Challenging Statutory Powers of Sale: Legal Risks, Protections & Strategic Advisory

 CLIENT ADVISORY BROCHURE

July 2025

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Challenging Statutory Powers of Sale: Legal Risks, Protections & Strategic Advisory

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Overview

In Kenya's real estate finance landscape, enforcement of statutory powers of sale has become a frequent flashpoint for litigation. Chargors often challenge lenders for non-compliance with statutory notices, seek injunctions, or invoke the doctrine of lis pendens to halt property sales. These disputes have direct implications for borrowers, lenders, and third-party purchasers.

At CM Advocates LLP, we offer strategic legal guidance and representation to navigate these disputes, ensure lawful execution, and safeguard stakeholders' rights.

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Key Legal Issues

1. Statutory Power of Sale:

• Enforced under Sections 90 and 96 of the Land Act, 2012.

• Lenders must issue a 90-day notice of default and a 40-day notice of sale.

• Failure to comply can invalidate the sale.

2. Disputes on Notice Service:

• Alleged non-service of notices is a common ground for injunctions.

• Courts require strict proof of service.

• Procedural non-compliance can delay or bar recovery.

3. Doctrine of Lis Pendens:

• Applies to land under active litigation.

• Prevents transfer or sale during ongoing legal proceedings.

• However, it only applies when there is active prosecution—not merely filing.

4. Jurisdictional Clarity:

• Disputes on loan defaults, charges, and notices fall under the High Court.

• ELC handles issues related to land use, planning, and occupation.

• Filing in the wrong forum can result in dismissal.

5. Purchaser Protections:

• Section 99 of the Land Act protects innocent buyers.

• Titles acquired in good faith are secure, unless fraud is proven.

• Legal due diligence remains critical.

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How CM Advocates LLP Can Help

Lender Enforcement Support

• Drafting and service of compliant statutory notices.

• Execution of statutory power of sale.

• Auction process management and litigation defense.

Buyer and Developer Representation

• Title due diligence and compliance audits.

• Safeguarding rights of buyers acquiring charged property.

• Structuring transactions to protect against future claims.

Dispute Resolution and Jurisdiction Strategy

• Forum analysis and litigation in appropriate courts.

• Injunction defense or pursuit based on procedural posture.

• Protection of stakeholder rights in lis pendens claims.

Support for Foreign and Institutional Investors

• Structuring compliant land acquisitions.

• Tax, regulatory, and immigration advisory.

• Post-sale property and asset management.

Integrated Advisory

• Collaboration with our real estate, banking, tax, and insolvency teams.

• Seamless project support through affiliated real estate manager Property Boutique.

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Contact Our Experts

CM Advocates LLP

Head Office Nairobi
I&M Bank House, 7th Floor
2nd Ngong Avenue
P.O. Box 22588 – 00505, Nairobi, Kenya
T: +254 20 2210978 / +254 716 209673
E: law@cmadvocates.com

Mombasa Office
Links Plaza, 4th Floor
Links Road, Nyali
P.O. Box 90056 – 80100, Mombasa, Kenya
T: +254 041 447 0758 / +254 791 649913
E: mombasaoffice@cmadvocates.com

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