Equity Bank has been directed to conduct a fresh valuation of a businessman’s property in Mombasa, before selling it after the lender complained that three previous attempts to auction the land attracted low bids.
Justice Stephen Kibunja of the Environment and Land Court said it was necessary to commission another valuation before further attempting to sell the land.
The lender moved to court seeking permission to sell the property in the Mikandani area in Mombasa County, at the best reasonable price, but not necessarily one above the forced market value as previous auctions have failed due to the low bids.
“The bank’s right to exercise its statutory power of sale is evident and this court cannot deny it. It has shown through the three attempts of the failed auctions that it is keen on complying with its legal obligations,” ruled the judge.
The bank told court that the sale of the property belonging to Peter Mugambi Maina at the best obtainable price would reduce the debt.
“I am of the view that the sale of the suit property should be conducted without undue delay, because it is the just thing to do. However, the sale should not be conducted on the basis of the existing two-year-old valuation reports,” he said.
The judge ruled that once the bank obtains a new valuation, it should be at liberty to exercise its statutory power of sale, in accordance with the law, even if below the forced sale value.
The court said the valuation should be done within 30 days from the date of the judgement and a copy of the valuation be shared with Mr Maina.
The court heard that valuations done in August 2021 and September 2022 placed the value of the property at Sh25 million and forced value at Sh18.5 million.
The best bids obtained during the auctions on January 14, 2022, and March 25, 2022, were Sh12.5 million and Sh125 million, respectively. In a third auction on September 23, 2022, the best bid was Sh12 million.
The court further gave Mr Maina 60 days to engage the lender in a bid to have the property sold under a private treaty, after getting valuation and in default, Equity Bank will be at liberty to proceed with the sale by public auction, and “conclude the sale through the highest bid that shall be received”.
The lender said the businessman borrowed several loans from 2016 totaling Sh54 million and charged the land.
Equity Bank said the company defaulted in the repayment of the loan facilities, which necessitated it to issue a statutory notice under Section 90 of the Land Act to both the defendant, as the Guarantor, and to the company and its directors.
Equity further told the court that each time it sought to sell the property, the businessman would rush to court and obtain an order, to stop the sale.
Other than blocking the sale, the bidders were lower than the value of the property at Sh25 million.
The lender then sought permission to sell the property at the best price, but without being tied down by the forced sale value.
