A lender's right to recover a debt is not automatically a right to take the land beneath the security. That distinction decided an appeal concerning a rental house on Plot No. 69 at Muyeye Water Project, Malindi. For someone assessing coastal property, the question is not simply whether a building exists: whose interest in that building, and in the underlying land, was actually offered?
In Musa Salim Chai & another v Zakayo Kaiya Kaibunga, Civil Appeal No. 141 of 2018, the Court of Appeal at Malindi addressed that boundary in its judgment delivered on 24 April 2020. The appeal arose from Malindi ELC Case No. 358 of 2016, decided on 21 September 2018. This was a merits judgment, not an interim injunction application. (Caption, p. 1; closing, p. 16.)
The agreement covered the house
The judgment describes the first appellant as proprietor of the house and the second appellant as registered owner of the plot. Under their permission arrangement, the first appellant had built and rented out the house. On 12 June 2012, he borrowed KSh 252,000 from the respondent, with repayment due within thirty days. The house secured the loan; on default, it was to be sold to recover the advance without interest. (Paragraphs 1–3, pp. 1–2; paragraph 25, p. 9.)
Default occurred. But instead of selling the house under those terms, the respondent transferred both house and plot to himself. The plot owner was not a party to the loan agreement. The appellants sought vacant possession, compensation for rental income through mesne profits, a permanent injunction and costs. The trial court dismissed their suit. (Paragraphs 3–6, pp. 2–3; paragraph 26, p. 9.)
What the appeal court found
The appellate court recorded a County Government of Kilifi letter dated 19 June 2015 describing the transfer as irregular because due process had not been followed. It also recorded the respondent's admission that the agreement did not authorise him to take ownership of the plot. These are specific features of the evidence, not a general rule that any loan default invalidates a transfer. (Paragraphs 27–29, p. 10.)
Both contracting parties had breached the agreement, the court held. It nevertheless distinguished ownership of a coastal house from ownership of the land beneath it, applying the house-without-land concept to this security arrangement. The court rejected the allegation that the borrower had acted fraudulently and found that the irregular transfer and refusal of late repayment amounted to unjust enrichment. (Paragraphs 31–35, pp. 11–13.)
Possession granted; rental compensation refused
The appeal succeeded on vacant possession and injunctive relief. The court set aside the dismissal, granted the appellants vacant possession of Plot No. 69 with the house, and permanently restrained the respondent, his servants and agents from collecting rental income from or otherwise dealing with the house. It awarded costs of the appeal and the lower-court matter. (Paragraph 40, pp. 15–16.)
Mesne profits were not awarded: the evidence did not sufficiently establish the rental amount claimed. Success on possession did not supply that missing proof. Nor did the operative orders expressly direct registry rectification or quantify a final loan balance. Later enforcement, registry implementation and occupation have not been established here. (Paragraphs 36–40, pp. 13–16.)
Check the interest, not just the address
The property is identified as Plot No. 69 at Muyeye, Malindi; the county-government evidence supports its Kilifi location. However, page 1 gives original number 1412, while pages 9 and 16 give 412. That inconsistency should be checked against authoritative parcel records, not silently resolved.
For buyers and lenders, the practical task is to separate the building interest, land interest, security terms and actual court orders. ArdhiScore supports that work with available parcel, court, gazette and field intelligence, alongside monitoring. It does not certify title, reveal private bank records, provide complete coverage or guarantee that a dispute will be prevented. Professional legal and property due diligence remains necessary. See how ArdhiScore works.
Primary source: Judiciary's 24 April 2020 civil appeal collection, member MSA Civil Appeal No 141 of 2018- FINAL.pdf, printed pp. 1–16.