Urithi Sacco’s Sh. 1 billion land to be auctioned over Sh. 500 million debt

Urithi Auctioning: The High Court has authorized Family Bank to auction 104 acres belonging to Urithi Sacco. Family bank will auction the land which is valued at Sh. 1 billion in order to recover a debt of Sh. 500 million which the Sacco has failed to repay.

The auction had been contested in court by 36 members of the Sacco. However, High Court judge Justice Grace Kemei dismissed their petition and ruled that investors had been notified about the loan. Apparently, sale agreements that were signed by the members indicated that the land was charged to Family Bank.

“In the circumstances of this case, Urithi Sacco, for which the plaintiffs are members, committed itself in the charge to repay the full loan facility advanced and comply with all the terms of the charge before the suit land could be discharged,” the court ruled. “Indeed under Para II of the agreement of sale, it disclosed to its members, the plaintiffs that the property is charged to Family Bank and that the purchase price was to be used to procure the discharge of charge from the bank in order to facilitate completion of the transaction. These are the terms the Plaintiffs bound themselves to in the agreement of sale.”

In court proceedings, the Sacco had argued that it had signed a debt restructuring agreement with Family Bank in 2019, adding that there was no reason for investors to panic. It has until 2024 to repay the loan under the new plan. However,the Sacco had already defaulted on the loan.

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Documents before court showed that Urithi had had acquired the land in 2015 for Sh. 728 million. It took a loan of half a billion shillings from Family Bank to fund the acquisition. This loan was to be repaid within 60 months, but the Sacco defaulted in barely four years later in 2019. Currently, the Sacco still owes the bank over Sh. 295 million.