Ideally, once the parties execute the agreement and comply with all the formalities, the subject land is supposed to be transferred to the buyer. Unfortunately, like with any other contract, it is not always as straightforward. What happens in Kenya where a purchaser pays the full price yet the seller blatantly refuses to surrender the title? What remedies are available to such a purchaser? Because surely, the law must be offering some protection to innocent land purchasers?
In such a case, the law deems the seller to have created a constructive trust in favour of the purchaser. A constructive trust is a trust imposed by law when a seller enters into an agreement with a purchaser, with an intention of transferring the land to the purchaser. The trust becomes operative upon the seller receiving the purchase price.
The backbone of constructive trust is the parties’ common intention. The court in Llyods Bank Plc v Rosset (1991) 1 AC 107 defined common intention as an agreement, arrangement or understanding actually reached between the parties, relied on and acted upon by the claimant. It is only necessary to show that there existed a common intention between the purchaser and the seller in relation to the land. The common intention can be proved by a sale agreement.
The Court of Appeal in Macharia Mwangi Maina & 87 Others v Davidson Mwangi Kagiri [2014] eKLR described constructive trust as an equitable concept that acts on the conscience of the legal owner of land to prevent him from acting unconscionably to defeat the common intention. In that case, the respondent entered into sale agreements with numerous purchasers for 240 different plots. However, he refused to surrender the title despite the purchasers paying the full purchase prices. The Court held that the respondent created a constructive trust in favour of those persons who had paid the purchase price pending the sale of all the 240 plots.