Rights and Remedies of charge under the Land Act

A Charge is as legal instrument conferring an interest in land securing the payment of money or money’s worth or the fulfillment of any condition, and includes a sub-charge and the instrument creating a charge.

Noteworthy, a Charge operates as  security only and not as  a transfer of any interests or rights in the land from the chargor to the chargee, however, in the event of default by the Chargor the Chargee has the right within the confirms of law to realize his money.

A Charge instrument must contain.

• The terms and conditions of sale
• an explanation of the consequences of default; and
• the reliefs that the chargor is entitled to including the right of sale

The rights of a Chargee are stipulated under Section 90 (4) of the Land Act. In the event the  chargor is in default of any obligation due under the charge whether express or implied and is in default for one month, the Chargee may serve on the Chargor a notice, in writing, to pay the money owing or to perform and observe the agreement as the case may be. 

In the event of further default, the chargee may:

• sue the chargor for any money due and owing under the charge;
• appoint a receiver of the income of the charged land;
• lease the charged land, or if the charge is of a lease, sublease the land;
• enter into possession of the charged land;
• sell the charged land;

In the case of First Choice Mega Store Limited v Ecobank Kenya Limited [2017]eKLR the court opined that-:

[39] A purposive construction of section 90 is necessary. Section 90 must thus be read and understood with the open fact that the chargee also has a right to pursue his various remedies. Any interpretation, which curtails that right, should not be favored given that it is the same section that triggers the application of a chargee’s rights and remedies.’

By Ivy Ndirangu