Loan default in Kenya: your rights before a bank sells

When a borrower defaults on a loan secured by a charge over land, the Land Act, 2012 requires the lender to follow a strict process before selling.

The notice sequence

1. Statutory notice (section 90) — at least three months’ notice to remedy the default, stating the amount and the consequences.
2. Notice to sell (section 96) — if the default continues, at least forty days’ notice of the intention to sell.
3. Redemption notice and auction — under the Auctioneers Rules, an auctioneer must serve a notification of sale (typically 45 days) before the auction.

Notices must also be served on the spouse and other persons with an interest in the property, where applicable.

The lender’s duty on sale

The lender must obtain the best price reasonably obtainable, supported by a recent valuation. A sale at a significant undervalue can be challenged.

Your options

• Negotiate a restructuring or moratorium early.
• Sell privately with the lender’s consent — often achieving a better price.
• Challenge defective notices in court; injunctions may be granted where the process was not followed.
• Redeem by paying the arrears and costs before the fall of the hammer.

Act early. Courts are reluctant to stop a sale where the borrower admits the debt and the process was followed.

This article is general information, not legal advice on your situation.

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