Introduction

In Uganda the obvious way of proving ownership of land is by being in possession of a certificate of title. By law, possession of title is ordinarily conclusive evidence of ownership.  The significance of a certificate of title is that it is presumed to be indefeasible. Section 59 of the Registration of Titles Act is to the effect that a certificate of title issued under the Act cannot be impeached or defeated and wherever it is presented it shall be conclusive evidence that the person named in the certificate is the owner of the land described in the certificate.

In Uganda, land has become such a precious factor in wealth creation and production with numerous transactions, transfers and interests being created on land. Ideally, the process of acquiring land should be straight forward, free of conflict and as stress free as is possible while protecting the rights of the interested party. However, because of abuse of land acquisition procedures and processes, issues of fraud and conflict over land have become prevalent within the sector so much so that the process of purchasing land has been described as ‘almost synonymous with conmen’. The extent of the prevalence of fraud can be viewed through the remarks of the former Head of the Land Division at the High Court; Dr. Andrew Bashaijja as he explained that “Most of the cases we handled here – I can say 75 percent-plus – are fraud-related cases,” and describes the fraud as “rampant” throughout the land sector.

What is fraud?

The RTA does not define what amounts to fraud. However, fraud has been defined to mean the intentional perversion of the truth by a person for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or her or to surrender a legal right. It is a false representation of a matter or fact whether by words or by conduct, by false or misleading allegations or concealment of that which deceives and it is intended to deceive another so that he or she shall act upon it to his or her legal injury.[1]

Fraud has also been defined to cover dishonest dealings in land such as depriving a purchaser for value in occupation of the land of his unregistered interest. It is well settled that fraud means the actual or some act of dishonesty. So literally, fraud refers to any dishonest act that is intended to deprive another person of their interest in land through.

Who is liable for fraud?

Courts require persons who are alleging that they were deprived of their interest in land fraudulently, to specifically plead and strictly prove fraud. As such the party alleging fraud has the burden to prove it and it cannot be inferred from the facts. This is in line with the general principle of the law of evidence that he who alleges must prove.[6]

The position of the law is that fraud must be attributed to the person who becomes registered as proprietor (transferee) of the land. This means that a person registered through fraud is one ―who becomes registered as proprietor through a fraudulent act by him or to which he is a party or with full knowledge of the fraud.

Fraud attributable to the transferee is either actual, imputed or constructive. Fraud must be attributable either directly or by necessary implication, that is the transferee must be guilty of some fraudulent act or must have known of such act by somebody else and taken advantage of such act.[8] A person becomes privy to a fraudulent transaction either by being an active participant in its perpetration by action or omission, or when having acquired knowledge of its perpetration by others or third parties, knowingly and wilfully seeks to take benefit from it.[9]

Therefore, where there are a series of subsequent transfers, for the title of the incumbent registered proprietor to be impeachable, the fraud of the previous proprietors must be brought home to him…A fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents.[10]

 The principle that fraud is attributable to the transferee actually or by necessary implication requires a mention of some incidents that can result in fraud.

 

Incidents of Land Fraud

 

1. Acquisition of special certificates of titles under false pretense;

Section 70 of the Registration of Titles Act provides;

‘If the duplicate certificate of title is lost or destroyed or becomes so obliterated as to be useless, the persons having knowledge of the circumstances may make a statutory declaration stating the facts and the particulars of all encumbrances affecting the land or the title to the land to the best of the deponents’ knowledge, information and belief; and the registrar if satisfied as to the truth of the statutory declaration and the bona fides of the transaction may issue to the proprietor a special certificate of title to the land, which special certificate shall contain an exact copy of the certificate of title in the Register Book ….’

 

This section gives a right to anyone who has custody of a title and knows the circumstances surrounding its loss to apply for a special certificate of title. This section has been misused by fraudsters to obtain special certificates of title for other people’s properties and eventually transfer them to their names and then sell to third parties.

Due to many complaints and unnecessary litigation, Ministry of Lands, Housing & Urban Development (MLHUD) came up with a strict rule that the applicant of a special certificate of title must be the registered owner who must also avail an LC Letter introducing him/her as the owner of the land and a police letter confirming the loss of the title. In addition to availing this documentation, the registered owner is required to physically appear before the registrar of titles for identification and verification before the application for a special certificate of title is approved.

It is therefore important for any person interested in purchasing land held under a special Certificate of Title to carry out some due diligence around the circumstances regarding the application for and issuance of a special certificate of title.

2. Administrators/executors transferring land to their individual names or third parties without the consent of the beneficiaries;

An administrator or executor under the law is the legal representative of the estate of the deceased. As such, he or she is duty bound to administer the estate on behalf of the beneficiaries. An administrator or executor is registered on the titles as a trustee and not as a personal proprietor[11].

There are many incidents where administrators of estates transfer land that belongs to an estate of a deceased to themselves in their personal capacity or to third parties without the consent of all the beneficiaries or even without the involvement of all the administrators (where there are joint administrators). Whereas it is nearly impossible to ascertain all the beneficiaries of an estate, the duty to conduct due diligence on the property falls on the interested buyer.

 When dealing with deceased’s estates, the interested buyer must verify the letters of administration/probate with the respective court and obtain consent of the beneficiaries before purchasing the property. However, purchasing such properties is risky because of the uncertainty of the rightful beneficiaries and the risk of the property being caveated by an unknown beneficiary after the purchase.

3. Forging powers of attorney with intention to defraud;

Section 146 (1) of the Registration of Titles Act provides;

The proprietor of any land under the operation of this Act or of any lease or mortgage may appoint any person to act for him or her in transferring that land, lease or mortgage or otherwise dealing with it by signing a power of attorney….

This section empowers a holder of powers of attorney to act on behalf of a registered owner. These powers are often misused and forged too. The supreme court decision of Fredrick Zaabwe vs Orient Bank & others (supra) was relied on in Konda Mathias Zimula vs Byarugaba Moses & Anor[12] to cancel a certificate of title where the second defendant had taken the plaintiff’s duplicate certificate of title, used forged powers of attorney purported to have been signed by the plaintiff to transfer the suit property into her names and later on into the names of the first defendant.

The above case is just one of many where duplicate certificates of title have been cancelled because they had been issued due to forged powers of attorney. It is therefore important for any one dealing with a donee of powers of attorney to verify with the donor of the powers and confirm if such are valid and if the Donee is acting within his scope.

Most land offices have made it a requirement to have the donor of the powers of attorney appear at the respective registry for identification and to confirm the sale before effecting the transfer of property.

4. Concealment of true consideration of the transaction;

In an attempt to defeat payment of stamp duty or paying less of it, most purchasers of land usually disclose the value of the land which is less than the true consideration paid to the seller. Such act of dishonesty amounts to fraud.

Recently the Supreme Court held that undervaluation of the land amounts to fraud.[13]

Instances of concealment of the true consideration of the transactions are rampant.  It is important that the intending purchaser fully and truly discloses the true value for purposes of ensuring that such a transfer is not impeached on account of defrauding the Government through the false/under declaration  of the land value for purposes of stamp duty assessment and payment.

5. Double titling of land;

The existence of more than one title on the same piece of land is an incident of fraud that cannot be missed. This fraud is usually committed within the land registry which is mandated to issue duplicate certificates of title. In most cases, the land registries while acting on forged documents submitted by the clients may erroneously issue more than one title on the same piece of land. Unfortunately, such fraud may only be detected once the true owner raises a complaint with the land office.

In the case of St. Mark Educational Centre limited vs Makerere University[14] CACA No. 40 of 1997 where two certificates of title were issued on the same piece of land, the court of appeal upheld the finding of the high court and noted that the fraud committed was not the type a purchaser or even his advocate could discover during an ordinary search at the registry. The fraud was committed on the register and the register being a Freehold title from which another register of a mailo title was created.

6. Forging land titles;

There are many cases where innocent purchasers acquire forged titles from fraudsters only to be surprised at the land registries when they are retained and cancelled on submission to effect a transfer. Many have been victims of such scam. The forged titles appear as authentic as the titles issued by MLHUD. There are reports that this form of land fraud through the issuance of forged documents has been aided by corrupt lands officials as explained by George Musisi, a lawyer at the Foundation for Human Rights Initiative, a charity that offers legal aid services, “when you look at the forged titles, sometimes it even has the seal of the land office”.

7. Illegal removal of caveats;

Fraudsters have taken advantage of Sections 140 and 202 of the Registration of Titles Act which provide for removal of a caveat by the Registrar issuing to the Caveator a notice to show cause why the caveat should not be removed. The notice is sent to the Caveator by post. In most cases, the notices are never posted. As long as there is a receipt from post office, this is evidence enough for the registrar to remove the caveat on expiry of the 60 days. Unfortunately, the Registrar of Titles cannot be blamed because he/she is following the law.

In reality, communication through postal services is the most archaic mode of communication. Many people use fictitious postal addresses or postal addresses that do not actually belong to them. Whereas the postal services are available, most Ugandans do not utilize them because of the e-communication.

If a Caveator is not vigilant enough to resolve whatever issues that arise from the property or to check on the property more often to confirm if an application to lift the caveat has been lodged, his or her interest will be extinguished without his or her knowledge. Recently the Supreme Court in Saul Kisiribombo Rumanda Vs Emmy Tumwine (supra) found that the Respondent’s caveat had been irregularly removed by the Appellant in connivance with officials in the MLHUD.

It is therefore prudent for Caveators to constantly check on the status of their interests at the land registry with a view to confirm if their caveats are still intact on the land register.

8. Real Estate Companies/dealers giving Bibanja Holders unreasonable offers;

 Real Estate Companies have a tendency of identifying customary land or unregistered land and entering unreasonable agreements with the squatters by offering them less consideration for their land or forcefully taking over their property. The said real estate dealers will then process the title to the land, subdivide the same and eventually sell to innocent buyers who will never take quiet possession of the land because of the unresolved issues with the squatters.

It is therefore an important duty on the purchaser to have made sufficient inquiries before getting registered on the land. The need for carrying out inquiries has been emphasized by court in various decisions. The position of the law is that, a person who purchases an estate which he knows or should have known to be in occupation and use of another other than the vendor without carrying out the due inquiries from the persons in occupation and use commits fraud. Therefore, the failure to make reasonable inquiries of the persons in possession and use of land or the purchaser’s ignorance or negligence to do so forms particulars of fraud. Knowledge of other people’s rights or claims and the deliberate acquisition of an interest in the face of such knowledge is fraud.

Effect of fraud

We have elaborately explained that fraud is an exception to the indefeasibility of title. This means that once fraud is proven before courts of law, the transferee’s title would be cancelled. It was held in the case of Fam International Limited and Ahmad Farah versus Mohamed El Faith[15] that fraud is such a grotesque monster that the courts should hound it wherever it rears its head and wherever it seeks to take cover behind any legislation. Fraud unravels everything and vitiates all transactions”.

Conducting due diligence/ search

 The first step in acquiring land is to carry out inquiries on the land to ascertain the status of the land in relation to the risk of existing competing and overlapping interests.

There is a famous quotation in the legal fraternity by Okello J. A as he then was in Sir John Bageire vs. Ausi Matovu[16], emphasizing the value of land property and the need for thorough investigations before purchase;

“Lands are not vegetables that are bought from unknown sellers. Lands are valuable properties and buyers are expected to make thorough investigations; not only of the land but of the sellers before purchase.”

The question of conducting a search is further discussed in Uganda Posts and Telecommunications v Lutaaya[17] where Court held that a mere search on the register is not enough. The person ought to inquire beyond the register. That the law is very clear that if a person purchases an estate which he knows to be in the occupation of another other than the vendor, he is bound by all the equities which the parties in such occupation may have in the land.

The failure to inspect the land for purposes of being brought under the Registration of Titles Act is a fatal irregularity and the purchaser would be found to have acted fraudulently by processing the title well knowing he had not followed proper procedure. The title could be impeached and cancelled for lack of an inspection report that is so crucial in the process of obtaining a title.[18]

In conducting a search, a prospective buyer must do the following;

1. Particulars of the land;

The intending purchaser should be availed with the particulars of the subject land in terms of description. It must have a block and plot, the details of the registered owner, location of the land, the area/acreage etc. The purpose of the particulars is to enable an intending purchaser to cause a search at the relevant land registry to confirm not only the proprietorship but also the existence of a white page/registry file with corresponding particulars like those on the certificate of title. In the recent past, it is now possible to actually compare not just the names but also the physical likeness of the proprietor, as passport size photos are used these days and helps to weed out fraudsters using forged land titles albeit with the same name.

2. Site visit to the Land/Property;

A site visit is significant not only because it familiarizes the purchaser with the property in question and the neighborhood that it is located in, but because it offers one the opportunity to gather some information which may not be accessible through the land registry regarding the history of the property. Some of the information can only be got from the locals around the area who know the owner of the property very well. Physical attributes of land are part of the due diligence that the law expects of one. A search at the registry though critical is not sufficient in itself.

During a site visit, the intended buyer may interact with the LC of the area to confirm ownership of the property and if there are any disputes in relation to the land.

Also the intending purchaser should find out whether the land is subject to spousal consent or if there are any equitable interests on the land.

3. Boundary opening;

Registered land is generally a subject of a specific delineation and specification as to the boundaries and area size.

It is therefore important that an intending purchaser engages a surveyor to ascertain the size of the property and confirm its true description. The intending purchaser must conduct a boundary opening to confirm whether the boundaries are in tandem/consistent with the particulars of the land. This is necessary in case of fraud and also where there is a mistake/error on the title.

4. Conduct a search at the Land Registry Office;

 

This step can often be carried out by the Purchaser’s lawyer (if he/she has one) to help confirm the authenticity of the title in question. The search goes on to aid the buyer in ascertaining the right property ownership, its genuineness, establish its existence plus identifying the conditions, pending rates or encumbrances on the title.

It is also advisable to present the land title for the land subject to a sale before a registrar of titles for verification before entering into any agreement. The registrar is able to verify if the title is authentic. It should be noted that newly issued titles bear a QR code which confirms the authenticity of the title once scanned.

With the computerized lands system, the buyer can verify the seller’s details at the land registries including his appearance to avoid impersonation.

5. Appoint a Lawyer to help you through the whole process;

 

Lawyers generally have the knowledge to guide the buyer on acquiring good title. They are able to advise on the ‘dos’ and ‘don’ts’ of entering land transactions.

6. Preparation of the sale agreement and transfer of title;

 

Once the buyer is satisfied with the findings of the due diligence and is ready to proceed with the purchase, a sale agreement has to be prepared by a lawyer, preferably the buyer’s lawyer. The buyer’s lawyer will ensure that his/her client is protected at whatever cost. The sale agreement must entail among other clauses, a clause on indemnity incase the seller misrepresents or passes on a defective title. The intended buyer is encouraged to make payments through a Bank.

Once the sale is concluded, the seller must execute and handover a transfer form, his/her passport size photo and copy of the national ID to the buyer. In case the seller is a company, it must handover the executed transfer form, registered resolution to sell, photos and IDs of the directors.

It is a requirement of the law that the intending transferee discloses the consideration paid in the transfer instrument and consent form and any under valuation of the property by the transferee may amount to fraud if it was intended to defraud government of its revenue.

The intended buyer should entrust his lawyer to handle the process of transfer of title to his/her names. Upon registration, a person whose name appears in the title is deemed to be a registered proprietor.

Having followed the above, the purchaser can claim to have acquired a valid interest in land that cannot be impeached and in case of impeachment his defence would be that of a bonafide purchaser for value without notice.

Conclusion.

There is rampant fraudulent land transactions perpetuated by different actors, sellers, lawyers and officials in MLHUD. The effect of fraud is that it invalidates a title that would otherwise have been indefeasible. The immediate consequence of such is the possibility of one having thrown away money through the ‘purchase’ of air or a non-existent interest in land. The process of acquiring land has been heavily invaded and affected by fraudsters and such a reality calls for serious vigilance on the part of any person intending to acquire an interest in land so as to secure their investment or interests.

 

[1] The Supreme Court in the case of Fredrick Zaabwe vs. Orient Bank & O’rs SCCA No. 04 of 2006,relying on Black’s Law Dictionary 6^th Ed. at page 660

See John Katarikawe versus William Katwiremu and Another [1977] HCB 187

Kampala Bottlers Ltd vs Damanico (U) Ltd SCCA No. 22/1992.,, see also David Sekajja Nalima vs. Rebecca Musoke (supra)

See Kampala District Land Board & Anor V Venancio Babweyaka & 3 Ors Civil Appeal No. 2 of 2007  where it was held that the degree of proof of fraud required is one of strict proof, but not amounting to one beyond reasonable  doubt

J.W.R Kazzora v. M.L.S Rukuba, S.C.C.A No. 13 of 1992

[6] See Section 101, 102,103, and 106 of the Evidence Act (Cap.6)

MUSISI —Vs GRINDLAYS BANK (U) LTD & OTHERS[1983] HCB 39

[8] See judgment of Wambuzi CJ as he then was in Kampala Bottlers Limited v Damanico (U) Limited CA No 22 of 1992.

[9] Agandru v Etoma (CIVIL SUIT No. 0007 OF 2011)  

[10] David Sekajja Nalima vs. Rebecca Musoke (supra

[11] Silver Byaruhanga Vs Fr. Emmanuel & Anor SCCA No. 9 of 2014

[12] HCCS No. 66 of 2007

[13] Betty Kizito David Kizito & ors SCCA No. 8 of 2018,

[14] CACA No. 40 of 1997

[15] [1994] KALR 307

[16] Sir John Bageire vs. Ausi Matovu CACA No.07 of 1996, at page 26

[17] CA 36 of 1995

[18] Asiimwe Anor v Mukirania (HCT – 01 – LD – CA – 002 OF 2017)