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Landlord sues bank for default and intent to auction his house

By Kamau Muthoni | Jan 28th 2018 | 2 min read

The Co-operative Bank is embroiled in a legal battle with its landlord for failing to pay rent and at the same time placing the property for auction over unpaid loan.

Nairobi businessman Stanley Mwangi has sued the bank over Sh14 million in house rent arrears. Mwangi is also seeking to block an intended auction by the bank, his tenant, over an unserviced loan.

According to him, the bank ought to have paid Sh417,840 in rent each month to enable him pay Sh323,870 every month to repay the loan.

His lawyer Kenneth Mburu argued that the bank refused to pay rent, even as Mwangi’s loan grew.

By the time he went to court, the bank was demanding Sh16 million from him.

“The defendant, who is a tenant on the property since sometimes in 2013, has and continues to deliberately decline, neglect and ignore to pay the reserved rent hence frustrating the plaintiff’s attempts to repay the loan, occasioning the default,” Mburu told High Court judge Olga Sewe.

The bank entered into a tenancy agreement with Mwangi in 2013 for the premises in Dagoretti.

A monthly rent payment, according to the agreement, was subject to increment by 7.5 percent after every two years.

Mwangi says he took up a loan one year after the agreement expecting that the bank would pay its dues and he would have a surplus of close to Sh100, 000 every month after servicing the credit.

It emerged the bank allegedly left the building but left all its fixtures -- money vaults, ATM service room and partitions, intact on allegations the building had cracks.

“The defendant continued to be in occupation as its fixtures and fittings are intact and under lock and key, but the defendant has deliberately declined, neglected or ignored to pay the reserved rent hence frustrating the plaintiff’s efforts to repay the monthly repayments,” Mburu told the court.

The bank then placed the same building on auction this week, although Mwangi claims it never served him with bank details on how he went into arrears of Sh16 million.

“To my knowledge and belief, the loan account held in my name with the defendant is not in arrears as far as the monthly payments are concerned and that the defendant is keen on creating confusion to illegally dispossess the property,” the court heard.

The bank did not deny that it had rented the building but insisted that Mwangi demanded for rent only after he received a letter notifying him that it would be auctioned.

 “It is telling that the said demand was only made after the receipt of the defendant’s 40 day demand,” the court heard.

The bank wants the court to dismiss the case arguing it is an abuse of the legal process.

The case will be mentioned on February 13. 

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