Remedies of a Chargor in Kenya: Injunctions, Redemption & Setting Aside Irregular Auctions

When a lender moves to enforce a charge over land, shares or other assets, understanding the remedies of a chargor in Kenya can mean the difference between losing property at a fire-sale price and preserving it through lawful challenge. The Supreme Court of Kenya’s decision of 14 November 2025, which affirmed the enforceability of continuing-security clauses, has intensified enforcement disputes and placed fresh urgency on borrowers to act quickly and strategically. This guide sets out the statutory framework, the practical steps a chargor can take (from emergency injunctions to statutory redemption), and the procedural pathway to set aside an irregular auction.

It is designed for borrowers, corporate counsels, insolvency practitioners and litigation lawyers who need actionable, step-by-step direction grounded in Kenyan statute and case law.

Disclaimer: This article provides general legal information and does not constitute legal advice. Readers facing enforcement proceedings should seek case-specific guidance from a qualified advocate in Kenya.

1. Overview, Legal Framework for Charges in Kenya

The remedies of a chargor in Kenya are scattered across several statutes, each governing different categories of charged assets and different enforcement mechanisms. A chargor’s ability to obtain relief depends on correctly identifying which legislation applies, what registration obligations the chargee must satisfy, and what procedural protections the law affords before a sale can be completed. The table below maps the principal statutes to their scope and relevance for borrowers facing enforcement.

The interplay between these statutes is critical. A charge over company-owned land, for example, engages both the Land Act (for the power-of-sale procedure) and the Companies Act (for registration obligations under section 878 of the Companies Act). Practitioners advising chargors must audit compliance across all applicable regimes before formulating a challenge.

2. Immediate Emergency Remedies of a Chargor in Kenya: Injunctions, Caveats and Urgent Relief

The most time-sensitive remedy available to a chargor is the interlocutory injunction. When a lender has issued a statutory notice and an auction date is imminent, obtaining a court order to restrain the sale is often the only way to preserve the status quo while the underlying dispute is resolved.

2.1 Grounds for an Interlocutory Injunction

Kenyan courts apply the principles established in Giella v Cassman Brown & Co Ltd (1973), which require the applicant to demonstrate:

• A prima facie case with a probability of success. The chargor must show a genuine triable issue, for instance, that the statutory sale notice was defective, that the debt has been overstated, or that the chargee is acting in bad faith.
• Irreparable harm that cannot be compensated by damages. Loss of a family home or a business premises typically satisfies this threshold because land is unique and monetary compensation may be inadequate.
• Balance of convenience favours the injunction. Courts weigh the prejudice to both parties. Where a sale would be irreversible but a short delay would not prejudice the chargee, the balance tips towards granting the injunction.

2.2 Ex Parte and Inter Partes Applications

Where a sale is imminent (within days), the chargor can apply ex parte, without notice to the chargee, for a temporary restraining order. The applicant has a duty of full and frank disclosure: the court must be informed of all material facts, including those unfavourable to the applicant. Failure to disclose can result in the order being discharged with costs. The typical procedural timeline is:

• Day 1–2: File the application supported by a sworn affidavit, a certificate of title (or charge instrument), and copies of any defective notices. Seek an urgent hearing date from the duty judge.
• Day 2–3: Obtain ex parte temporary restraining order if urgency is established.
• Day 7–21: Return date for inter partes hearing; serve the chargee with all application documents before the hearing.

2.3 Lodging a Caveat or Caution at the Land Registry

In parallel with a court application, a chargor (or any person claiming an interest in the land) can lodge a caution at the Land Registry under the Land Registration Act, 2012. A registered caution prevents the Registrar from registering any dealing, including a transfer following an auction, until the caution is removed or the cautioner is served with notice. This is a low-cost, fast-acting protective measure that complements a court injunction.

Documents to prepare for urgent relief:

• Sworn affidavit setting out the facts, the defect in enforcement, and the urgency
• Certified copy of the certificate of title or search result
• Copy of the charge instrument and all statutory notices received
• Evidence of payment or offers of payment (bank statements, correspondence)
• Draft order (specifying the relief sought)
• Certificate of urgency signed by an advocate

3. Redemption, Statutory Right and Practical Steps to Redeem the Charged Property

The right to redeem is arguably the most fundamental of the remedies of a chargor in Kenya. Redemption allows the borrower to reclaim the charged property by discharging the outstanding debt in full, including principal, interest, and costs, before the sale is completed. Under Section 92 of the Land Act, 2012, a chargor retains the right to redeem at any point before the chargee has executed the transfer to a purchaser.

3.1 Timing and Mechanics

The redemption window closes only when the sale is completed, that is, when the transfer instrument is executed and registered at the Land Registry. An auction alone does not extinguish the chargor’s equity of redemption. Industry observers expect that the Supreme Court’s 2025 affirmation of continuing-security clauses will lead chargees to move more swiftly to complete transfers, compressing the practical window for redemption.

3.2 Redemption Calculation Checklist

Before tendering a redemption payment, the chargor should demand a full accounting from the chargee. The calculation should include:

• Outstanding principal as at the date of redemption
• Accrued interest at the contractual rate (verify the rate against the charge instrument)
• Penalties and default charges, challenge any that are not expressly authorised by the charge
• Costs incurred by the chargee in connection with the sale (auctioneers’ fees, advertising, legal costs)
• Credit for any amounts already paid or held in suspense accounts

The chargor should tender payment formally, in writing, specifying the amount and requesting a discharge of the charge within a stated period. If the chargee refuses to accept a valid tender or to provide a proper accounting, this can constitute evidence of bad faith and support a subsequent application to set aside any sale that proceeds.

4. Setting Aside an Irregular Auction or Sale, Procedural Grounds and Remedies

Where a sale has already taken place, the chargor’s principal remedy is to apply to court to have the sale set aside. Kenyan courts have consistently held that the chargee’s power of sale is not absolute, it must be exercised in strict compliance with statutory requirements and in good faith.

4.1 Common Grounds for Challenge

• Defective statutory notice. Under Section 90 of the Land Act, 2012, the chargee must serve the chargor with a written notice specifying the default and allowing a prescribed period (typically three months) to remedy it. A notice that is not served personally, is served at the wrong address, omits material particulars, or allows an insufficient cure period is defective and can invalidate the entire sale.
• Inadequate valuation or sale at undervalue. The chargee has a duty to obtain the best price reasonably obtainable. A sale conducted without a current valuation, or at a price significantly below market value, can be challenged, particularly where the chargee or a related party is the purchaser.
• Conflict of interest or collusive sale. If the property is sold to the chargee itself, to a related entity, or to a pre-arranged purchaser at a depressed price, the sale is voidable. Courts have set aside transactions where the auction was not publicly advertised or where bidding was manipulated.
• Failure to account for surplus. Where the sale proceeds exceed the outstanding debt, the chargee is obliged to account for and remit the surplus to the chargor. Failure to do so is an independent ground for relief.

4.2 Procedural Steps to Challenge a Sale

The chargor should act immediately upon learning of a defective sale. Delay can be fatal, courts may refuse relief where the chargor has acquiesced or where an innocent third-party purchaser has registered the transfer. The practical timeline is:

4.3 Evidentiary Tips

Strong applications are built on contemporaneous documentary evidence. The chargor should preserve and present:

• Copies of all sale notices (or evidence that no notice was received)
• Independent valuation reports showing the property’s market value at the time of sale
• Correspondence with the chargee (emails, letters) showing any payment offers, negotiations, or disputes
• Auctioneer records: advertisements, attendance registers, bidding records
• Land Registry search results showing the timeline of registration

5. Enforcement Powers of the Chargee and How They Limit Chargor Remedies

To understand the remedies available, a chargor must also understand the chargee’s enforcement arsenal. The typical powers conferred on a chargee include the statutory power of sale, the power of attorney to transfer, and the right to appoint a receiver. Each power has specific procedural prerequisites, and failure to follow them opens the door to challenge.

5.1 Continuing Security Clauses

The Supreme Court’s 14 November 2025 decision affirmed that continuing-security clauses, which provide that a charge secures not just the original loan but all present and future indebtedness, are enforceable in Kenya. The likely practical effect is that chargees will rely on these clauses to resist redemption attempts where additional facilities remain outstanding, even if the original loan has been repaid. Chargors must therefore audit the full scope of the charge instrument and verify whether any “all monies” clause extends the secured obligation beyond the debt they believe to be outstanding.

5.2 How to Enforce a Debenture, Powers and Procedures

A debenture secured by a fixed or floating charge over company assets is typically enforced by appointing a receiver (under section 690 of the Insolvency Act, Cap 53) or by exercising the power of sale. The chargee must follow the notice requirements specified in the debenture instrument and must act in good faith with a view to obtaining the best price. If the chargee appoints a receiver without proper grounds, for instance, where the debt is genuinely disputed, the chargor can apply for the appointment to be set aside.

5.3 Remedy, Statutory Basis and Timeframe, Comparison Table

6. Receiver vs Administrator, Comparison and Practical Implications for a Chargor

Chargors often face confusion about the difference between a receiver and an administrator, particularly where a company debtor is involved. The distinction has significant practical implications for the scope of the chargor’s remedies and the assets that may be affected.

Early indications suggest that where a chargor faces a receivership (rather than administration), the window for injunctive relief is narrower because the receiver typically moves quickly to realise assets. Negotiation should be pursued in parallel with court action, not as a substitute for it.

7. Special Topics: Debentures, Registration Steps and Movable Property Security

7.1 How to Register a Debenture in Kenya

Proper registration of a charge is the chargee’s obligation, but it directly affects the chargor’s remedies. An unregistered charge is a potent defence. The steps for debenture registration are:

1. Prepare the debenture instrument, specifying the property charged, the secured obligations, and the enforcement powers.
2. File the prescribed particulars of the charge at the Companies Registry within 30 days of creation (section 878 of the Companies Act). Late filing requires a court order.
3. If the debenture includes a charge over land, lodge the charge at the relevant Land Registry under the Land Registration Act, 2012.
4. For charges over movable assets connected to Kenyan property and income streams, register under the Movable Property Security Rights Act at the online MPSR registry.
5. Obtain certificates of registration from each registry and attach them to the facility file.

7.2 Movable Property Security Rights Act, Impact on Chargor Remedies

The MPSR Act brought movable-asset security in Kenya into a modern framework with an electronic notice-filing system. From a chargor’s perspective, the Act’s significance lies in enforcement discipline: a secured creditor who has not perfected their security interest by registration may lose priority to other creditors, and, critically, may be unable to enforce the security against the chargor at all. Chargors should always conduct an MPSR registry search as a first step in any defence strategy.

7.3 Share Charges, Enforcement and Defence

Where a chargee holds security over company shares, enforcement typically involves transferring the shares to the chargee or a third-party purchaser. The chargor’s defences include challenging the valuation of the shares, contesting whether proper notice was given, and invoking any pre-emption rights in the company’s articles of association. Taking security in Kenya over shares requires careful compliance with both the charge instrument and company-law formalities, and any lapse can be exploited by the chargor.

Conclusion, Quick-Action Checklist for Chargors in Kenya

The remedies of a chargor in Kenya are powerful but time-sensitive. Delay is the single greatest risk. Borrowers facing enforcement should take the following immediate steps:

• Conduct a Land Registry or MPSR search to confirm the current status of the title or security interest.
• Lodge a caution or caveat at the relevant registry to prevent registration of any transfer.
• Preserve all evidence: notices, correspondence, payment receipts, valuation reports and advertising records.
• File for an injunction if a sale date is imminent, prepare the supporting affidavit, certificate of urgency and draft order.
• Demand a full accounting from the chargee and calculate the redemption amount.
• Tender payment formally and in writing if redemption is viable.
• Audit the charge instrument for continuing-security clauses, “all monies” provisions, and procedural requirements the chargee must satisfy.
• Instruct an experienced banking and finance advocate immediately, the Global Law Experts lawyer directory connects borrowers with specialists across Kenya.

Sources

1. Kenya Law (National Council for Law Reporting), Judgments & Statutes
2. Land Act, 2012 & Companies Act, Kenya Law
3. Latham & Watkins, Taking Security in Africa: Kenya
4. Muturi S.K & Co. Advocates, Chargee’s Statutory Power of Sale
5. MMTK Law, Land as Security for Loan: The Debt Recovery Options
6. Walker Kontos, Update on Beneficial Ownership Obligations in Kenya