A recurring argument raised by borrowers facing the exercise of a lender’s statutory power of sale is that the charged property is more than land, that it is a home, a business legacy, or a property of deep personal and emotional significance. While such considerations may resonate on a human level, the Court of Appeal has once again made it clear that they carry little legal weight once property is pledged as security in a commercial transaction.

In Blue Waters Hotel Ltd & 2 Others v Guaranty Trust Bank (Kenya) Ltd [2025] KECA 1421 (KLR), the Court reaffirmed a fundamental principle of secured lending: property offered as security ceases to be a personal asset and becomes a marketable commercial commodity, capable of lawful sale upon default.

The dispute arose from a KShs. 220 million facility advanced by the bank to the borrower and secured by charges over prime properties in Kisumu and Nairobi, together with guarantees and other securities. Despite multiple loan restructurings intended to accommodate the borrower’s financial difficulties, the loan fell into persistent default. The bank consequently issued the requisite statutory notices and moved to exercise its power of sale. In response, the borrowers sought to restrain the auction, contending that the properties were unique and that their sale would occasion irreparable loss.

Both the High Court and the Court of Appeal rejected this contention. The appellate court was unequivocal that once land is deliberately offered as security in a commercial transaction, its legal character fundamentally changes. It is no longer insulated by sentimental or personal considerations. Instead, it assumes the character of a commercial instrument whose primary purpose is to secure repayment of a debt. By charging the property, the borrower expressly accepts that sale is the lender’s ultimate remedy in the event of default.

Central to the Court’s reasoning was the doctrine governing injunctive relief. To warrant an injunction, an applicant must demonstrate irreparable harm, loss that cannot be adequately compensated by an award of damages. The Court held that this threshold is rarely met in cases involving charged property. Such property is, by its very nature, marketable and capable of valuation. Any loss arising from its sale is therefore quantifiable and compensable in damages, should the sale later be shown to have been unlawful or irregular. Emotional attachment, business significance, or inconvenience do not elevate a charged asset beyond its commercial value in the eyes of the law.

The Court’s position was also informed by broader commercial and policy considerations. Secured lending depends on certainty and enforceability. If borrowers were permitted to restrain statutory sales merely by invoking sentimental value, the reliability of land as security would be eroded, and the credit market destabilized. Equity, the Court reminded, does not exist to shield defaulters from the consequences of commercial bargains freely entered into, nor to rewrite contractual risk allocation after default has occurred.

The decision in Blue Waters therefore sends a clear and timely message. Once property is charged, it becomes a commercial asset. Where default is admitted and statutory procedures are followed, the lender is entitled to realize its security. Injunctions are discretionary remedies reserved for deserving cases, not a refuge for borrowers seeking to delay the inevitable.

For borrowers, the case is a cautionary reminder to treat charged property with the seriousness it deserves. For lenders, it reinforces judicial support for the lawful enforcement of security rights. Above all, it affirms a core principle of commercial law: the moment property is offered as security, its fate is governed not by sentiment, but by contract and statute.