, drain or pipeline into, through, over or under any lands whatsoever but may not in so doing interfere with any existing building Section 4(1) WA provides for notice to be issued for any private land affected of the intended works in the Gazette Section 4(2) WA provides that the notice should include description Section 4(3) WA provides for the notice to be served to the owners of the affected parcels Section 5 WA provides the process for objection and resolution Section 6 WA provides for mechanisms of compensation by the Government Section 7 WA provides for right of entry while Section 8 WA deals with the penalty for construction of buildings on the Wayleave trace

44. ii. Energy Act (EA)1 of 2019 PART VII —RIGHTS OF WAY, WAYLEAVES AND USE OF LAND FOR ENERGY RESOURCES AND INFRASTRUCTURE Section 170 of the EA provides that a person may develop energy infrastructure, including but not limited to electric supply lines, petroleum or gas pipelines, geothermal or coal infrastructure, on, through, over or under any public, community or private land subject to the provisions of this Act and relevant written law.

45. CONT. Section 171, EA provides process of permission to do exploration Section 172, EA power of entry for the developer and compensation in case of any damages Section 173, EA compensation on consent from the owner Section 174, EA provides for objection by owner Section 175, EA provides for compensation Section 176, EA Power of licensee to enter to inspect or repair

46. CONCLUSION A critique of overriding interests Overriding interests have been stated to have myriads of advantages; however some scholars have developed a number of critiques as follows: 1. A title is not absolute As a result of the overriding interests it is un-debatable that no title is absolute. An absolute title cannot be in the true sense absolute because the register may not be a true mirror of the state of a title. 2 . Un-discoverability Overriding interests are not necessarily discoverable from any reasonable inspection of any parcel of land, this is essentially because they are not included in the register. A purchaser of the registered land may find that he or she is bound by a right that has not been protected by an entry on the register.