Mr Moi transferred to himself 53 acres of land belonging to widow Susan Cheburet Chelugui, the judge ruled.
The land was illegally grabbed 36 years ago but only transferred to Mr Moi's name in 2007.
Ms Chelugui's husband Noah Chelugui was a local chief during Mr Moi's rule.
The former president, who remains Kenya's longest-serving leader, was accused by Ms Chelugui and her son David Chelugui of transferring their family land into his name two years after Ms Chelugui's husband passed away.
Mr Moi is then said to have sold the land to Rai Plywood Limited, a timber firm, the BBC's Mercy Juma reports from Nairobi.
Rai Plywood Limited told the judge that it had bought the land from Moi in 2007 after thorough legal checks.
However, Mr Moi was unable to provide the court any proof of how he came to possess the land, our correspondent says.
Judge Anthony Ombwayo said Mr Moi had behaved in a way that was "unconstitutional, irregular, unprocedural" and "tainted".
Mr Moi became Kenya's second president in 1978 and served until 2002.
He ruled the country with an iron fist and was accused of human rights abuses.
Under international pressure, he allowed multi-party elections in 1992, which were marred by widespread violence and allegations of rigging.
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