Property &Investments

CONTENTS Jamii Bora Makao rolls out new Sh3bn housing project 54

Sh1.5m
Cost of a two-bedroom house in the proposed Jamii Bora Makao housing project

PROPERTY LAW

Mortgage default suit shows how banks are predators and vultures
Its like a robber killing his victim and not only attending his funeral, but insisting on carrying the casket to the grave to conrm that his victim is dead and buried
BY AAMERA JIWAJI

t takes a big man to challenge an institution as large as the Housing Finance and an even bigger one to succeed. By these standards, Captain J.N. Wafubwa is a giant. He questioned and challenged the behaviour of Housing Finance for more than 23 years, and when the court delivered its decision in April this year, the judges words left no doubt that a severe transgression had been committed against Kenyans by their banks and nancial institutions. In 1989, Housing Finance, then known as Housing Finance Company of Kenya (HFCK), extended an 18-year mortgage to Captain Wafubwa but he fell into arrears after failing to meet his obligations. HFCK exercised its statutory power of sale, staged a public auction and, in 1996, sold the property for Sh4.5 million to United Millers Ltd, which was the highest bidder. United Millers paid the 25% down payment to HFCK, but did not complete the payment, which meant that the deposit they had paid of Sh1.125 million was forfeited to HFCK as per the conditions of the sale. In 1997, HFCK arranged a second auction but it was stopped by an injunction led by Mr Wafuba, through which he sought to repossess the property since the forfeiture of deposit by United Millers had liquidated his debt to HFCK.
| Nairobi Business Monthly October

He claimed that not only did the 25% deposit paid by United Millers clear all the incidental charges which were due to HFCK but that it also left a credit. This injunction was dismissed and the property of Mr Wafuba was sold through private treaty to a Mr John Wambua Kiili for Sh4.5 million, which was used to clear part of the outstanding loan, and left a balance with HFCK. The main contention in this matter is the 25% deposit paid by United Millers. While Capt. Wafubwa claims the sum as due to his mortgage account, HFCK claims the same to the banks prot and loss account. HFCK testied that when the 25% deposit paid by United Millers was

The sale of property is guided by the Indian Transfer of Property Act

forfeited, it was transferred to HFCKs account and that when a sale aborts any sums received goes to (HFCK) and (the defaulter) cannot benet from a contract to which he is not a party and that (Captain Wafubwa) is still indebted to (HFCK). The court said it was unable to return the property to Mr Wafubwa since it had been lawfully sold to Mr Kiilu under a private treaty. The court then deliberated on the main issue, which was who stands to benet from the 25% deposit that had been made from the rst property auction. The Indian Transfer of Property Act, under which the sale of the property was

made, mandates that monies received from any sale or attempted sale ought to be used to clear the mortgage debt and interest, and that any residue ought to be given to Capt. Wafubwa. Justice Erick Ogola said: There is absolutely no grounds, whether based on morals of business, justice or society, upon which the defendant, a bank, would be the person to benet out of the deposit paid under a sale or an attempted sale. It is not the property of the bank that is being sold. Its involvement is as an attorney of the plainti, even if it is exercising statutory power of sale. In fact, the bank has a duty to keep a very respectable distance from such money. The submission by the bank that it put the money to its prot and loss account is a mockery to the plight of the plainti and is too insensitive to the justice of business. The judge felt the need to make what he called a generally disturbing observation, and went on to make some general ones on the unethical and unfair conduct of Kenyan banks. Where is justice? he asked. Banks cannot just hide behind the contracts they make, regardless of how unjust they are, to literally destroy their customers. Without their customers the banks cannot operate. A time has come for banks in Kenya to look into the eyes of their customers and answer the question: Are banks Kenyans? Or have they just entered Kenya for business? Banks in Kenya reign large, he observed. I am reminded of a predator who after killing the prey is not satised to leave the carcass to the vultures, but becomes both the predator and the vulture, killing the prey and gleaning the meat from the carcass to ensure the prey is really dead. I am also reminded of a robber killing his victim and not only attending his funeral, but insisting on carrying the casket to the grave to conrm that his victim is dead and buried. Else, how does one explain Wafubwas case? Wasnt there no time when the defendant in this matter could say this is the case and time to close this account? All sectors of our society are being reformed, he said, and banks should not be left behind. In the matter of Capt. Wafubwa vs. HFCK in Civil Case No 385 of 2011, the court entered judgment for Capt. Wafubwa and ruled that he receive the amount of money remaining from the 25% deposit after deduction of the nal mortgage payment, Sh4.5 million in lieu of his property which HFCK had sold, 27.5% interest on both sums, and costs of the suit.

MANAGEMENT

Jamii Bora Makao rolls out new Sh3bn housing project J

amii Bora Makao has kicked o the second phase of its Sh5 billion low-cost housing project in Isinya area of Kajiado, which targets to build an additional 1,250 houses. The groundbreaking for the Sh3 billion real estate development in Kisaju was done on September 7, setting in motion construction work that is expected to be completed in the next two years. Mr Wagane Diouf, the managing director of Urbanis Africa, which manages Jamii Bora Makao projects, said Sh2 billion had been spent on the rst project to build 950 housing units targeted at low-income earners with units going for as low as Sh1.5 million for a two-bedroom house. The second phase comprises three and four bedroom houses, which are being sold for Sh2.5 million and Sh5.4 million respectively. The rst phase is over and we are now nalising the project in terms of electricity and other social amenities, said Mr Diouf during the groundbreaking ceremony of Phase II at Kaputiei Village in Kajiado County. The rst batch of houses is 90% sold, he said, adding that this is a sign that the people appreciate our entry into middle incomebased housing. The project, named Kisaju View Park, is a

low-end income housing estate located in Kisaju, some 55Km from Nairobi and 20km from the upcoming Konza City. We chose Kisaju because the area is expansive, giving room for more housing as well as building a mixed economy in the area, he said. Its location away from the city centre gives people a feeling of owning a house and saves them the hustle and bustle of the city. It gives the occupants a decent life at an aordable cost. The estate will have 1,300 market stalls to boost economic activities in the area. He said Jamii Bora Makao had partnered with Jamii Bora Bank and Housing Finance to provide nancing to buy the houses, which are being nanced through the o-plan model. Mr Diouf said Urbanis Africa has launched an electronic commerce platform that enables investors in the diaspora to invest in the project through Jamii Bora Makao. Upon completion of Phase II, the total number of housing units will be 2200. Jamii Bora has nanced electrication of the area, and Mr Diouf appealed to the government to help in constructing roads. The estate will also have primary and secondary schools, religious institutions, commercial centres and medical amenities.

October

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