The High Court Commercial Division has set aside the sale of a residential property in Najjera, Wakiso District, after finding that Housing Finance Bank unlawfully exercised its power of sale over a mortgaged home, in a ruling that restores ownership rights to the former proprietors, Barnabas Samuel Aliku and Christine Mutesi Aliku.
In a judgment delivered on May 31, 2026, Justice Susan Odongo found in favour of homeowners Barnabas Samuel Aliku and Christine Mutesi Aliku, who had sued Housing Finance Bank, tenant Tony Lugayizi Mulinde and Speke Uganda Holidays Ltd over the sale of their property in Najjera, Wakiso District.
Court records show that the couple acquired and developed the property on Kyadondo Block 219 Plot 1138 in Najjera using financing from Housing Finance Bank.
Their financial position later deteriorated due to an economic downturn in Europe and loss of employment, which affected their ability to service the loan. The bank subsequently revised the interest rate upwards, increasing the monthly repayment burden.
In 2013, the bank sold the property for UGX 135 million to Speke Uganda Holidays Ltd, a company reportedly associated with the tenants occupying the house at the time.
The former owners told court they were not properly notified of the intended sale and only became aware of the transaction after identifying a prospective buyer willing to purchase the property for UGX 235 million.
Upon examining the evidence, Justice Odongo found that while the borrowers were indeed in arrears, the bank breached its statutory obligations by failing to adequately serve sale notices, relying on a flawed disposal process, and selling the property at a significantly undervalued price.
The court further raised concerns over transparency in the auction process and the involvement of the sitting tenants in the eventual acquisition of the property.
The judge ruled that the transaction was unlawful, negligent, and in violation of provisions of the Mortgage Act and the Mortgage Regulations. She further held that the bank’s claimed outstanding loan balance could not be sustained, noting that it arose from the institution’s failure to obtain the best reasonably available price for the property.
The decision is expected to reinforce strict compliance obligations for financial institutions in mortgage recoveries, particularly the requirement to provide proper notice, ensure transparency in the sale process, and secure fair market value in order to protect borrowers’ equity of redemption.
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