Real estate developer sues Housing Finance for overcharging Sh4 million

NAIROBI, KENYA: A real estate developer has sued Housing Finance Company of Kenya for overcharging it for the construction of residential houses in Kiambu.

Hadar Limited, in a suit filed at the High Court, claimed that it had repaid Sh167 million HFCK loaned the company for the construction of the three- and two-bedroom houses, but that the lender was still demanding payment despite an audit report showing an excess payment of Sh4 million.

“We are asking the court to stop HFCK from executing a threat to sell the remaining developed housing units since it has unlawfully overstated the interests due to justify its claim. The records show that the whole loan has been fully paid,” said lawyer Titus Koceyo.

According to the company, it had an agreement with HFCK for the loan to facilitate the construction of houses on two parcels of land in Kikuyu, after which the lender would dispose of some of the houses to recover the amount advanced.

"On August 19, 2013, the parties executed a letter of offer and HFCK approved a construction loan facility of Sh113 million for the project. The loan tenure was for 24 months and the project was to cost Sh167,394,000,” said Mr Koceyo.

It was also agreed that Hadar Limited provide additional equity of Sh14.5 million either in kind or cash.

The company submitted its title documents to HFCK as collateral. Koceyo said HFCK begun to systematically breach and decline to perform its obligations to frustrate the project and escalate the costs. The case was certified as urgent and HFCK directed to file its response within two weeks.