Legal Alert – Conversion Of Titles And Closure Of Registers
The promulgation of the Land Registration Act (LRA) in 2012 heralded the commencement of efficiency in land registration systems that had hitherto been segmented in varying legal regimes. The Land Registration Act was the legislative framework that was expected to collate the land registration process in one law. However, the process of conversion has been stretched out resulting in the continued application of repealed land laws by relying on transitional clauses in the new laws.
It appears now that the long-awaited transition has arrived. The Ministry of Lands vides Gazette Notice Number 11348 of 31st December 2020 published a list of titles for conversion of land reference numbers. This conversion has been made under the powers vested in section 6 of the Land Registration Act, 2012 and implemented through the Land Registration (Registered Units), Order, 2017 (“the Order”). The Order establishes registration units across the country which are divided into registration sections and further divided into blocks.
The basis of the current action of the Ministry is premised on Regulation 4 of the Order which provides that:
a) The Directorate of Surveys is mandated to prepare cadastral maps together with a conversion list indicating new and old title numbers (where applicable). The cadastral maps are annexed to the Gazette Notice and take the format of Registry Index Maps;
b)The Cabinet Secretary is required to publish in the Kenya Gazette and in two daily newspapers of nationwide circulation, the cadastral maps and conversion list within thirty (30) days of receipt of the same from the Directorate of Surveys;
c)The new registries will come into effect within four (4) months of the end date of the publication in the Kenya Gazette. The specific Gazette Notice denotes this date to be 1st April 2021.
Migration of Registries and Titles
To further give effect to the Order, Regulation 8 makes provision for the transitioning of the registries and titles from the registries that were initially handling titles that are now named in the conversion list.
In this regard, registries from whom the named parcels have been removed will close the respective registers and migrate all particulars, documents and entries to the new registers. These registries are required to maintain a transition register under Section 104 of the LRA (savings and transitions) tracking the migration.
For convenience and expediency, the closing of the transition register and the migrating of data from the affected register should be done simultaneously.
Title holders of the affected parcels will apply to the Ministry for the replacement of their old titles through Form LRA 97 which application shall be accompanied by the original title document as well as copies of the proprietor’s identification documents.
Where a proprietor has not made an application for replacement but wishes to transact on the property, the Registrar shall proceed to replace the old title, mark the old title as cancelled and close the old register.
Understandably, many questions arise, key among them, how to deal with titles that are currently held by financial institutions as security.
a) Can the Registrar replace titles on his/her own accord?
b)Is there a deadline to the conversion or is it a progressive process?
c)Should financial institutions discharge the current securities they hold and register replacement charges?
d)Are deeds of variation of charge sufficient to effect the changes?
A reading of the Order and the LRA informs us that:
- The Order does not purport to grant the registrar powers to unilaterally replace titles; rather, it allows for a process where the replacement of titles can be done on application by the proprietor and/or within a transaction.
- The transitioning of titles is envisioned in Section 105 of the LRA which allows the Registrar to create a new register and migrate all particulars from the old register thereby substituting the old register and subsequently issuing the proprietor with a new title document in the prescribed form.
- Neither the Order nor the LRA expressly provide for the transitioning of the interests in land. While the LRA validated the rights and liabilities created by charges and leases under the repealed laws, the Order can only be said to lend itself to this dilemma by providing for the migration of titles to the new registers. In that respect, it is a plausible conclusion that the new register is a true reflection of the old register denoting all interests in the property.
We are however aware that the key component of the property, namely the property’s description will have changed. Noting the practical difficulty on the part of the Ministry in effecting the changes, namely, registering conditional discharges of charge, granting exemption from stamp duty and registering replacement charges for all securities currently held by various financial institutions, we dare say that banks are safer holding on to their securities in the current form on the strength of Section 105 of the LRA as opposed to risking the loss of title documents in the melee that is likely to ensue.
Notwithstanding the foregoing, an alternative to the registration of replacement charges is the registration of a deed of variation. However, Section 84 of the Land Act does not contemplate a variation of the property description and it is therefore our opinion that a deed of variation cannot be relied upon to transition the securities held by banks; at least not to the extent of the description of the charged property.