Spousal consent: Why banks are facing legal hurdles in using property as security for loans

When Mohammed Hussein Ahmed walked Nino Alio to Absa Bank Kenya to borrow money, she indicated in her documents that she was unmarried.

Fast forward to 2024, Absa contracted Regent Auctioneers to sell a property she had used to secure the loan.

 The lender was greeted with a court case filed by Hussein, who banked on his right as a spouse to consent for the property to be used as collateral.

The bank, in its response, argued that Hussein and Alio married on January 13, 2022, while a further charge was executed on June 14, 2021. It also stated that she had, in an affidavit, declared that she was still a spinster at the time of taking the loan.

On the other hand, Hussein said that they got married on May 23, 2019, but the certificate of marriage was issued later.

 Faced with the two counter-narratives, Justice Benard Murunga froze the intended auction until the case is heard and determined, saying that selling the property without determining the issue of spousal rights could violate Hussein’s rights.

Hussein’s case with Absa puts to the fore the developing predicament that banks now face while issuing loans to married men and women.

From an analysis of several judgments, it is now clear that a bank cannot sell a property in the event of a default if neither the man nor the woman has consented to the other using the property as collateral. In some instances, the issue of consent has bitten banks, while in others they have prevailed by providing evidence that either the wife or the husband had given consent.

As Justice Murunga was halting the sale of property held by Absa, Justice Helena Namisi was stopping SBM Bank from auctioning another property in a case filed by Florence Wendoh.

Wendoh told the court that the bank was cajoling her to assume liability for her late husband, Charles Maringo.

At stake was their matrimonial property at Karen.

Wendoh explained that Maringo passed on April 21, 2021. He, however, had a loan with the defunct Chase Bank, which loaned him at least Sh 22 million.

She maintained that she only came to know about the loan when her husband was fighting for his life in an ICU. Wendoh said that upon looking at his phone, she saw persistent calls from the bank and messages sent to him.

The widow further narrated that in April 2019, a bank official by the name of Egidia Mecha, who initially allegedly presented herself as her late husband’s friend, disclosed the banking relationship at her home.

She claimed that the lender coerced her to sign a letter admitting liability and requesting more time to repay the loan.

“ She (Mecha) said she wanted to help me. She pulled out a pad and told me that I need to commit myself to ensure that the Bank doesn't auction the property. She dictated a letter to me. I signed the document. She said now you are safe,” testified Wendoh.

According to her, it allegedly threatened to sell off her matrimonial home. Unfortunately, Maringo did not make it. The bank, she said, came for their home to auction.

She denied ever appearing before any lawyer to sign a document in support of her husband taking a loan.

In response, SBM called Pauline Gakere, its debt recovery officer, as a witness. She admitted that she was not present when the letters of offer, mortgage and statements of accounts were being signed. She said she could not personally vouch for the authenticity of the signatures.

The bank did not, however, call Mecha as a witness.

Justice Namisi said that Wendoh’s story remained unimpeached as there was no contrary evidence to show she had consented.

The judge also observed that when Mecha went to have Wendoh sign the document, her husband was in an ICU. According to the judge, Mecha’s action was unbecoming as she put the widow in a duress, as the threat of a house being sold with a dying spouse left Wendoh with no alternative but to sign.

The judge however, noted that the widow subsequently disowned the letter in August 2022, adding that the bank official cornered her alone at the hospital.

“This Court finds the conduct of the Defendant’s officer, Ms. Egidia Mecha, to be unconscionable. Pursuing a debtor's spouse to a hospital ICU to extract a security admission is a gross violation of the duty of care and ethical banking standards. It constitutes actual undue influence,” said Justice Namisi, adding that the document could not be used as an admission of debt as it was vitiated by duress.

She asserted that without spousal consent, a charge over a matrimonial home is null and void.

Justice Namisi permanently barred SDBM from selling or advertising for sale the property.

“A declaration is hereby issued that the Charge/Mortgage dated April 3, 2012 is invalid, null, and void ab initio for lack of due execution, lack of spousal consent, and fraudulent misrepresentation,” she decreed.

Former Cabinet Secretary Moses Kuria’s wife Joyce Njambi  last year sued Equity Bank after it went for their two properties over Sh 50 million unpaid loan.

Njambi sued after the politician’s separate case was thrown out. Kuria was similarly seeking to block the auction of two apartment blocks located in Ruaka and Juja, Kiambu County but Justice Aleem Viram dismissed Kuria’s urgent application.

According to court documents, Kuria secured a Sh50 million loan from Equity Bank in December 2017 to finance the construction of a five-storey rental block in Ruaka and a similar one in Juja.

The two properties were offered as collateral, with legal charges registered against their titles. However, after defaulting on the loan, the bank moved to recover the outstanding amount through a public auction.

The loan agreement required monthly payments of Sh402,832, which Kuria failed to honor.

n its filings, Equity Bank stated that Kuria repeatedly missed payments despite being reminded on multiple occasions.

Kariuki King'ori, a bank representative, revealed that a meeting was held with Kuria on January 24, 2025, at his Karen office, where a revised payment plan was agreed upon.

"The plaintiff has not only failed to honour his payment commitments but has also neglected to follow through with the agreed repayment plan," said King'ori.

In her case, Njambi argued that she had not consented to the properties being used as collateral.

Similarly, business mogul Peter Munga’s wife Rose Njambi also filed a case over Sh433 million loan row pitting her husband, Africa Banking Corporation (ABC), ABC Capital and Central Depository and Settlement Corporation.

Njambi argued that she was unaware that the billionaire had offered shares valued at Sh604 million at Britam Insurance Company as security for the loan.

Munga, who is the founder of Equity Bank Group and its former chair, has been in a long, drawn fight with ABC over a loan issued to one of his companies, Equatorial Nut Processors, a macadamia processing company. He guaranteed the firm with the Britam shares.

He tried to stop the auction twice, before Justice Alfred Mabeya and subsequently before Justice Dora Chepkwony in Kiambu, but failed.

In her case, Njambi told Justice Peter Mulwa that she has been in a long-standing marriage with Munga.

According to her, they have acquired during their marriage several properties, including 25 million shares, which she owns and a further 50 million which are owned by Munga in the same company.

She argued that Munga's stake at Britam was acquired during their marriage, and she had contributed towards the purchase.

"The said 50 million shares are thus matrimonial property within the meaning of Section Six of the Matrimonial Property which the applicant has a proprietary life interest," argued Njambi.

She alleged that she was shocked to learn that her husband pledged the shares as security to ABC without her written and informed spousal consent.

She said to add insult to injury, he allegedly silently even used her stake at the insurance firm to secure the loan advanced by ABC.

The issue of spousal consent stems from a landmark battle by a TV actress who sought to rescue a house that her former husband had offered as security for a loan.

The Court of Appeal, in a landmark judgment in favour of Citizen TV actress Elizabeth Wanjiru, who is commonly known as ‘Shosh’ in the  ‘Mother-in-Law’ programme, ruled a spouse cannot use matrimonial property to secure a loan without the consent of his or her partner.

Judges Wanjiru Karanja, GBM Kariuki and Jamila Mohamed, in a 2017 verdict which also sent a warning to financial lenders and third-party buyers, ruled the whole transaction to recover the unpaid loan was null and void.

The case involved Wanjiru’s former husband Shem Bageine, Housing Finance Corporation of Kenya (HFCK), and a third-party buyer, Mugo Muriu Investments Ltd.

Mr Bageine is a Ugandan national.

HFCK’s failure to verify whether Bageine had sought Mrs Wanjiru’s go-ahead to take up the loan has cost it millions.

The Court of Appeal ordered the lender to return Sh1 million to Mugo Muriu Investments Ltd, which bought the prime property in Loresho in 1987.

Mugo Muriu Investments Ltd will get the money minus interest that could have accrued for the past 29 years.

In the case that has been in the corridors of justice for 29 years, the judges ruled the interest of a spouse in a property acquired jointly cannot be overridden by that of a lender to recover an unpaid loan.

“Anyone who lends money on the security of a matrimonial home nowadays ought to realise that the wife may have a share in it... It seems utterly wrong that a lender should turn a blind eye to the wife’s interest or the possibility of it and afterwards seek to turn her and the family out on the pleas that he did not know she was in actual occupation,” the judges ruled.

On April 13, 1968,  Wanjiru, aged 24 years, wedded Bageine, then a University of Nairobi student, at PCEA St Andrew’s Church Nairobi.

As man and wife, they purchased the contested home in 1981 but it was registered under the man’s name. The house was bought through a mortgage given by HFCK.

In her case, she told the court she contributed in buying the property, for which they repaid the mortgage in full in 1984.

They lived together until the man left following domestic problems.

After moving out of the matrimonial home, Bageine took another loan of Sh600,000 from HFCK and offered their title as security.

He did not pay, forcing HFCK to auction the property in 1987. Wanjiru had offered to clear the debt but the bank refused to take the offer.

After the transfer of the property on June 10, 1988, Mugo Muriu started demanding rent from Wanjiru as she was still living in the house.

She immediately sued the firm, HFCK and her former husband, saying she was not aware of the loan and that the contested property equally belonged to her.

In his defence, Bageine denied making any contribution towards the purchase of the matrimonial property.

HFCK on the other hand told the court it sold the property after Bageine defaulted on repaying the loan. 

Mugo Muriu Investments Ltd argued it was just an innocent buyer of the property.

But the judges found HFCK knew Bageine had a wife who was living in the contested house but ignored her.

The court ordered Mugo Muriu, HFCK and Bageine to pay ‘Shosh’ the cost of filing the case both in the High Court and Court of Appeal.