Embattled Landlord Seeks Senate Help to Avert Auction

Moi University Savings and Credit Co-operative Society (Musco) is seeking the help of the Senate to stop a planned auction of its multi-million-shilling Musco Towers in Eldoret town.  

This follows a ruling by High Court judge Hellen Omondi allowing Co-operative Bank of Kenya to auction off the nine-storey building to recover Sh553 million owed by Musco.

The bank advanced the money to the workers Sacco to develop the property.

On February 7, Justice Omondi authorised the bank to attach and sell Musco Towers since the Sacco has failed to repay the loan – ending a 10-year court case pitting the two entities.

Justice Omondi said that from the documents provided, Musco obtained funds between 2008 and 2016 from Co-op Bank but failed to honour their financial duties on repayments.

“Musco gave the suit property to the bank willingly and as security which was to be realised in the event of default in repayment,” she said, adding that the Sacco had ignored the bank’s demands and statutory notices.

The building was set for auction on October 30, 2019, but Musco moved to court to block the planned sale, arguing that they spent Sh400 million through savings and a bank loan to put up the structure and would therefore not accept the planned auction of the property.

RELATED: Banks Descend on Builders as Loan Defaults Hit Real Estate

Following the ruling, Antique Auctions said on Monday that it had received instructions to dispose of Musco Towers, which is located about 470m off and to the right of Eldoret-Malaba road (Uganda road) deviating at a road leading to Uasin Gishu County headquarters.

“Duly instructed by our chargees, on March 4, we shall sell by public auction the nine-storeyed block with basement, lower basement and mezzanine floors in Eldoret town situated along Elgeyo Road opposite Sirikwa Hotel,” the company said in a public notice. 

Musco Towers sits on a 0.114-acre plot and has two basement floors, seven fully-let shops on its ground floor, and 14 offices on its mezzanine floor occupied by rent-paying tenants.

The leasehold property has a term of 50 years with effect from August 1, 2009.

The notice said the first to sixth floors are fully let to house the University of Eldoret Town campus, with the seventh floor hosting nine privately rented-out offices.

The eighth floor hosts five offices and a restaurant.

Musco shareholders have now petitioned Uasin Gishu Senator Margaret Kamar to help them save the property as a final frantic measure. 

Susan Chepchirchir, who represents the shareholders, said they had given up on the court process and would now appeal to local leaders to intervene in the matter.

“The court has made its ruling on the matter and we do not intend to appeal the decision. We are taking the battle to the Senate as that is our last resort,” she said.

The Sacco had earlier been taken to court by Dinesh Construction Company for failing to pay Sh141 million to the contractor who built and handed over the building as contracted.  

Musco was ordered to settle the bill with an interest rate of 14% per annum from June 17, 2015.

Join 15,000+ pros getting our weekly digest of news and insights.