When Innocence is Not Enough: Reassessing the Bona Fide Purchaser Doctrine in the Context of Sehmi Another v Tarabana Company Limited 2025 kesc 21 klr

MMA Advocate Morna Aturinda

By Morna Aturinda
Head of Real Estate, Banking and Financial Services

The doctrine of bona fide purchaser for value without notice has long been protecting innocent buyers who acquire property in good faith, for valuable consideration, and without knowledge of any competing claims.

However, the recent decision by the Supreme Court in Sehmi & Another v. Tarabana Company Limited [2025] KESC 21 (KLR) has sparked significant debate on whether mere innocence is sufficient to shield a purchaser from prior equitable interests.

A. Facts Of The Case

The dispute arose when the plaintiffs, Sehmi and others, bought land from Tarabana Company Limited, a company that had, at the time of the sale, appeared to have clear title to the property. The land in question was located in an area of significant economic value, which had attracted numerous investments. However, a subsequent claim was filed by a third party, arguing that the land had been sold without proper legal authority and that the rightful owners were not the company but a different group, with whom the plaintiffs had no prior knowledge. The plaintiffs had conducted what appeared to be an extensive due diligence process, consulting the relevant land registries and ensuring that all documents appeared in order. Despite the plaintiffs’ belief that they had made an honest purchase, the court was forced to scrutinize whether the principles surrounding the Bona Fide Purchaser Doctrine still applied, given the underlying complexities and the evolving nature of property transactions in the modern era.

B. Legal Issues Raised

Several key issues emerged from the case:

  1. Scope of the Bona Fide Purchaser Doctrine: whether the principles protecting a Bona Fide Purchaser should strictly be adhered to even when a defect could have been discovered through due diligence?
  2. The Standard of Due Diligence: How much responsibility should a purchaser bear when it comes to investigating the history of the property they are purchasing?
  3. The Role of Public Policy: Should public policy allow for a more nuanced interpretation that would place greater responsibility on the seller, or even allow for remedies for buyers who have been duped?

C. Clarifications Made by the Supreme Court in the Sehmi Case

The Supreme Court made several critical clarifications:

(i) No Protection for Illegal or Irregular Titles: The Court ruled that a bona fide purchaser cannot be protected if the root of title is defective — meaning: If the initial grant or allocation of land was illegal, fraudulent, or irregular, then subsequent purchasers — no matter how innocent — acquire nothing because no valid legal estate ever existed.
(ii) Good Faith and Due Diligence: The Court emphasized that a bona fide purchaser must perform reasonable due diligence. This includes, Inspecting the land physically, Searching the land register, Inquiring into any obvious anomalies (e.g., persons in possession, structures, disputed claims).
Failure to investigate suspicious circumstances negates a claim of good faith.

"If the purchaser engages in conduct that is unconscionable in the eyes of equity, or fails to inquire where suspicion arises, their claim of innocence collapses."

The Court stated
(iii) Public Land Allocation: The doctrine does not apply where Public land is illegally or irregularly allocated, because public land cannot be privatized illegally and Titles issued in violation of the law are void and incapable of protection. Article 40(6) of the Constitution of Kenya 2010 disqualifies protection for titles to illegally acquired land.

"The right to property does not extend to any property that has been found to have been unlawfully acquired."

Thus, the Court held that:

D. Wayforward

In summary, the doctrine of bona fide purchaser for value without notice remains an important defence in Property Transaction in Kenya, however, it does NOT:

  • Protect titles rooted in illegality,
  • Shield purchasers who fail to exercise due diligence,
  • Apply to irregular allocations of public land.
Therefore, innocence, while still relevant, is no longer an absolute shield—it must be coupled with demonstrable prudence. As a result stakeholders must adapt:
  1. Purchasers and Advocates: Must adopt more rigorous investigative practices.
  2. Policymakers: Should consider reforms to enhance registration efficacy and reduce reliance on equities.
  3. Judiciary: Must provide clearer guidelines on what constitutes “reasonable” inquiries to prevent arbitrary outcomes.

E. How Other Jurisdictions Handle the Issue:

  1. England and Wales: Pursuant to the Land Registration Act 2002, certain overriding interests (such as leases not exceeding seven years and rights arising from actual occupation) bind purchasers regardless of registration. A purchaser must therefore exercise due diligence, as these interests may affect the title despite being unregistered.
  2. Australia (Torrens System): Under the Torrens system, registration confers indefeasibility of title, protecting registered proprietors against most prior claims. However, exceptions exist, particularly for instances of fraud or in personam claims founded on trust, estoppel, or contractual obligations.
  3. South Africa: Under the South African law, the bona fide purchaser for value without notice doctrine affords strong protection to innocent purchasers. Nevertheless, registration does not cure defects where a stronger equity exists, such as in cases of fraud or mistake, as affirmed in Legator McKenna Inc v. Shea (2010).
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