Family loses sh30b property, accuses bank of fraud

MORTGAGE| 

The administrator of the estate of the late Samwiri Mishambi Kwesiga, represented by Ida May Kwesiga, is protesting the sale of family property, the Mayflower Apartments, by the Housing Finance Bank at a paltry price, which she says is a fraction of the property's value.

The bank reportedly sold the property at $2.4m (about sh8.8b) to a city businessman, yet the property was a couple of years ago valued much higher.

According to court documents seen by Sunday Vision, the family argues that the property is valued at $8m (about sh29.3b). A subsequent valuation put the value at over $9m (about sh33b).

The family accuses the bank of high-handedness and fraud in the transaction.

They want a permanent injunction issued against the sale of the property in addition to costs and general damages of the suit.

"A permanent injunctive order restraining the defendants and their workers, agents or any other person deriving authority, from evicting the family and all her agents," the court document states.

Through Mpairwe & Company Advocates, the family has petitioned the High Court in Kampala, seeking to recover the property that was sold to Balaji Group (EA) Ltd.

"The plaintiff (Kwesiga) contends that the sale of the said suit land to the second defendant (Balaji Group (EA) Ltd) was unlawful, illegal, tainted with fraud and an absolute clog on the plaintiff right to equality of redemption of the sold property," Kwesiga's lawyer stated in court documents.

The family has since moved to court to block the sale of the property, saying it was done in total violation of the court order that was issued to halt the sale.

They also argue that the sale was in total disregard of the financial hardships caused by the COVID-19 pandemic.

Sunday Vision has also seen an online advertisement for the sale of Mayflower Apartments at sh44b.

In the court case, Kwesiga argues that on October 11, 2019, when the bank advertised the sale of the property, her family subsequently on November 8, 2019, applied to the court to have the transaction reviewed.

"The plaintiff applied to the High Court of Uganda to have the sold mortgage reviewed on grounds that it was given unconscionable terms, misrepresentation of facts by staff members and not being given a chance to be represented by an independent financial advisor," Kwesiga said.

According to the family, despite the financial challenges posed by the COVID-19 pandemic, Housing Finance Bank went ahead to sell the property at the time when land transactions were halted by the lands ministry.

"The financial challenges of the plaintiff were aggravated by the outbreak of the coronavirus pandemic that affected the business and slowed down  the cashflow of the plaintiff for which the first defendant (bank) should have recognized and restructured the said mortgage," Kwesiga stated in a court document.

The family further argues that the bank, without issuing further default notices, neither re-advertised nor re-evaluated to ascertain the current market value of the property proceeded and sold the property to Balaji Group (EA) Ltd.

Kwesiga said her family secured the loan with intention of improving the apartments and condominium comprised in Freehold Register Volume 212, Folio 22, Plot 34 on Kyandondo Road in Nakasero, Kampala. The loan amount was $2.72m at the time.

She said on June 29, 2017, she engaged Stanfield Property Partners to value the property comprised in FRV Folio 22 Plot 35 , Kyadondo Road in Nakasero and KCCA 305 Folio 10.

The property was valued at $8m (about 29.3b) on open market and $5m (18.3b) on forced market.

"The plaintiff used the said loan facility to furnish the apartments and condominium titles and on July 11, 2017, she engaged Alcent Land and Property Ltd to evaluate the said suit land and the same was valued at $9.229m (about sh33.7b) on open market and $7.3m (about 26.7b) on forced market.

Bank's reasons

Kwesiga's family is in a financial dispute with the Housing Finance Bank over money she borrowed between March 2012 and April 2015.

The bank argues that the mortgage was secured by presenting four multi-units construction facilities on March 1, 2012; December 27, 2012; June 28, 2013; October 15, 2015, and April 24, 2015, by the administrator of the late Samwiri Mishambi Kwesiga through Ida May Kwesiga.

The mortgagor (Kwesiga), according to the bank, allegedly defaulted the payment and, subsequently, the bank demanded all the money and issued a statutory notice of default and sale but the mortgagor failed to comply.

"In exercise of its power to sell, the mortgagee duly advertised the mortgaged property comprising 16 developed units, 24 undeveloped units and freehold property on Plot 35 Kyadondo Road for sale on October 15, 2019."

The bank's lawyer said the purchaser (Balaji Group (EA) Ltd) expressed willingness to purchase the mortgage property and their bid for the property was the highest.

"The mortgagee (bank) hereby warrants that it has agreed and has valid right to sell and transfer the mortgage property.

The mortgagee (bank) will, however, not be responsible and liable for any other loss, damage whether direct or indirect that the purchaser may suffer as a result of the sale," the purchase agreement reads in part.

Sale agreement

According to the sale agreement, Sunday Vision has seen, the bank agreed to receive payment by installment.

The initial payment was $1.5m and $900,000 was to be paid on December 15, 2020.

"The mortgage shall immediately, upon the payment of the full purchase price, hand over to the purchaser the duplicate certificate," the purchase agreement reads.

The bank, through its lawyers, has already communicated to the tenants on the property, notifying them that the new owner of the property is Balaji Group (EA) Limited.

The tenants were instructed, henceforth, to pay rent to the new owner and not the Kwesiga family.

Sources told Sunday Vision that recently, court bailiffs tried to evict Kwesiga's family from the property and there was a stand-off with security guards.