The real estate boom that peaked this year captured attention partly because of the legal disputes that emerged between property developers, land and home owners.
Lawyers and property managers said such high-profile disputes were unavoidable as more developers compete to invest in gated estates.
“Disputes are not a strange phenomenon and neither will they end going into the new year since land ownership deals are high-value investment ventures and as a result are highly emotive,” said Simoni Namada, a commercial lawyer at Namada & Co. Advocates.
Among the high profile property disputes that have run through the year is that over the Sh30 billion Fourways Junction, which saw Muga Developers ordered to pay Nancy Gatabaki Sh725 million in cash and property in exchange for her interests in the firm.
A battle over the multi-billion billion Tatu City is also being fought in the courts as Mr Stephen Mwagiru contests how the company’s affairs are being run by the other three owners – Vimal Shah, Nahashon Nyagah and Renaissance Capital.
Suraya Properties is engaged in a dispute with Michael Muigai, a relative of founding President Mzee Jomo Kenyatta over the land on which the Oakland Valley Estate is to be built.
The disputes present extra costs to be borne by home-buyers who enter into off-plan agreements with developers. Owing to unpredictable costs of material, developers in some instances have been forced to request buyers to top up on agreed amounts.
“This model has been shown to work but it has had its challenges in the country as developers go back on promises of price limits and sorting out such disputes can be tough and lengthy,” said Mwendwa Makathimo, the manager of Vidmerck Limited, a property management firm.
Suraya Group announced this week that it would be handing over 200 completed houses from phase one of their project for which investors had paid Sh2 billion in advance. Property disputes likewise weigh on lenders by slowing down their rate of recovering development loans.
“We have been forced to restructure the loan and that is expensive as you have to pay interest for a longer period,” Dr Kanyenje Gakombe, the director of Metro Villas revealed in an earlier interview with the Business Daily.
The firm took a Sh140 million loan from Savings and Loans to develop 34 maisonettes in Eastlands and although the project is complete, the owners cannot construct an access road to it after Buru Buru Girls School management went to court last year challenging this.