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Homeowners sue over Sh72m service charge

By Paul Ogemba | Sep 8th 2021 | 3 min read

A road leading to Karen Hills Estate. [Courtesy]

Homeowners of an affluent estate in Karen, Nairobi, are up in arms against the developer for failing to account for millions of shillings paid as service charge.

The residents of Karen Hills Estate have sued Karen Hills Limited and Lordship Africa Fund Management Limited seeking to stop them from further collecting the service charge and to disclose the amount they have collected since 2011.

Their case filed through lawyer Issa Mansur has lifted the lid on the sad tale of landowners refusing to give up their interest on property they no longer own but want to control how the estates are managed after selling to individuals.

“They have been levying service charge since 2011 without complying with the terms of agreement with those who purchased the land to build their homes. They have not accounted for the money paid of furnished the home owners audited statements of expenses incurred,” said Mansur.

The more than 30 homeowners argued that the developer has been demanding Sh30,000 per month from each household as service charge since 2011 which brings the total to more than Sh72 million which they claim has not been accounted for.

“In consideration of the services offered by the management company, the plot purchasers agreed to pay a monthly service fee of Sh30,000 each which has not been accounted for from the time of purchasing the plots,” said Mansur.

Despite paying a high amount to maintain the Karen Hills Estate, the residents claimed that the developer has not done anything to improve their surrounding leading to invasion of rodents including snakes which put their lives at risk.

According to Mansur, Karen Hills Limited acquired the 64-acre land from the government and in 2012 incorporated Lordship Africa Fund Management Limited as the master developer.

The land was divided into 60 plots of one-acre each to form the Karen Hills Estate and sold to the individuals who built their palatial homes.

According to the sale agreement, the land owners would incorporate Karen Hills Management Company Limited to manage the estate.

As is the case in such arrangements, it was expected that the home owners would be involved in the management company by being incorporated in the board of directors but this did not happen as the developer insisted on maintaining exclusive control.

He added that despite the agreement, the companies have failed and refused to transfer shares to the home owners or appoint representatives to the management company.

The residents are also accusing the companies of refusing to appoint an auditor to ascertain the accounts of the management company which runs into millions of shillings which has made it impossible to know the actual costs incurred in maintaining the posh estate.

“They have refused to provide the amenities for which the service charges are supposed to cater for. They have not involved the home owners in any decision making regarding management of the estate which has resulted to misuse of their funds,” said Mansur.

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