Illegal property cautions can be costly if sued

Some property brokers hit below the belt when lucrative deals slip away from them. Some notorious agents and brokers laugh all the way to the bank after selling property way above the set price without the knowledge of the registered owner. Some go to the extent of placing caveat or caution on the property without consent or knowledge of the legal owners. What is the effect of cautions on property?

Eva, Nairobi

Legally, once a caution is registered on the property, an official search conducted at the Ministry of Lands would reveal that it is encumbered and cannot be transacted upon easily.

For starters, a caution is an instrument registered at the Ministry of Lands that prevents the legal owner from dealing in the property.

It is an offence to wrongfully place a caveat that may prevent the owner from selling, charging or leasing the property. According to Section 75 of the Land Registration Act, any person who lodges or maintains a caution wrongfully can be sued for damages.

For instance, placing a wrongful caution that may lead a registered owner to lose prospective clients would attract high damages and compensation. It is important for conveyancers to advise clients that wrongful cautions may invite legal suits for damages that may milk dry their bank accounts. Cautioners or caveators must prove that they are entitled to interests in the disputed property whose transfer they seek to forbid.

Cautioners can file suits in court seeking orders to force the sellers to sell them the property as agreed in their sale agreements. However, registrars may reject unnecessary cautions.

In daily practice, registrars give notice in writing to registered owners whose property, lease or mortgage is affected by the caution. Cautions may be withdrawn through court orders or the expiry of the restriction.

Cautioners may reject the intended withdrawal of the restriction in writing to the Registrar. Property owners affected by restrictions can apply to the High Court to have them removed.

The new Land Registration Act revises, consolidates and rationalises the registration of titles to property to give effect to principles of devolved government in property registration.

The law also makes it an offence to make a false statement in land transactions. Cancellation or amendment of prescribed documents will attract a fine not exceeding Sh5 million or imprisonment for a term not exceeding five years. However, according to Section 157 of the Land Act (2012), similar offences attract a fine of Sh10 million.

- Harold Ayodo is an advocate of the High Court of Kenya.