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Post Reply: Signed, Sealed… and Still Cancelled? Why Land Sale Agreements Must Now Include Indemnity and Refund Clauses!

<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on April 14, 2025, 9:16 am</div><div id="pl-4284" class="panel-layout">
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<h3 class="widget-title">Moses Kahoro</h3>
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<p class="break-words" dir="auto">In Kenya, a title deed isn’t just a document—it’s a status symbol. People frame them like portraits, hang them in their living rooms, and proudly send scanned copies to every family WhatsApp group. It’s proof that you’ve arrived. That you own something tangible. Something permanent.</p>
But after a recent Supreme Court ruling, that framed title might need a footnote: “Valid until further notice.”⚠️

In Harcharan Singh Sehmi &amp; Another v. Tarabana Co. Ltd &amp; 5 Others (SC Petition No. E033 of 2023), the Supreme Court delivered a decision that shakes the very foundation of land ownership.

The appellants had held leasehold property in Nairobi for decades and applied for a lease renewal before expiry. Despite the continued occupation, the land was later irregularly reallocated by the government and ended up in the hands of the 1st respondent—a registered owner who claimed to be an innocent purchaser for value.

But the Court took a hard stance. It held that even a registered title held in good faith cannot stand where the root of that title is unlawful. According to the Court, Article 40(6) of the Constitution and Section 26(1)(b) of the Land Registration Act expressly deny protection where land is acquired illegally, unprocedurally, or through a corrupt process—no matter how far down the chain the illegality originated.

The implications are sobering. Registration is no longer an automatic shield. Buyers, developers, and financiers are now exposed to risks buried deep in the title history—risks that can’t be uncovered through a simple registry search.

Because let’s be honest: that certificate of official search is just a piece of paper, my friend. 🧾. It tells you who the current owner is—not how they got there!

That’s why indemnity and refund clauses are no longer nice-to-haves—they’re essential.

A robust indemnity clause shifts the legal and financial burden to the seller, holding them accountable for losses arising from title defects, fraudulent dealings, or past irregularities. But indemnity alone is not enough. With land values appreciating rapidly, a refund clause pegged to current market value is critical. It ensures the buyer can recover a meaningful amount—not just the outdated purchase price—if the title is cancelled.

Just as important, these clauses must survive registration. Because the reality is: the risk doesn’t end when you receive your title deed. Sometimes, that’s exactly when it begins.

So, frame your title if you must. Just make sure your agreement is doing the real heavy lifting.

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