Lumumba Lena Owano
Few letters cause as much alarm as a notice from a bank threatening to sell a home or business premises. Yet Kenyan law does not allow a lender to move straight to auction. The Land Act, 2012 sets out a sequence of statutory notices that must be properly served before a chargee can exercise its power of sale, and courts regularly stop sales where that sequence has not been followed.
Step one: the three-month statutory notice
Where a borrower defaults, the chargee must first serve a notice under section 90 of the Land Act. It informs the chargor of the default and gives a period of three months to remedy it, warning of the remedies the lender may pursue if the default continues.
Courts have treated this notice as mandatory. In Fredrick A. Makumbi v Kenya Commercial Bank Ltd (2014), the High Court examined the sequence closely and found that a later notice had been served before the three months had run out.
Step two: the forty-day notice to sell
If the default is not remedied, the chargee must then serve a further notice of at least forty days under section 96 before completing any contract for the sale of the property. Only after this period may the property be sold, usually by public auction through a licensed auctioneer, who must in turn issue the notices required under the auctioneers' rules.
The matrimonial home: an extra layer of protection
Where the charged property is a matrimonial home, section 79(3) of the Land Act provides that the charge is valid only if the documents were executed by the chargor and any spouse. The Matrimonial Property Act, 2013 likewise requires the written and informed consent of both spouses before a matrimonial home is mortgaged. A charge registered without proper spousal consent is open to challenge.
What borrowers can do
A notice is the start of a process, not the end of it. Borrowers should:
- Read every notice carefully and note the date it was served
- Check whether each statutory period has actually expired before the next step was taken
- Request a full statement of account and verify interest and charges
- Explore restructuring, refinancing or a private sale, which often achieves a better price than auction
- Seek advice early: injunction applications are far stronger when filed promptly
What lenders should get right
For banks and other chargees, procedural shortcuts are expensive. A sale set aside for defective notice can expose the lender to damages and delay recovery for years. Careful service, accurate records and a properly instructed valuation protect the lender's position as much as the borrower's.
Every charge and every default is different. If you have received a statutory notice, or you are a lender preparing to enforce security, take advice before the next deadline passes.
Sources
This article is general information on Kenyan law as at its publication date and is not legal advice.
