The Supreme Court has cleared the way for an appeal expected to examine lenders’ powers and actions when a borrower dies before a mortgaged property is sold.
This follows the court’s dismissal of a bid by Housing Finance Company (K) Limited to stop Faith Wanjiru, the administrator of the estate of the late Harrison Charles Kimeriah, from pursuing the appeal in a 46-year property battle.
‘The case has a significant bearing on the public interest as it affects thousands of borrowers across the country and implicates consumer protection, transparency, and accountability of financial institutions,’ said the court.
The appeal is expected to address and examine what a bank must do before selling property used as security for a loan when the borrower has died, and whether the bank must first deal with any insurance taken out with the loan. The judges are also expected to examine whether a bank must follow additional steps before selling such a property.
‘It is our view that the twin issues of whether there are additional legal requirements and procedures that come into play in relation to the realisation of a security where the chargor is deceased at the time of exercising the statutory power of sale; and the legal and evidentiary obligations and requirements of a charge with respect to an insurance policy taken in relation to the loan facility transcends the parties herein, amounts to a substantial point of law for determination,’ said the judges.
The five-judge bench said the questions ‘transcend the parties, amount to a substantial point of law for determination, and have a significant bearing on the public interest’.
The dispute originates from a Sh500,000 loan that Housing Finance advanced to Kimeriah in July 1980 and was secured by a charge over property registered as L.R. No. 7793/6 in Nairobi, jointly owned by him and his wife.
Kimeriah repeatedly failed to service the facility and had admitted arrears in earlier proceedings, blaming the default on financial difficulties affecting his business.
In 2000, the parties recorded a consent setting out how the outstanding amount would be paid, but the Court of Appeal found that Kimeriah did not comply with the agreement. He died in January 2005 before the loan was fully repaid, and Housing Finance later sold the charged property by private treaty for Sh10 million the following year.
His widow later challenged the sale, saying the lender should have maintained the agreed insurance and failed to serve her with required notices. She claimed the property and its developments were worth Sh150 million.
The High Court in Nairobi ruled in her favour on November 30, 2023. It found that the loan had been fully repaid and awarded her Sh150 million, plus costs and interest.
Housing Finance appealed, challenging findings on default, statutory notices, insurance and the award. The Court of Appeal considered whether the sale was lawful, whether the lender breached the insurance terms and whether the Sh150 million award was justified.
On July 4, 2025, the Court of Appeal overturned the High Court judgment and dismissed the suit. It found that the borrower had defaulted and that Housing Finance’s power of sale had accrued.
The appellate court also found that Kimeriah’s advocates had acknowledged receipt of a statutory notice and contested the amount claimed. It rejected the High Court’s finding that Housing Finance had an overriding duty to keep the property insured after default.
The court further said the High Court had not provided a basis for the Sh150 million award. It noted that Kimeriah had received Sh40 million from the purchaser after the claim against him was compromised by consent in April 2013.
Ms Wanjiru then sought certification to appeal to the Supreme Court. On May 15, 2026, the Court of Appeal granted permission, identifying two questions concerning deceased borrowers and mortgage insurance.
Housing Finance moved to the Supreme Court, arguing that the dispute was private and did not raise a question of general public importance. It said the certified issues had not been properly pleaded or determined in the lower courts.
Ms Wanjiru opposed the application, arguing that the law remained unsettled on lenders’ duties where a borrower dies and insurance forms part of the loan arrangement.
The Supreme Court rejected Housing Finance’s challenge and held that the certified questions had been canvassed in the lower courts and had a foundation in law.
The judges said the questions concerned ‘the unsettled question of processes that may arise upon the intervening death of a chargor’ and uncertainty over ‘the purpose and effect of an insurance cover’.
The court also said the issues affect borrowers beyond this dispute. It specifically found that they affect ‘thousands of borrowers across the country’ and implicate consumer protection, transparency and accountability in financial institutions.
The court dismissed Housing Finance’s request and upheld the Court of Appeal’s certification ruling. It permitted Ms Wanjiru to appeal on whether additional requirements apply when a lender sells security after a borrower dies and on legal and evidentiary requirements concerning loan insurance.