High Court Bars Bank From Auctioning Property After Borrower Clears Loan Arrears

A High Court in Nairobi ruled that a bank cannot proceed with auctioning a borrower's property once the arrears that triggered a default have been fully cleared and the loan account regularized. In the case, the borrower had a Ksh80 million facility secured by two commercial properties and defaulted for one month. The bank accelerated the loan and issued statutory notices, but Justice Moses Ado found that the arrears had been reduced to zero and issued an injunction against the forced sale, stating it would cause irremediable loss. The ruling reinforces judicial scrutiny of accelerated loan recalls and emphasizes that banks' statutory power of sale must be exercised with fairness and proportionality.