Lenders panic over fake titles

By Harold Ayodo

Kenya: Recently, Eldoret police boss Erastus Muthamia alerted judges and magistrates in the region not to clear bond documents (titles) until their authenticity is established.

Muthamia, who led a crackdown on fake documents in the area, further alerted banks on circulation of fake and fraudulently acquired documents.

This has sent commercial banks into a panic mode as they wake up to the reality that some outstanding loans could have been given on the strength of questionable title deeds as security.

Some are in the process of seeking court orders to protect their “resources” in case the documents are revoked.

The Eldoret alert came hot on the heels of revelation of reported cases of duplicates, forged documents and tampering with original records at the Ministry of Lands offices countrywide.

Non-existent land

There are also title deeds for non-existent land and cases involving numerous title deeds issued for the same property.

The current developments are not new, as 10 years ago the Kenya Bankers Association (KBA) pleaded with then Lands Minister Amos Kimunya to revoke fraudulent titles.

The Association said banks could lose billions of shillings if titles charged to its members were nullified.

And as questionable title deeds continue hitting the headlines, bankers may be forced to seek alternative security on loans where documents presented are questionable.

Currently, title deeds remain key to secured debts. The challenge, however, is that there are many unscrupulous brokers who sell land and give out fake title deeds, resulting in double registration and multiple title deeds.

Stringent guidelines

Three years ago, Lands ministry was expected to gazette more stringent guidelines for anyone searching its land registry records to stem the problem of fake title deeds.

The new rules and guidelines were to be released amid fears that some landowners, especially in Athi River, Kitengela and Mlolongo areas, may be holding fake title deeds.

Then Lands Commissioner Zablon Mabea said many prospective investors had fallen victim to unscrupulous brokers who used genuine title deeds to produce fake ones, which they issued to unsuspecting buyers.

Officials at the Lands ministry as well as real estate players said many people had been conned into buying public land or land earmarked for industrial development. 

The officials said after purchase, the buyers had invested in residential estates and commercial buildings financed by mortgages from banks and other financial institutions.

It is emerging that it is not banks alone that are being plagued by fake title deeds nightmare; the judiciary is also affected. Some of the fake title deeds are said to have been used by hardcore criminals to be released from courts after presenting them to secure bonds.

Courts mainly rely on official documents as further security before releasing charged suspects on bail/bond.

Should the accused abscond, in addition to the court issuing warrants of arrest, the amount of money or property held by the court as security is forfeited.

It is required that courts perform official searches on title deeds and also value the property before the registrar of lands confirms the authenticity of the document and its alleged market value. However, courts often reject questionable title deeds.  

— The writer is an Advocate of the High Court.