LAW OF IMMOVABLE PROPERTY

SAMPLE QUESTION
Kofi entered into an agreement/contract with Ama for the sale of land. Kofi paid the full purchase
price of GHS 1,000,000.00 At the time they agreed on the sale, Ama had used the land a collateral
for a loan. It was agreed between Kofi and Ama that after Kofi pays the purchase price, some of the
money would be used to redeemed the property, and where the property is redeemed then Ama
would execute a Deed of Purchase for Kofi. Ama, redeemed the property. After the redemption,
Kwasi approached Ama for the land and Kwasi offered GHS 2,000,000.00 for the purchase of the
land. Ama agreed with Kwasi and has executed a deed of purchase for Kwasi for the sale of the
land. Kofi has heard about the transaction between Ama and Kwasi, and he is aggrieved. Kofi has
come to you for advice. Advice Kofi.
SUGGESTED ANSWER

The issue to be resolved is on Enforcement of a Contract for the Sale of Land.

The issues to be resolved are:

1. Whether or not Kwasi has acquired valid legal title of the land.
2. If Kwasi has or has not acquired a valid title to the land, what remedy(s) is available to Kofi.

As to whether or not Kwasi is entitles to the legal estate of the land, the position of the law is that
under section 34 of the Land Act, 2020 Act 1036 the parties to a conveyance may first enter into a
contract of sale of the land before executing the deed of transfer that would transfer the legal estate
from the vendor to the purchaser. As a matter of fact, in most case, a vendor of a property may sell a
property to a purchaser without executing a deed of purchase to transfer the property to the person.
However, subsequently the same vendor may sell the same property to a different person.
This double contract of sale creates confusion as to which of the purchasers would have overriding
interest over the land.
To examine objectively, section 36(2) of the Land Act makes provision to the effect that section 34,
and 35 in relation to the execution of Contract of sale and execution of a conveyance is subject the
rules of equity. Therefore, in a situation where none of the purchasers have documents covering the
land to pass title to them, then equity says that their interest is the same and the first in time would
prevail. That is the first purchaser would have priority over the later since the equitable maxim is
where the equities are equal, the first in time prevails.
However, there are instances where the person whose interest was created subsequently or last
would have in his favor documents covering the land. In other words, the vendor would prepare a
deed of conveyance in that persons favor. In that, the maxim that would apply is; where the
equities are equal, the law prevails.
This means that if two parties have equitable interests in the same property and one subsequently
obtains the legal estate in the property, his legal interest will prevail over the equitable interest.
However, where the second interest is a legal estate, it normally has priority over an existing
equitable interest provided the owner of the legal estate did not have notice of the existence of the
equitable interest. This is known as the doctrine of the bona fide purchaser as was held in the case
of Numo Adjei Kwanko II v. Lebanon Society,
A person who acquires property through purchase for valuable consideration and not by gift,
without notice whether actual, constructive or imputed of adverse title is said to be a bona fide
purchaser for value without notice. A bona fide purchaser for value without notice is not bound
by another’s equitable interest in the property where he did not have actual, constructive or imputed
notice which any diligent search and inspection did not reveal the said interest.
This means that where a subsequent purchase has notice of the prior existing equitable interest, that
person would not qualify as a Bona fide purchaser.
That Notice could take the following form; namely,
 Actual Notice
 Constructive Notice
 Imputed Notice
It was held in the case of Yeboah V Amofa & Ors [1997-98] IGLR 674, that the burden of proving that a
party is an innocent purchaser is on the on the party (purchaser).

This means that a person who claims to be an Bona Fide purchaser has to prove to the Court that
he did not have notice of the prior equitable interest.
Where a person proves to the Court that he a bona fie purchaser, he would have the legal title
over the property and would have the rights to take possession and control of the property. Thus
in the case of Pilcher V Rawlins [1871-72] 7 LR Ch App 259, by James L J at page 269:
“Such a purchaser when he has once put in that plea may be interrogated and tested to any
extent as to the valuable consideration which he has given in order to show the bona fides or
mala fides of his purchase and also the presence or the absence of notice; but when he has gone
through the ordeal and has satisfied the terms of the pleas of purchase for valuable
consideration without notice then according to my judgment this court has no jurisdiction
whatever to do anything more than to let him depart in possession of that legal estate, that legal
right, that advantage which he has obtained whatever it may be.”
It must be stated that, where the vendor rather executed a deed of conveyance to the first
purchaser, then it would rather be the first purchaser who would have legal title over the
property not the subsequent purchaser. This because where a vendor executes a deed of
conveyance to a purchaser, the vender divest himself of title in the property and cannot pass title
to a subsequent purchaser since the vendor would not have any title over the property to pass to a
subsequent purchaser. This is known as the principle of Nemo Dat Quod Non Habet, which
literally means you can’t give what you don’t have.
It is also pertinent to state that where a subsequent purchaser is able to prove to the court that he
is a Bona fide purchaser, the first purchaser who had the equitable interest cannot sue the vendor
 for specific performance since the vender has legally transferred his interest in the land to the
subsequent purchaser and the subsequent purchaser would have ownership, possession and
control over the property.

In the instant case, it can be seen that Ama had an agreement with Kofi in relation to the sale of
the land, and Kofi paid for the purchaser price. Ama did not execute deed for conveyance to
Kofi to transfer legal title to Kofi. However, Kofi haven’t paid for the land, under equity he
would be said to have equitable interest in the land. Kofi does not have legal interest in the land
because Ama has not prepared any form of conveyance to transfer legal title to Kofi.
Interestingly, the property was even encumbered at the time Ama Agreed with Kofi to sell the
land to Kofi since Ama had used it as subject matter for a mortgage. This is not an issue because,
Ama subsequently redeemed the property so it was then free from encumbrance. After the
property was redeemed, Ama was to executed a deed of conveyance in favor of Kofi, but Ama
failed to do so.
However, Ama rather executed a deed of conveyance in favor of Kwasi after Kwasi offered a
higher price for the land. This means that Kwasi is a subsequent purchaser of the property.
The issue is between Kofi and Kwasi, who should have ownership, possession and control of the
land?
In this case, it is evidently clear that a deed of conveyance was prepared for Kwasi which means
there is a purported transfer of legal title to Kwasi. However, as discussed in the law above,
Kwasi legal title would have priority over Kofi’s prior equitable interest if Kwasi is able to prove
that he is a Bona fide purchaser.
That is, Kwasi would have to prove to the Court that he did not have notice of Kofi’s existing
equitable interest. The facts do not disclose whether Kwasi had notice or not. But if it is proved
that Kofi had actual or constructive, or imputed notice or knowledge of Kofi’s prior equitable
interest then Kwasi would not be a bona fide purchaser and Kofi interest would have priority
over Kofi’s interest.
Under the circumstance, it can be concluded and submitted that, if we are to go by the fact the
Kwasi may not have had notice of Kofi existing interest, the Kwasi is a bona fide purchaser and
his interest overrides the interest of Kofi.

In relation to the remedy available to Kofi, the position of the law is that if parties enter to an
agreement for lease, before the execution of the lease, the agreement for lease (contract of sale)
could be enforced to confer title as though is a lease.
Thus, if a contract of sale is entered into under section 34 of the Land Act 2020, Act 1036 such an
agreement could be enforced under section 35 of the Land Act 2020, Act 1036.
In the case Sykes v. Abbey [1995-96] 1 GLR 81 relying on Walsh v. Lonsdale [1882] 21 Ch. D
CA 88 it was held that, “The legal position is that equity will treat the subject matter, as to
collateral consequences and incidents, in the same way as if what is contemplated finally by the
parties had been exactly as they ought to have been done. For instance, where a party holds
possession under an agreement for a lease, of which specific performance would be ordered, the
parties are treated in equity as being in the same position as regards their respective rights as if the
lease had been granted.”

Togbor v. Odoi Sykes [2009] 9 G.M.J. 162 @ 174, S.C.

“In law any agreement for a lease which the parties can rely on to enforce the contract is looked at
in equity as if a lease had been granted….
There is no doubt that Exhibit ‘D’ gave the respondent the right to be on the land. There was
evidence that he put up a carpentry shop and paid ground rents which were accepted by the Lands
Commission…. I am therefore convinced that given the evidence, the respondent could have used
Exhibit ‘D’ to sue the second defendant if it had disregarded the contractual terms in Exhibit ‘D’.
The Agreement for a lease was effective to vest in the respondent an equitable right to assert that he
had permission to be on the land as a lessee of the Government of Ghana” . - Per Anin
Yeboah JSC

The equitable maxim, in this circumstance is, ‘equity sees as done that which ought to be done’.
If there has been part performance by the purchaser to the vendor under an agreement for the sale of
land, even though the conveyance has not been prepared, the vendor in equity would hold the
property in trust for the purchaser. Thus, the vendor becomes constructive trustee, and the purchaser
because the beneficial owner. This is because, in that case there was conversion of money to land,
and Land to money.
Therefore, if the vendor purports not to perform his obligation under the contract to transfer title and
possession of the land to the Purchaser, the purchaser can enforce the contract against the vendor by
specific performance to compel the vendor to perform his specific obligation under the
contract/agreement.
However, it must be emphasised that where a subsequent purchaser is able to prove to the court that
he is a Bona fide purchaser, the first purchaser who had the equitable interest cannot sue the vendor
for specific performance since the vender has legally transferred his interest in the land to the
subsequent purchaser and the subsequent purchaser would have ownership, possession and control
over the property.
In the instant case if Kwasi is able to prove that he is bona fide purchaser, then he would acquire a
valid title and since title would have already moved from Ama to Kwasi, Kofi cannot seek the relief
of Specific Performance against Ama because ownership and Possession of the land would be with
Kwasi, not Ama.
To conclude, the advice to Kofi therefore is that if Kwasi is able to prove that he is a Bona fide
purchaser for value without notice title would validly pass to him. Based on the equitable maxim
that when the equities are equal, the law prevails, it can be said that Kwasi interest would override
Kofi’s prior equity interest. Kofi remedy is to sue Ama for breach of contract, damages, and
recovery of the full amount paid to Ama with interest. However, if Kwasi is not able to prove that
he is a bona fide purchaser, then he would not acquire a valid title and Kofi’s equitable interest
would override kwasi, since when the equities are equal, the first in time prevails, and as such
specific performance would lie against Ama.