Sale of Najjera Property was Unlawful, Court tells Housing Finance Bank

The High Court has ruled that the sale of a mortgaged property in Najjera by Housing Finance Bank was unlawful, negligent, and conducted at a gross undervalue. Justice Susan Odongo delivered the decision in a case filed by Barnabas Samuel Aliku and Christine Mutesi Aliku, who accused the bank of fraudulent and unlawful conduct and breach of contract.

The couple sought cancellation of the bank’s title, reinstatement of their ownership, and damages. In 2009, the plaintiffs obtained a loan of Shs 119 million from Housing Finance Bank, secured by a legal mortgage over property comprised in Kyadondo Block 219 Plot 1138 at Najjera, with a 20-year repayment period and monthly instalments of Shs 1.6 million.

The bank argued that the couple defaulted, prompting it to exercise its statutory power of sale. However, court noted that while the property was valued at Shs 135 million, a buyer identified by the plaintiffs was willing to pay Shs 235 million.

“This discrepancy of Shs 100 million is not a mere margin of error but a gross undervaluation that shocks the conscience of this Court,” Justice Odongo ruled, concluding that the sale breached mandatory provisions of the Mortgage Act and its Regulations.