Co-op Bank loses bid to dispose of land to recover loans

Co-operative Bank headquarters in Nairobi. [David Njaaga, Standard]

In 2009, Julia Njoki realised that a title deed to a land her deceased husband owned was missing and reported the matter to the police.

Later, she realised that her son was the one who stole the document.

Njoki said the land in Bahati, Nakuru County, was initially registered in the name of her husband Samson Kabiri Kabitu.

She later learned that her son, Michael Kabutu Samson, had stolen the title deed and transferred the property to his name before guaranteeing a loan facility to Charles Kimani Wangui.

Michael was arrested and convicted on his plea of guilty in 2013 and sentenced to a one-year jail term.

Njoki said she later learned that the land had been advertised for sale but the move was aborted. The planned sale prompted her to file a suit at the Environment and Lands Court in Nakuru.

In the suit, Njoki stated that she was in the process of losing the only home that she had ever known. She wanted the court to issue an order canceling the title deed in the name of her son and a permanent order barring the sale of the land.

She named Co-operative Bank of Kenya Limited, Luka Kabiri, and Wangui as respondents.

Njoki said the bank had asked her to vacate the said property on grounds that it did not belong to her and was served with two documents, including a 45-day redemption notice dated November 6, 2014, and a copy of the advertisement for sale by Legacy Auctioneers.

She said her son passed on upon his release from jail in October 2020.

Her son, she said, acquired the title fraudulently after the death of his father. Therefore, no valid charge could be registered on the title.

In its response, the bank revealed that in 2011, Kimani took two loans of Sh500,000 and Sh1,500,000 guaranteed by Michael, who offered the title for Bahati/Kabatini/Block 1/2679 as collateral.

The bank said before advancing the loan, it conducted due diligence and confirmed that the suit property was registered in the name of Michael.

According to the bank, Kimani defaulted in repaying the loan, and the bank decided to exercise its statutory power of sale through Legacy Auctioneers.

But Justice Mwangi Njoroge, in his judgment, faulted the bank for not conducting due diligence beyond a search at the land registry.

"While it is manifest that the real registered owner of the suit land is deceased and the impostor who purported to charge the land as owner lacked any confirmed grant of letters of administration or any documentation that showed that he had otherwise legally acquired the title in his name, the provisions of Section 45 of the Law of Succession Act kick in, and the 2nd defendant must be deemed as an intermeddler," ruled the court.

The court said it would be against the interests of justice to uphold the claim to the right of a statutory power of sale by the bank while there was evidence that the charge in its favour was executed by an intermeddler and based on a title obtained illegally.

The court directed that the title deed for parcel number Bahati Kabatini Block 1/2679 in the name of Michael Kabutu Samson, issued on March 31, 2011, be canceled.

The Land Registrar Nakuru was ordered to reinstate the title to parcel number Bahati Kabatini Block 1/2679 in the name of Samson Kabiri Kabitu, deceased.

Further, the bank, Kabiri, and Kimani were permanently barred from trespassing on, selling, alienating, or in any other way disposing of the land.