Land remains the foundation of Kenya’s economy, but it is also one of its most contested and litigated assets. Ownership disputes continue to cast a shadow over the legal and commercial environment, posing significant risks for investors, lenders, and developers alike. While the Constitution and statutory frameworks, including the Land Registration Act, 2012, affirm the importance of title, the courts have consistently clarified that such protection is not absolute where fraud, illegality, or irregular acquisition is involved.

Against this backdrop, collateral-based lending rests on fragile ground. Titles offered as security are only as strong as the root from which they originate, and any defect in that chain of ownership can unravel entire transactions. The Court of Appeal’s recent decision in Frank Logistics Limited vs. Golden Lion Real Estate Company & 6 Others (Civil Appeal E303 of 2024) [2025] KECA 1471 (KLR) emphasises this point, reiterating that lenders have a duty to establish a valid root of title before accepting land as collateral. The ruling not only highlights the inherent risks in defective land transactions but also indicates increased judicial scrutiny on the due diligence obligations of secured lenders.

The Case in Brief

The dispute centred on ownership of L.R. No. 1/835, popularly known as Blacky’z Lounge in Kilimani, Nairobi.

The Golden Lion Real Estate, the first respondent, claimed lawful ownership after purchasing the property from Propco Ltd in 2014 and registering it in 2015. Conversely, Frank Logistics Ltd, the appellant, asserted that it acquired the same property through Edward Shylock Ndege and registered the title in 2017/2018. Frank Logistics then used the disputed property as collateral to secure a KSh 90 million loan from Credit Bank, the sixth respondent.

At the Environment and Land Court, Frank Logistics’ title was invalidated, the Golden Lion’s ownership was upheld, and subsequently, the charge by Credit Bank was declared null and void.

On appeal, the Court of Appeal upheld these findings, ruling that the Golden Lion was the rightful registered proprietor under the Government Lands Act (GLA). In contrast, Frank Logistics’ title was marred by illegality and procedural irregularities. Significantly, the Court pointed out apparent defects in the chain of ownership, such as transfers made after the alleged vendor’s death and registrations carried out during the hold of a court injunction, which is prohibited under the doctrine of lis pendens (meaning that property involved in a legal dispute cannot be transferred until the dispute is resolved).

As a result, the Court ruled that the bank’s charge, being anchored on a defective root of title, was null and void. Both the appeal and the cross-appeal by Credit Bank and its agent were dismissed with costs.

Key Takeaways 

The Court of Appeal’s decision in this case is a crucial reaffirmation that titles are not inviolable and that secured lending on land as collateral depends entirely on the root of title from which the charge originates. 

Kenyan jurisprudence now establishes that, although a certificate of title is prima facie (accepted as correct until proved otherwise) evidence of ownership under Section 26 of the Land Registration Act, it is not absolute if the acquisition is tainted by fraud, illegality, or procedural irregularity. The Court referenced Embakasi Properties Ltd vs. Commissioner of Lands [2019] eKLR and the Supreme Court’s statements in Dina Management Ltd vs. County Government of Mombasa & Others [2023] eKLR, as well as Munyu Maina vs. Hiram Gathiha Maina [2013] eKLR, to reaffirm that a proprietor must demonstrate the legality of their root of title once challenged. Presenting a title deed alone is insufficient.

Article 40(6) of the Constitution excludes unlawfully acquired property from protection, a principle reinforced in Rutongot Farm Ltd vs. Kenya Forest Service [2018] eKLR. This anchors judicial rejection of titles procured through irregular conversions, fraudulent transfers, or collusive dealings at land registries.

The doctrine of lis pendens was strongly reaffirmed. As recognised in Rose Wakanyi Karanja vs. Geoffrey Chege Kirundi [2016] eKLR, once land is subject to litigation or an injunction, no valid dealings can take place. The appellant’s transactions during the period of court orders were therefore invalid.

Conclusion

Ultimately, the Frank Logistics ruling serves as a clear warning: land governance weaknesses are no longer a secondary legal issue, but a core concern in secured lending. Protecting shareholder value, ensuring regulatory compliance, and maintaining a market reputation now require lenders to go beyond superficial land searches and instead undertake comprehensive, multi-layered due diligence. Where possible, they should also consider risk transfer tools, such as title insurance. Compliance, vigilance, and strategic foresight must underpin all land-backed financing activities.