Buying land involves more than signing an agreement and making a deposit. A recent Court of Appeal decision has highlighted the obligations buyers and sellers must meet before asking a court to force the other party to complete a land transaction.
The ruling centred on a buyer who had paid only part of the agreed purchase price but later asked the court to compel the seller to complete the sale.
The court explained that such an order, known as specific performance, is not automatically available to a person who claims that a land transaction has gone wrong.
Instead, the party seeking the remedy must show that they have honoured their own obligations under the agreement, or are ready and willing to do so.
What is specific performance?
Specific performance is a court remedy that requires a party to fulfil the terms of a contract instead of simply paying damages for breaching it.
In a land transaction, this could mean a court ordering a seller to complete the sale and transfer the property to a buyer where the legal requirements for the remedy have been met.
However, the Court of Appeal stressed that specific performance is an equitable remedy, meaning it is granted at the court’s discretion and depends on the conduct and circumstances of the parties.
A buyer therefore cannot simply point to a signed sale agreement and demand that a seller be compelled to complete the transaction.
What must a land buyer prove?
The ruling makes clear that a buyer seeking specific performance must demonstrate that they have performed, or are prepared to perform, the essential obligations contained in the agreement.
This includes paying the purchase price according to the agreed terms and meeting other contractual requirements.
In the case before the court, the purchaser had failed to pay the outstanding balance within the agreed period.
The court also considered the buyer’s attempt to subdivide and sell portions of the property before obtaining legal title, finding that this conduct amounted to a breach of the agreement.
The decision therefore reinforces an important principle: a party cannot rely on a contract while disregarding its own obligations under that same contract.
What if both buyer and seller breach the agreement?
The case also dealt with a situation in which both parties had failed to fulfil their obligations.
While the buyer had not paid the outstanding balance within the agreed period, the seller had also failed to provide certain completion documents.
The court’s reasoning means that a breach by one party does not automatically erase the other party’s obligations.
Where both sides have failed to comply with a contract, the court can examine the conduct of each party before deciding what remedy, if any, should be granted.
For land buyers and sellers, this makes proper compliance with the sale agreement particularly important.
What is lis pendens and why does it matter?
The court also addressed the legal principle known as lis pendens.
The doctrine generally protects disputed property during ongoing court proceedings by restricting dealings that could undermine the court’s eventual decision.
However, the judges clarified that the protection is connected to the outcome of the underlying dispute.
This means a party who ultimately loses the case cannot simply rely on lis pendens to invalidate dealings with the property that occurred during the litigation.
What does the ruling mean for land buyers?
The decision provides several practical lessons for anyone entering a land sale agreement.
First, buyers should ensure that the agreed purchase price is paid within the timelines set out in the contract.
Second, parties should complete all other obligations required before completion, including providing or obtaining necessary documents.
Third, buyers should be cautious about subdividing, selling or otherwise dealing with property before they have acquired the legal rights required to do so.
Keeping evidence of payments, agreements, correspondence and other transactions is also important because courts determine financial claims based on evidence presented before them.
Why the ruling matters
The Court of Appeal’s decision does not mean that a buyer loses all legal protection simply because a land transaction has encountered problems.
Rather, it underscores that courts will examine the conduct of the parties and the terms of their agreement when determining whether to grant specific performance.
For Kenyans buying or selling land, the broader lesson is straightforward: a signed agreement creates obligations for both sides. A party seeking the court’s assistance must also be prepared to demonstrate that they have honoured their own side of the bargain.
