What You Must Do Before A Land Transaction in Uganda

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Currently, in Uganda, there is a trend of rapidly escalating land conflicts, even for land with ancient proprietorship. In 2004, the World Bank summed up the contemporary impact of land conflicts on economic productivity in Uganda as a costly calamity.

Largely, these conflicts have been influenced by the ignorance of the populace concerning the complex land system in Uganda, and the various avenues enabled by the law to meet ends in land proprietorship, which have manifestly perceptible flaws that are often exploited at the expense of the rightful landowners, a wider class being the predominantly poverty-stricken and ignorant people. The laxity and toxicity in our ailing administrative, regulatory land institutions have been conducive for these land conflicts.

Considering the prevalence of land conflicts in Uganda, utmost vigilance, through inquiries, is essential before entering into any land transaction. In Uganda, land transactions include, buying the land, acquiring a lease or a sub-lease, a license and offering loans secured by the land. It’s from these transactions that one acquires an interest in land, which refers to a right, power or privilege over or in the land. Inquiries in land transactions refer to an investigatory process; a prudent verification, search, review and a probe of the land and its ownership. Inquiries actualize the legal concept of due diligence.

While land beneficiaries, for instance, purchasers, banks and those interested in getting leases usually pay high importance to expedite the conclusion of land transactions, it’s very critical, in their interest to offer adequate time and analytical attention to effective inquiries/ due diligence of the land at the initial stage of the transaction. Conducting inquiries determines the feasibility of the transaction itself.

The essence of the inquiries is to verify ownership of the property, provide one with information on all existing interests, prior estates, rights, and liabilities on the land, protect one against pre-existing claims over the property, and the discovered information can be used as a platform to re-negotiate the price in the transaction.

To counteract the long-looming land crisis or likely conflicts and protect the interests of land beneficiaries, careful-comprehensive inquiries, using peculiar acumen concerning the circumstances of the transaction, must be deployed. The extent and type of inquiries depend on the tenure of land, the nature and object of the transaction. Inquiries should be made on the below coverage of areas;

Identity of the person conveying the land

This should be done to know the description, status or position of the person transacting and their connection to the land. Inquiries should be made on whether one is a spouse, a child, beneficiary, an administrator, a tenant on the land, a company, a director of a company, a court decree-holder, an agent of the landowner and/or on the citizenship/nationality of that person.

The identity of citizenship is valuable in determining the type of interest legally allowable to be held by such a person. In the case of a company, a search at the Uganda Registration Service Bureau (URSB) should be conducted to find out the nationality of the directors, shareholders and the management of the company to identify whether the company is foreign or local.

For a natural person, not originally a citizen of Uganda, inquiries should be made from the Citizenship and Immigration Control Department under the Ministry of Internal affairs to confirm or verify the citizenship of that person. This is because non-Ugandan citizens/companies as provided by Section 40 of the Land Act, can only own a lease but not any other interest. They, therefore, cannot pass a good title in other tenures.
Identifying a person intending to convey any interest in the land is useful in the assessment of the credibility of the person identified with the legitimacy of his/her rights or interest claimed on the land. This rationale is buttressed by the holding in the case of Nanteza Nabeta -v- Konde that, “land is never bought from unknown sellers like buying tomatoes and bread. Land is valuable property and all buyers are expected to make exhaustive investigations about both the land and the sellers before buying.”

The interest/tenure of the current proprietor

Inquiries should be made on whether the current owner’s interest is a Kibanja, Mailo, freehold, customary or leasehold.

If the interest is titled, the intending beneficiary should be availed a copy of the duplicate title by the landowner and must use it to make inquiries from the Land Registry. While making inquiries, the prospective beneficiary must ensure an accurate correlation of what is constituted on the vendor’s title with what is on the Registry’s title. For instance, the size/acreage, block, plot, Folio or Register volume numbers, description of the land in aspects of physical location, instrument registration number and registration date, the Registrar’s signature or seal, and any entry such as previous transfers, incumbrances or other registrable instruments, their dates of entry or cancellation, must be the same, and in case of a title based on a subdivision, it should have the same number of the head title.

Even for land without a title, for instance, a Kibanja, a search at the registry should be done to ascertain the actual landlord alleged by the Kibanja holder to be the proprietor of the main interest in case it’s a registered interest.

For both titled and non-titled land, undertaking proficient on-ground inquiries is very crucial in ascertaining ownership and interests on the land. For titled land, the intending beneficiary should engage the services of an accredited land surveyor to do a location survey and boundary opening to confirm the location/description and acreage of the land.

For both titled and non-titled land, inquiries should be made from the spouse, if any, the occupants of the land, the neighbours of the land, local authorities (LCs) where the land is located as to the ownership, size or boundaries, physical possession and use, history of the current ownership/acquisition of the land, right and authority of a person intending to transact on the land.

Physical investigations on the land enable the beneficiary to have constructive notice of any rights and any information reasonably discoverable by a physical inspection and is a shield from fraud. The requirement of physical inquiries and the effect of failure to make such inquiries was insisted on in the case of Nafula V Kayanja, where court affirmed that, “there was physical possession and occupation on the suit land by the Plaintiff’s caretaker. The Defendant was thus required to inquire from the occupants on the suit land as to what their interest was on the suit land. He did not…A purchaser of property which he knows to be in occupation and use of another person other than the vendor without carrying out due inquiries from the person in occupation and use commits fraud”.

General inquiries should also be made on the approved/permitted use of the land from authorities like the National Environmental Management Authority (NEMA) if the land is in a low-lying area, and the Uganda National Road Authority (UNRA) to verify that the land is not within a road reserve, and on the pending property taxes from the city, municipal or any local authority where the land is located.

Critical analysis of contractual documents

This is very relevant in an instance of a lease. The Lease Agreement must be thoroughly analyzed to ascertain the remaining period of the lease, the size of the leased land, the terms and covenants of the lease, and whether the intended purpose of the land is allowed by the use of land clauses in the lease. Because of an implied covenant in leases that the assignee or sub-lessee should observe the covenants and terms in the original lease, any relevant information exposed by the analysis of the lease agreement is very material; with the ability to impact the suitability of the property and needs of the transaction.

History of ownership of the land interest

For titled land, details as to the chronological ownership should be extracted at the land registry. There should then be a logical analysis of the information extracted to a reasonable conclusion that the sequence of such ownership suffices to offer valid current ownership. For instance, if the original interests say a mailo created a lease interest and the lease expires, after the expiry of the term of the lease, the land reverts to the owner under the initial tenure of a mailo. It would thus be illegitimate for a freehold title to be issued for the same land where the lease was held, and any interest/title accruing from the freehold title would be illicit.

For unregistered land, the intending beneficiary must make inquiries from the owner and relevant persons to ensure that there is an unbroken chain and a believable systematic history of ownership, transfer proving the devolution of the land to the owner’s current possession. This verily corresponds with the position in the case of Oryem V Omony with an emphasis that, “In the case of unregistered land, there is no central register and as such, the burden is on the buyer to ascertain whether the land has been properly conveyed over the years and that the current vendor is the party to whom it was last vested in”.

Investigating existing encumbrances and the legitimacy of their removal

An incumbrance is any burden; a prior estate, interest, right, claim or demand on the land, by someone other than the landowner, which adversely affects the use of or inability to transfer the land. According to Section 3 of the Land Amendment Act, any change of ownership of title is subject to existing interests or claims on the land.

The information of the existence of any incumbrance on the property is thus a strategic tool in decision making in the interest of a prospective beneficiary before engaging in a transaction. This is typical in instances of certain incumbrances such as mortgagees where other liens or mortgages take priority over others as per their dates of registration (Section 48 of the Registration of Titles Act), and where there is a caveat as it is operational in prohibiting registration or any dealing in the land except in accordance its provisions. (Section141 of the Registration of Titles Act). Any entry or cancellation of an incumbrance is usually indicated on one of the title pages.

Noteworthy, investigations should also be made on the removal of any incumbrance. A caveat save for beneficiaries or the Registrar lapses upon expiry of 60 days after notice of an application to remove the caveat to the caveator. (S.140(2) & Section 141 of the Registration of Titles Act. Inquiries, for instance, on the written consent to remove the caveat and mortgage release form in case of a mortgage or any relevant document and its authenticity must be made and verified. This is because any removal or cancellation of an incumbrance procured by fraud is void as against all parties as provided under Section 77 of the Registration of Titles Act.

The need to conduct inquiries on the removal of incumbrances was stressed out in the case of Nafula -V- Kayanja, where Nafula, who got the land from his father instantly discovered fraudulent changes on the land title and lodged a caveat on 25/11/2010, but Kayanja went ahead and got registered on 17/3/2011 and claimed that he was a bonafide purchase without knowledge of the fraud. That the caveat didn’t exist at the time he transacted. In addition to ordering cancellation of his title, Court rebuked his negligence concerning diligence on the caveat that, “it is in no doubt that by the time the Defendant(kayanjja) got registered on the suit land, there was a subsisting Plaintiff’s caveat …registered much earlier. If the Defendant had done a search at all, it would have unfailingly revealed to him that the title was encumbered”.

Authority

Authority is of two kinds; legal capacity and general legal authority. Under legal capacity, inquiries must be made on the actual personal capability of the present owner of the property to enter into a legally recognizable, binding contract involving the property. Realist scenarios are often for minors and persons of unsound mind.

If a minor is the landowner or the land title is in a minor’s name and he/she is still a minor at the time of the transaction, it is suggestive that the minor’s father or mother is a presumptive guardian, and can’t be a direct benefactor. Therefore, whether it’s a minor’s father, mother or guardian transacting on the minor’s land, a prospective land beneficiary must be furnished with a guardianship order bestowing such persons with authority to deal with the land on behalf of the minor as per Section 3 and 4 of the Children amendment Act, and Sec. 5 of the Children Act. This was confirmed in the matter of Kyeswa, Batwawula and Sebaduka (all minors) [2019] UGHCFD 1, where court stated that, “even those dealing with the guardian in respect of the property must know and be mindful of the fact that he is executing the contract(s) on behalf of the minor”

If the landowner is a person of unsound mind, an inquiry must be made on whether he/she is capable of managing his affairs, whether person transacting on his/her behalf has written authority from the mentally ill person appointing him/her a personal representative, or a certified Representative/Guardianship Order, and special permission from Court to transact on the ill person’s land. The indispensable possession of this authority is in accordance with Section 2, 61, and 63(1) and 2 of the Mental Health Act, 2018 and Section 2 and 4 of the Administration of estate of persons of unsound mind Act, and the case of Aseru Joyce Ajju -V- Anjoyo, where Court emphasized that, “a person of unsound mind…to such a degree is incapable of managing himself or herself or his or her affairs..”

On the contrary, the general authority relates to whether the person conveying the interest in the land is clothed with sufficient, legitimate, factual power to convey the interest. Such authority consists of the following:

Spousal Consent

In highly sensitive dealings such as for land, there is no absolute mutual agency relationship between a husband and a wife such that one can act on behalf of the other merely because of the marriage. Section 39 of the Land Act and Regulation 64 of the Land Regulations establish a statutory restriction on dealings on family lands. such dealings are subject to prior consent of the spouse as stated in the case of Oryem Vs Omony, that, “..the provisions thus create a general incapacity of one spouse to contract in his or her name, in respect of family land, without the other’s consent”

This denotes an obligation on an intending land beneficiary to undertake inquiries on the existence of the spouse, and request for written consent of that spouse. Particularly, under Section 5 and 6- Mortgage Act, the law mandates a Mortgagee, where the matrimonial property is the subject of the transaction, to conduct due diligence on the marital status of the proprietor to ascertain the need for spousal consent.

To find out the existence of spouse(s), inquiries should be made with verification from the neighbours and the area local leaders where the land is located, the marriage registry, and marriage ceremonial places, for instance, places of worship to ascertain the existence of any marriage, and in relevant death registration offices, for instance, the National Identification and Registration Authority(NIRA) for a death certificate, and in a health facility for a death notification record/certificate of cause of death, where the land proprietor alleges death of a spouse.

Powers of Attorney

If a person is dealing with the land on behalf of the owner of the land, he/she cannot be acting on his own but as an agent of the owner. This means that he/she should be having authority from the landowner to make any transaction on the land. Such authority must be conveyed through a properly executed, attested and registered unrevoked Powers of Attorney as required by Sections 146, 147 and 148 of the Registration of Titles Act.

Inquiries as to the authenticity and the extent of powers exercisable by the agent under the Powers of Attorney must be ascertained from the owner of the land, and the Registrar of Documents at Uganda Registration Service Bureau (URSB).

The need for investigative inquiries on the authority of the person acting on behalf of the landowner was considered in Nanteza Nabeta -v- Konde, where the Purchaser/ Defendant was made aware of the landlord’s existence but the Landlord’s agent, a cousin who used to collect the Busuulu on her behalf, conducted the transaction and signed the transfer forms without her knowledge and authorization to do so in favour of the purchaser who never got concerned to ask for a written authorization from the Landlord to her Agent. With insistency, Court held that, “the Defendant cannot convince Court that he believed in the signed transfer forms when he never saw the Landlord signing them”.

Consent of the Principal Interest holders or incumbrance holders

This consent goes beyond the consent of people registered on the certificate of title, and it must be in a written form.

(i) Consent of mortgagees.

A person leasing or subleasing the land subject to a mortgage must have the written consent of the mortgagee before the transaction. In absence of the mortgagee’s consent, such a transaction is invalid. (Section 101 and 109 of the Registration of titles Act). Therefore, if it is discovered during inquiries on incumbrances that the land is subject to a mortgage, it is incumbent on the prospective beneficiary to make inquiries and satisfactory information that the landowner has obtained the consent of the mortgagee.

(ii) Consent of the (main)owner of the land

In case of a lease interest, inquiries should be made on whether the lessor has obtained authority from the landlord to lease or sub-lease. Leases are subject to lease agreements between the first parties. (Section 101 of the Registration of titles Act). If a heedful analysis of the lease agreement reveals a restriction clause on any transaction on the land, the intending beneficiary must make inquiries to ensure that the owner of the original interest has granted consent to the lessee to transact on the land.

If the interest is a kibanja, one must inquire and verify whether the landlord has authorized/consented to the relevant transaction by a kibanja interest holder. The acute controversies on the rights, powers and relationship between tenants (Bibanja holders) and their landlords (Mailo landowners) make the dire need for this inquiry inevitable. The requirement of the landlord’s consent, as the authority to transact by a kibanja holder, was considered in the case of Nanteza Nabeta V Konde, where the Purchaser/ Defendant was made aware of the landlord’s existence but he purchased the land from a Kibanja holder. Court held that, “The trust he put in the people he was dealing with was unjustified. The Kibanja holder didn’t have authority to sell and hence didn’t have a good title to pass over to the Defendant”.

Also, one must inquire for and verify the consent of a joint holder in case of jointly held land, and where there is the residence of the land by dependent children of above 18 years, consent of those children, or consent of the parish land committee if the children are minors with interest in the inheritance of the land.

Resolution to sell the land

Under section 50 of the Companies Act, a company can contract through a person acting under its authority, on its behalf. If the land is being sold by a company, inquiries must be made on whether the officer(s) of the company have a company resolution authorizing the sale of the land, executed by the directors of the Company and registered with the Uganda Registration Service Bureau (URSB). Inquiries as to the authenticity and content of the resolution should be made at URSB. This requirement of a registered resolution is well within the precincts of the company law doctrine of “Ultra vires” where such individuals are prohibited from taking actions beyond the scope of their legal purview, without authority to do so.

Certified L.O.A or probate from Court, and consent of the beneficiaries

In instances of death of the landowner, any person intending to deal with the deceased’s land must have probate or letters of Administration from Court. He is then registered as a transferee on the title in case of titled land, with his/her position of an Administrator being indicated against his name as opposed to only his/her name appearing as a registered proprietor.

Particularly, Section 134(1) of the Registration of Titles Act empowers the Administrator or executor to be registered as so on the title with absolute proprietorship of the land for the purpose of dealing in the land. However, the above law must be broadly and purposively construed to afford it a rational meaning with a purpose in relation to the rights in the land under administration. Such interpretation connotes the character of an Administrator or Executor as merely of a legal representative of the deceased person as stipulated by Section 180 of the Succession Act and the position in the case of Anecho V Twaibu that, “at that point in time, the beneficial interest passes and all the assets are held by the administrator on bare trust for the beneficiaries, since the administrator’s role is merely distribution.

It is for that reason that as from the date of the grant the beneficiary has, in equity proprietary interest in the estate property, which will be enforced in equity against any subsequent holder of the property other than purchaser for value without notice. ..equity will intervene to prevent the Administrator from using his position to the detriment of the beneficiaries. It regards the beneficiary as the true owner”.

This, therefore, means that inquiries must be made on whether the Administrator or Executor has obtained the consent of beneficiaries and dependents to deal with the land.

In case of sale of land through a court sale, inquiries and verification must be done from a relevant Court on the existence of a court judgment, a court order, a decree and a warrant of attachment and sale, and in a newspaper and at the newspaper offices for a public advertisement of the land.

Failure or negligence in conducting due diligence/inquiries could make the entire transaction and a beneficiary susceptible to fraud, expensive-highly risky court litigation, invalidity, cancellation of the title and financial loss. Due to stringent yardsticks invoked by the law on the aspect of due diligence, the concept that a certificate of title is conclusive evidence of ownership by a registered person cannot offer ultimate protection.

Conclusion

The information exposed by thorough inquiries/due diligence impacts the proprietary rights of the beneficiary or the very nature of the property’s suitability to the substance of the transaction. In Uganda, most land transactions, in a wide spectrum, are conducted by real estate agents and brokers. Unfortunately, some of the agents and brokers are less informed; marred with the inability to conduct effective inquiries, forecast and reveal the implication of certain land transactions to intending land beneficiaries. While it may be a phoney agent’s discreet duty to lucratively prey on a beneficiary, it is a beneficiary’s unwavering duty to conduct reasonable effective inquiries. Unless on a race to loss, an intending beneficiary shouldn’t dice to engage the services of a lawyer. A lawyer should be promptly engaged at the initial stage of the transaction to attain all the aspects of effective land inquiries.


Asasiira Athen is a Commercial Law Practitioner/Advocate with M/S M. Mugimba & Co. Advocates.
For comments and inquiries, contact her at asasiraathens@gmail.com

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