A landmark ruling by the High Court has delivered a major victory for real estate investors, setting a precedent for buyers who have suffered delays and quality issues in off-plan developments.
The ruling favored two buyers, Nizarali Pradhan Sumar and Shehnaz Nizarali Sumar, against VK Construction Limited, after the developer failed to meet contractual obligations regarding the completion and quality of an apartment.
Case Background
As reported by buyrentkenya, The plaintiffs signed a sale agreement on April 23, 2015, agreeing to purchase a unit in a 32-unit four-bedroom apartment development for Kshs. 18,800,000. However, despite paying Kshs. 18,860,000, they encountered significant setbacks:
- Multiple defects in the apartment, including water leakage in all bedrooms and substandard finishing.
- Delayed handover, with the developer refusing to grant them possession.
- Uninhabitable conditions, even after eventually gaining access.
Frustrated by the lack of response from the developer, the buyers took legal action in 2019, seeking justice for the breach of contract.
Court Ruling and Compensation
Since VK Construction Limited failed to respond to the completion notice or defend itself in court, the High Court ruled in favor of the buyers, ordering the developer to:
- Refund Kshs. 18,860,000 (full purchase amount).
- Pay Kshs. 489,490 for repair and finishing expenses.
- Compensate Kshs. 150,000 per month for loss of income due to the delay.
The judgment reinforced the principle that buyers who fulfill their contractual obligations have the right to compensation if a developer fails to deliver.
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Key Takeaways for Real Estate Investors
This ruling carries significant implications for anyone investing in off-plan developments. Here’s what you should learn from this case:
- Legal Protections Exist – Use Them
- Many investors hesitate to take legal action against developers, fearing a lengthy court battle. However, this case shows that buyers can successfully claim compensation when developers breach agreements.
- If your developer is non-responsive, seek legal advice and consider issuing a completion notice before taking legal action.
- Due Diligence Is Crucial Before Buying Off-Plan
- Research the developer’s track record—have they completed past projects successfully?
- Request for references from past buyers to assess the quality of their work.
- Verify that the developer has all necessary approvals and permits to avoid legal complications.
- Include Strong Contractual Protections
- Ensure your sale agreement specifies penalties for delays and poor workmanship.
- Ask for a clear timeline for completion and handover.
- Include a clause for compensation in case of breach—this can help avoid lengthy disputes.
- Monitor Construction Progress Closely
- Regularly inspect your unit before completion and document defects.
- Engage a qualified property lawyer or consultant to oversee the process.
- If the developer refuses to grant access, raise concerns formally via a lawyer.
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The Bigger Picture
This ruling is not just a win for the plaintiffs—it is a wake-up call for developers to honor their commitments and uphold quality standards. If more buyers take action against non-compliant developers, it could push the industry towards greater accountability and better construction standards.
For investors, the message is clear: Be proactive, protect your rights, and do not settle for substandard property deals.
What’s your experience with off-plan investments? Have you faced similar challenges? Let us know in the comments!