Statutory Notices Before a Bank Can Enforce a Charge in Kenya

A missed payment does not give a lender an immediate right to take or sell charged land. The Land Act requires a statutory route, and notice is central to it. For borrowers, notices create a defined opportunity to understand and address default. For lenders, accurate content, service evidence and sequencing are essential: a commercial demand or an internal collection letter does not replace the notices required before a statutory remedy is exercised.

This article focuses on the notice path towards sale. The Land Act, 2012, the charge and the factual record must be read together. Receivership, possession and the wider rights attached to a charge are addressed elsewhere in this series.

Default must persist before the section 90 notice

Section 90 applies where a chargor defaults in an obligation, fails to pay interest or another periodic payment, or fails to perform an express or implied covenant, and remains in default for one month. The chargee may then serve a written notice requiring payment or performance. The trigger and the nature of default should be identified accurately; an enforcement file should not assume that every concern about a facility is already a statutory default.

The section 90 notice must adequately inform the recipient of the nature and extent of default. For a monetary default, it must state the amount needed to rectify it and allow at least three months for payment. For breach of a covenant, it must identify what must be done or stopped and allow at least two months to rectify it. It must also state the consequence of non-compliance and the chargor’s right, for relevant remedies, to seek relief from the court.

These are substantive requirements, not decorative wording. A borrower should retain the notice, envelope or delivery record, account statements and charge. A lender should retain the final notice, service evidence, calculations and the documents that support the alleged breach. A dispute about the amount or service should be considered promptly; waiting until a sale is imminent can narrow practical options.

Expiry of the first notice opens remedies; it does not itself start a sale

If the chargor does not comply within ninety days after service of the section 90 notice, section 90 lists remedies including an action for money, receiver, leasing, possession and sale, subject to the Act. The remedy chosen has its own requirements. A lender should therefore identify the intended remedy rather than treating expiry of one notice as a universal authority to do everything.

For a sale, section 96 adds a distinct stage. After the section 90 notice has expired, a chargee may not complete the sale process merely by relying on the earlier notice. The chargee must serve a further written notice to sell in the prescribed form and must not complete a contract for sale until at least forty days have elapsed from the date of service. The statutory periods run from service, so dates and proof of service matter.

The section 96 notice must also go to the persons the Act identifies, including the chargor and, where applicable, a spouse of the chargor living in the charged land, any lessee and certain other persons with a registered interest or known right to the land. The exact recipients depend on the title and facts. A current search and the lender’s records should be checked before service rather than after a challenge is raised.

Sale requires its own notice and valuation safeguards

A chargee exercising the power of sale owes a duty of care to obtain the best price reasonably obtainable at the time of sale. Section 97 requires a forced-sale valuation before exercise of that power. This is not a promise that a sale will achieve an ordinary open-market price; it is a statutory safeguard directed to the manner of sale and the lender’s decision-making.

Before a public auction, the sale process also involves the prescribed auction notice. The exact form, service method and auction period should be checked against the current regulations and the facts before publication. A lender should preserve the valuation, instructions, auctioneer material, service evidence and sale record. A borrower facing a proposed sale should request and preserve the notices, valuation material and communication without assuming that a bare dispute automatically stops the process.

Price, notice and service questions can interact. A valuation that is out of date, a notice sent to the wrong address or a sale step taken before the statutory period expires may be important. But their effect is fact-sensitive. The court may consider the charge, account, service evidence, valuation, the conduct of the parties and the remedy sought. Early legal advice is more useful than a last-minute attempt to reconstruct the record.

Service is a fact to prove, not an assumption

Both borrower and lender should treat service as an evidential issue. A lender should use the method permitted by the Act, regulations and charge, confirm addresses and retain delivery records. A borrower who receives a notice should record the date, preserve every page and request clarification in writing where the amount, default or proposed step is unclear. Informal telephone calls cannot safely replace statutory service.

Where a property is occupied by tenants, family members or a spouse, the register and occupation facts should be reviewed before sale notices are issued. The point is not that every occupant has the same statutory position; it is that a lender should identify persons to whom the Act requires notice, while a person affected by enforcement should identify whether the notice rules protect their interest. A purchaser should also investigate the title and the authority under which a sale is proposed.

Notice review should distinguish the legal default from the remedy that follows. A demand for a late instalment may help a lender obtain payment, but it does not remove the statutory content and timing requirements. Similarly, a borrower who has discussed payment informally should not assume that the statutory clock has stopped. Any agreed extension, settlement or withdrawal of a proposed sale should be confirmed in writing and kept with the enforcement file.

For a proposed buyer, due diligence should include the current register, the chargee’s authority, the sale documents and any apparent interests in occupation. The buyer is not the person who must cure the borrower’s default, but purchasing through an enforcement process does not eliminate the need to understand the legal basis of the sale. A clear record protects the borrower, lender and buyer alike.

Act while there is still time to cure, negotiate or challenge

A statutory notice is not necessarily the end of a property interest. Depending on the circumstances, a borrower may cure the default, seek a restructuring, arrange a sale by agreement, refinance or apply for relief. None of those outcomes should be assumed, and none removes the need to deal with the notice itself. A lender should communicate a formal decision through the statutory framework; a borrower should respond with payment evidence, a concrete proposal or a timely challenge where justified.

A practical enforcement file should contain the facility and charge, up-to-date account, section 90 notice, proof of service, section 96 notice, recipient and service records, official search, valuation, auction documentation and all material correspondence. A borrower’s file should preserve the same documents, together with payment evidence and any evidence relevant to the alleged default. The quality of that record often determines whether the parties can resolve the matter before a sale becomes irreversible.

Because notices and valuation involve dated documents, a party should confirm the current statutory text and any applicable regulations before relying on a template from an earlier transaction. Small differences in the charge, parties, registered interests or method of service can materially change the correct next step and available legal response promptly.

Primary source: Land Act, 2012, sections 90, 96 and 97.