Court: Matrimonial property can be auctioned even if one spouse is not consulted

Kenya: The High Court has declared that a spouse cannot claim a right to matrimonial property held as security even if the partner who took the loan had not consulted them.

The court ruled that banks are free to auction the property in case of default in repayment without reference to the spouse who was not consulted by the borrower and they have no right to block the sale.

However, the judgment will only apply for agreements in force until 2012, when the Lands Act, which now compels spouses to consult each other before registering property as security for loans came to effect. High Court judge John Mutungi said the issue of consultations and consent cannot apply to charges taken before Land Act 2012 came into force.

The determination arose from a case filed by a woman against a bank in which she contended her husband did not involve her when he took a loan, thus she did not consent to the charge on the family property.

The case between Barclays Bank against Attorney General Githu Muigai and Judith Atieno as an interested party, arose after the woman sued the bank on grounds that the property charged as security of a loan by her husband to the financial institution constituted a matrimonial property.

The bank told the court it had advanced money to Atieno's husband, Amos Oketch, who gave out the piece of land in Kajiado as security. Mr Oketch allegedly defaulted to pay the money, prompting the financial institution to offer it for an auction. They however negotiated and the sale was suspended. The borrower again did not honour his part of bargain, which prompted the bank to sell the land for a second time.

Atieno told the court the property was a matrimonial home belonging to her and the borrower and as such, she had a legal right to make a claim in respect of the property. She added that she never agreed to attaching the property as security. "Section 79(3) of the Land Act 2012 requires that any securities taken over matrimonial property be subject to consent of the spouse of a borrower and in absence of such consent the security is invalid," she argued.

Atieno said the family property would not be disposed as the bank had not executed the charge before the enactment of the new Lands Act.

Upon being served, Barclays sued the AG, seeking to have the court declare that sections of the new law could not apply in charges that had been taken before enactment of the Act. The bank had sought a declaration that section 78 of the Lands Act in regard to section 79(3) was against the Constitution.

Section 78 provides that section 79 (3) shall apply to all charges on land including any charge made before coming into effect of the Act. It provides that a spouse ought to seek consent before taking a property as security for mortgage or loan.