Shock wave as state reclaims land

In a bid to protect property worth billions, investors have gone to court to contest a recent move by Government to repossess what they term ‘legitimately’ acquired land, writes HAROLD AYODO

The constant buzzing of several telephones, both landline and mobile, welcomed workers to Lustman and Co, a real estate agency and property development company.

News had spread fast and wide just like bushfire. Clients were calling in frenzy after hearing the news.

The land, situated 6.5km from Ruai, upon which the houses were to be constructed, had been repossessed by the Government. Already, hundreds of millions of shillings had been paid as deposits for the development of the housing project steered by Lustman and Co. Majority of clients had also secured mortgages from banks for their houses and repayments were expected to begin soon.

“Everyone was in a state of shock. Our lawyers had effectively conducted searches at the Ministry of Lands and the land upon which the development were to take place was given a clean bill of health,” said Lustman.

“The announcement that the title deed of the land had been reclaimed by the Government threw us out of balance considering we had already engaged quantity surveyor, architects and all contractors and billions of shillings were at stake. Something had to be done and real fast.”

Legal suits

This is not a unique agonising occurrence to Lustman and Co alone that was lucky to get another piece of land elsewhere. Other developers are never so lucky. It has affected many other property development companies that sink investments into searches to ensure the legitimacy of land at the Lands Ministry. They ensure the right processes are effectively followed and legal documents with official Government stamp acquired.

The haphazard cancellation of over 500 title deeds acquired legitimately has opened floodgates of legal suits putting to stake investments worth over Sh5.3 billion.

The State further issued 350 title deeds and letters of allotment — to secure them — causing ripples in the multi-billion shilling real estate sub sector.

However, the flurry of legal suits will also involve innocent buyers who bought property unaware that their titles were questionable.

For instance, a tycoon may have been allocated land irregularly before sub-dividing into plots and selling to unsuspecting private developers.

Commercial banks and mortgage firms will also be in court for losing billions of shillings on cancelled title deeds they held as security to loans.

Roads Minister Franklin Bett at the demolishion of a house on a road reserve. [PHOTO: MOSES OMUSULA / STANDARD]

However, it will not be an easy ride in court considering the slow paced wheels of justice with nearly a million cases pending in courts!

And the bad news is that the State may strike when the cases are still pending before the High Court.

Majority of the illegal plots stemmed from a network of corrupt civil servants facilitated by gross impunity during the former regime.

The ripples in real estate come as a result of a flurry of incentives such as reduced stamp duty penalty to five per cent from 25 per cent to reduce cost of property transfer.

Therefore, most of the investors whose titles were cancelled could have undergone huge losses and legal redress would be their last hope.

Prime land

Among documents that were recently cancelled included that of a tycoon who held the title of the Kenyatta International Conference Centre (KICC).

Others affected include private developers who owned property running into billions of shillings on prime land in major towns countrywide.

Prime Minister Raila Odinga says the revocation of the 500 title deeds of irregularly acquired public land is a tip of the iceberg.

“Land grabbers are going to pay dearly for their greedÉ the days of ‘anything goes’ are gone,” Raila said recently when issuing the titles to their rightful owners.

Barely three months ago, residents of Spring Valley in Nairobi watched in horror as bulldozers moved in and turned a posh Sh100 million worth house into a heap of rubble, claiming it was built on a road reserve.

The eight-bedroom house belonging to businessman Mike Maina Kamau was pulled down in a morning operation led by Roads minister Franklin Bett.

“This property is built on a road reserve. Our repeated warnings to the owner to vacate have been ignored. That is why we decided to demolish it,” Bett said.

According to Bett, the Government acquired the land in 1973 and blamed corrupt Ministry of Land officials for illegally allocating it to a private individual.

But the owners of the property, which also had a swimming pool, gym and sauna, said the land was legally acquired.

Compensation

“This building is recognised by the Ministry of Lands and the City Council of NairobiÉ we will seek for damages in court,” said Maina’s brother, Kennedy Wainaina.

Bett warns that other buildings on road reserves would be pulled down to pave way for the construction of the 21km Northern bypass. Furthermore, several other investors who took advantage of the construction of Mombasa Road are also in a rude shock.

Take the case of hundreds of people who bought plots and constructed homes in Mlolongo township, which are now illegal.

Lands Minister James Orengo says most of the residential houses sit on plots acquired by the Government to construct the Nairobi-Mombasa Highway in 1972.

Meanwhile, dust is still settling on demolished private property along Thika Road to give way for the construction of the Northern bypass.

Furthermore, Kenya Anti-Corruption Commission (KACC) Director Patrick Lumumba says they are closing in on more grabbers promising to act tough.

Consequently, the High Court is the only institution that would redeem the fortunes of the investors with cancelled title deeds.

East Africa Law Society (EALS) Secretary General James Mwamu says the aggrieved developers can challenge the Government action.

“They can file cases at the High Court arguing their title deeds were cancelled illegally,” Mwamu says. Legally, courts can order the State to compensate — at market rates — investors whose titles were cancelled unconstitutionally.

However, private developers who acquired property without following the due process would be wasting time at the High Court.

According to Mwamu, the State can either go to court for orders to cancel illegal titles or invoke powers of the Lands minister.

“It would be hard for courts to order compensation for people who acquired land illegally,” Mwamu says.

Investors who have received notices of cancellation from the Government can also seek redress at the High Court to stop the State action.

New laws

“We are saying that the State should be guided by the supreme law (Constitution) in matters of land,” Mwamu says.

Orengo says nobody linked to the grabbing of public land would intimidate his docket arguing he would push for repossession of all illegally acquired property.

“I will not whatsoever make an apology to the culpritsÉ my obligation is to take such assets back to the public,” Orengo says.

The new laws, if properly implemented, would make it harder for the Executive to dish out public land to favoured individuals as political rewards.

The new Constitution guarantees protection over private property apart from that was acquired illegally, according to Article 40 (6).

As the players in the lucrative sub-sector contemplate legal action, registered real estate agents laud the Government action.

Brilliant Ventures Director Kenyan Macharia says the move would restore sanity in residential and commercial real estate.

Inflated prices

“It has been difficult to distinguish between valid and bogus title deeds as both documents are occasionally acquired from Ardhi House,” Macharia says.

He says most of the grabbed properties are in prime areas, which consequently led to a shortage and increased prices.

“Most private developers were forced out of the city centre following unimaginable costs of land due to scarcity,” Macharia says.

Louis Agili, a real estate agent, says the State should also institute investigations towards prosecuting the main culprits.

“Some private developers are innocent buyers who bought property after following legal procedures before Orengo cracked the whip,” Agili says.

Consequently investors who were holding onto their fortunes over uncertainties over Government action on land grabbers would change.

“Assurance from the State that documentation of titles is in top gear at the Ministry of Lands is welcoming to prospective investors,” Agili says.