![Court of Appeal Clarifies Co-Ownership, Statutory Power of Sale, and Void Transfers in Eighty-Four Investments v Irungu [2025] KECA 1365 (KLR)](https://www.mmaadvocates.co.ke/wp-content/uploads/2025/08/MMA-Article-Court-of-Appeal-Clarification.jpg)
Court of Appeal Clarifies Co-Ownership, Statutory Power of Sale, and Void Transfers in Eighty-Four Investments v Irungu [2025] KECA 1365 (KLR)
By Faith Kabora Associate | Real Estate, Banking and Financial Services
Introduction
On 25 July 2025, the Court of Appeal of Kenya delivered a significant judgment in Eighty-Four Investments Limited v Irungu & 4 Others (Civil Appeal 122 of 2019) [2025] KECA 1365 (KLR). The dispute centered on Land Reference No. 7699/2, raising questions on co-ownership, succession rights, competing Agreements for Sale, and the misuse of statutory power of sale.
This decision is a landmark in Kenyan land law and succession law, as it clarifies the limits of co-ownership, the enforceability of sale agreements, and the consequences of transfers tainted by fraud or made during pending litigation.
In 1986, Balwant Singh and James Flavian Chege Munene, the deceased, were registered as Tenants in Common for the property known as L.R. No. 7699/2. That same year, a charge was registered in favor of the deceased to secure a loan of Kshs. 518,000 advanced to Singh. For years, the property remained jointly held.
In 2004, Singh and the deceased jointly entered into an Agreement for Sale with Eunice Nyambura Irungu, the 1st Respondent, for the purchase of the property at Kshs. 11 million. She paid a deposit of Kshs. 1 million, with the balance due by February 2005. However, when she attempted to take possession, she was obstructed. In response, she lodged a caveat in October 2005 to protect her interest.
Three years later, in 2007, the deceased, acting unilaterally and without Singh’s involvement, entered into a second Agreement for Sale with Eighty-Four Investments Ltd, the Appellant, for the same property, this time at a price of Kshs. 21.8 million. The Appellant paid a deposit of Kshs. 8.1 million. The deceased passed away in December of that year.
Following his death, a Grant of Probate was issued in March 2009 to the 2nd , 3rd , and 4th Respondents, acting as administrators of the deceased’s estate. Despite a pending suit filed by the 1st Respondent in December 2009 challenging the second sale, the Respondents proceeded to transfer the property to the Appellant in January 2010, citing a statutory power of sale.
Balwant Singh, who had been excluded from the second transaction, disputed the validity of the statutory notice and filed a separate suit in April 2010. He alleged fraud and asserted his rights as co-tenant. Both suits were filed before the Environment and Land Court (ELC).
After considering the evidence and submissions, the ELC nullified the transfer of the property to the Appellant, finding it both unlawful and fraudulent.
The court held that the initial agreement for sale between Singh, the deceased, and the 1st Respondent was valid and binding. It had not been rescinded by either party; rather, it had been frustrated by the deceased, who failed to grant the 1st Respondent possession as required. The ELC found that this failure undermined the transaction and triggered the dispute.
The subsequent sale of the property by the deceased to the Appellant, excluding Singh, a registered co-owner, was deemed grossly irregular and of no legal effect. The court emphasized that the deceased lacked the capacity to unilaterally dispose of Singh’s share in the property, and Singh’s interest as a tenant in common in equal shares was both registered and undeniable. He had not consented to the sale to the Appellant and was not party to that agreement.
The ELC further scrutinized the purported exercise of statutory power of sale by the 2nd , 3rd , and 4th Respondents, acting as administrators of the deceased’s estate. It found the move to be unlawful, fraudulent, and a “mere cloak meant to veil the continuance of a fraud.” The court noted that the deceased had never exercised the power of sale during his lifetime despite holding the charge for over two decades and that the notice issued by the Respondents lacked a clear demonstration of crystallization.
The doctrine of lis pendens also featured prominently in the court’s reasoning. The 1st Respondent had filed her suit (HCC No. 664 of 2009) on December 23, 2009 prior to the registration of the transfer to the Appellant on January 13, 2010. The court held that the transfer occurred while a legal action concerning the property was pending, thereby binding the purchaser to the outcome of that suit.
Moreover, the ELC rejected the Appellant’s claim to be an innocent purchaser for value without notice. It found that a simple search would have revealed both Singh’s co-ownership and the caveat lodged by the 1st Respondent. One of the Appellant’s directors, the deceased’s son, was likely aware of Singh’s interest, and the Appellant had actual knowledge of the caveat before proceeding with the purchase.
On these grounds, the ELC declared the transfer to the Appellant null and void. It ordered the 2nd, 3rd, and 4th Respondents to specifically perform the sale agreement with the 1st Respondent, compelling them to transfer the property to her and place her in possession upon payment of the balance of the purchase price. The court also directed that the proceeds from the sale be shared equally between the Respondents and Singh.
The Appellant lodged an appeal before the Court of Appeal, challenging the judgment on twelve grounds, dissatisfied with the decision of the Environment and Land Court,
We have distilled them into three central issues: whether the Appellant held a valid title to the property; whether the 1st Respondent’s prior interest could override that title; and whether the statutory power of sale had been improperly exercised, with the trial court allegedly erring in disregarding the remedy under Section 99(4) of the Land Act, 2012.
Despite these arguments, the Court of Appeal upheld the ELC’s decision to nullify the transfer of the property to the Appellant. It affirmed that the sale was invalid and tainted by fraud, grounding its decision on several key findings.
First, the Court emphasized that the deceased and Balwant Singh, the 5th Respondent, were registered as tenants in common since 1986. As such, the deceased lacked authority to sell the entire property without Singh’s consent. The sale agreement with the Appellant excluded Singh entirely and failed to acknowledge his co-ownership, rendering it legally defective.
Second, the Court found that the Appellant was not an innocent purchaser for value without notice. Had proper due diligence been conducted, it would have revealed both Singh’s registered interest and the caveat lodged by the 1st Respondent. Moreover, one of the Appellant’s directors, the deceased’s son, was aware of the co-ownership, further undermining any claim of innocence. The Appellant proceeded with the purchase despite this knowledge, and the Court concluded that it could not benefit from statutory protections.
Third, the Court scrutinized the purported exercise of statutory power of sale. The charge registered in 1986 had remained dormant for over two decades. Its invocation by the 2nd , 3rd , and 4th Respondents in 2008, after the deceased’s death and without clear evidence of default, was deemed a fraudulent stratagem designed to circumvent Singh’s interest and legitimize an otherwise invalid transfer.
- Title to revert to the deceased’s estate and Balwant Singh as tenants in common.
- The Chief Land Registrar to cancel all post-probate entries and restore the original ownership.
- The 2nd, 3rd, and 4th Respondents to refund the purchase price to the Appellant, with interest, and refund the deposit paid by the 1st Respondent, also with interest.
- The Respondents to bear the costs of both the ELC suit and the appeal.
- Co-ownership Protection: A tenant in common cannot dispose of property without the consent of the co-owner; unilateral transfers are void.
- Doctrine of Lis Pendens: Transfers of property under litigation are subject to the court outcome and cannot defeat existing claims.
- Specific Performance Test: Purchasers must prove they were ready, willing, and able to complete the sale; payment of a deposit alone is insufficient.
- Caveat Limitations: A caveat offers notice and temporary protection of equitable rights but cannot validate a defective or fraudulent sale.
- Estate Administration: Administrators must strictly follow legal procedures; misuse of statutory power of sale renders a transfer invalid.
- Equitable Remedies: Where transactions are void, courts favor refund of purchase monies with interest rather than forced transfers of title.
- Fraudulent Transfers: Registration of land does not cure fraud—titles obtained through illegality or misrepresentation can be cancelled.