Some 100 homeowners at Greatwall Gardens estate in Athi River might lose their units after Erdemann Property Limited lost a KSh1.9 Billion loan case against Kenya Commercial Bank.
Erdermann Property Ltd, the developer made a prayer to the court saying that homeowners were innocent purchasers and that the units were sold by mistake, the prayer which was dismissed by a bench of three judges.
Justices Jessie Lesit, Gatembu Kairu and Grace Nyenye Macharia in their ruling said there was no proposal that the lender would not be able to compensate the property developer.
“Ultimately, we find that the application is unmeritorious. We hereby dismiss it with costs to the respondent (KCB),” the judges ruled on Friday last week.
“We note, as the learned Judge of the High Court did, that the said third parties who bought the 100 units are not parties to this dispute. The burden to inform them that the 100 units were securities to a loan facility lay with Erdemann Property Limited.”
The court was told that the property was charged to lender but the developer sold it to innocent third parties who are now occupants.
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Erdemann Limited secured a loan from KCB to put up 600 housing units. The property developer was supposed to hand over 100 unites to KCB upon completion, but the former failed to honour the agreement.
It instead sold 100 units belonging to KCB Bank.
Erdemann Property Limited had moved to the Court of Appeal after losing the case in the High Court but their lawyers failed to convince the Court of Appeal to stop KCB Bank from auctioning the 100 units to recover the loan balance owed by the company.
The court in its ruling has dismissed an argument by the beleaguered legal team representing the developer that the 100 homeowners are innocent and that they had purchased the said units unknowingly.
Erdemann is owned by Chinese who has been in the real estate business in Kenya since 2003. Great Wall Gardens at Athi River, Mavoko municipality.
By Robert Nyagah
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