Borrower fights Absa demand for instant payment of loan due in 2039

John Maina Kinyua has sued Absa after the lender initiated the sale of two properties in Sigona, Kiambu County, charged as security for the long-term advance.

The rental properties, Sigona/1294 and Sigona/2103, were charged to the bank in September 2024 to secure a Sh80 million loan repayable through 180 monthly instalments.

Under the agreement, the facility was due to mature in July 2039. But the relationship soured after Mr Kinyua allegedly missed a monthly instalment of Sh180,000 in April 2025, prompting Absa to demand immediate repayment of the entire Sh79.9 million outstanding amount. He questions the bank’s move to recall the loan because of a single default.

The borrower argues that despite the relatively small default compared to the outstanding Sh80 million facility, Absa moved to recall the entire loan and initiate recovery proceedings.

Absa issued a 90-day statutory notice on May 12, 2025. The notice demanded immediate payment of the entire loan balance of Sh79.9 million.

The bank later issued a 40-day notice to sell on September 3, 2025, demanding Sh79.8 million and paving the way for a public auction.

Mr Kinyua challenged the move, arguing that the bank had unlawfully accelerated the facility and sought to recover the entire loan despite the facility having about 14 years left before maturity. He told the court that the lender had collapsed a 15-year facility barely a year after it was advanced.

The borrower argued that the charge document required a specific event of default to be declared and a prior demand for arrears issued before the entire loan could be recalled.

He further maintained that he had cleared the arrears within the statutory notice period and that the loan account had been regularised.

According to court filings, bank statements produced by Absa showed that by September 24, 2025, the arrears had been reduced to zero.

“The applicant had fully regularised the account, reducing the arrears to zero,” the court noted after reviewing the statements.

Mr Kinyua argued that the intended sale was therefore “malicious, premature, and an abuse of the statutory power of sale.”

Absa opposed the application, insisting that the borrower had defaulted on his repayment obligations for several months, including February and April 2025.

The lender argued that the charge instrument gave it the right to recall the entire outstanding balance immediately upon default.

The bank maintained that because Mr Kinyua failed to pay the recalled principal sum within the statutory timelines, it was entitled to proceed with the realisation of the charged properties.

Absa urged the court not to interfere with what it described as a commercial contract voluntarily entered into by both parties.

But the court found that the borrower had raised serious questions about the legality of the recovery process.

The judge said the bank’s own records showed that the arrears had been cleared.

“The respondent cannot disown its own entries,” the court said. It added that seeking to sell property worth millions after the underlying arrears had been fully cured raised “a monumental triable issue.”

“A premature, accelerated foreclosure on a performing, fully regularised loan presents a formidable prima facie case with a high probability of success,” the judge ruled.

The court also accepted the borrower’s argument that the properties were income-generating assets whose sale could trigger loss of tenants and disrupt rental income used to service the facility.

It stopped the planned sale and barred the bank from interfering with the properties pending determination of the suit.

The parties were directed to complete pre-trial procedures within 14 days to pave the way for an expedited hearing of the dispute.

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