Compliant Vehicle Asset Recovery for Lenders
For lenders needing to repossess cars following a loan default, adhering to the strict legal procedure is not just recommended—it is mandatory. Wrongful or forceful repossession can lead to expensive lawsuits, criminal charges, and reputational damage. Swipe Recoveries Experts Ltd provides professional and legally compliant car repossession services for banks, microfinance institutions, and SACCOs across Kenya. We specialize in navigating the complexities of the Movable Property Security Rights Act, 2017, ensuring every repossession is conducted ethically and lawfully. Our goal is to secure your asset efficiently while protecting you from legal liability.
Key Law: The Movable Property Security Rights Act, 2017
The primary legislation governing how lenders can repossess cars and other movable assets is The Movable Property Security Rights Act, 2017 (MPSR Act). This Act modernized and streamlined the process, replacing many provisions of the old Chattels Transfer Act and Hire Purchase Act. A fundamental requirement under the MPSR Act is the creation and perfection of a 'security right'. For lenders, this means registering the car loan (security interest) against the vehicle's chassis number in the official Security Rights Registry, which is accessible via the eCitizen portal. This registration serves as a public notice of your legal interest in the vehicle and establishes your priority claim over other creditors.
Crucially, the MPSR Act sets out a clear, non-negotiable enforcement process. Before a lender can take any step to repossess a vehicle, they must issue a specific Statutory Notice of Default to the borrower. This notice must inform the borrower of the nature of the default and give them a prescribed period (typically at least 14 days) to remedy it. Attempting to repossess a car without issuing this notice is illegal and invalidates the repossession. Our team at Swipe Recoveries ensures that all pre-repossession legal requirements, including proper notice, are meticulously fulfilled.
The Step-by-Step Car Repossession Procedure
Our vehicle repossession process is methodical and focuses on compliance at every stage to ensure a legally defensible outcome.
Step 1: Verification and Statutory Notice. Once a loan is in default, we first verify that the security right was correctly registered under the MPSR Act. We then work with the lender to prepare and serve the mandatory Statutory Notice of Default to the borrower, delivered to their last known address.
Step 2: Locating and Securing the Asset. If the borrower fails to clear the arrears within the notice period, our specialized repossession team is activated. Using our skip tracing expertise and vehicle tracking technology, we locate the vehicle. The repossession itself must be conducted peacefully. Our agents are trained to de-escalate conflict and will not cause a 'breach of the peace'. If the borrower becomes hostile or obstructive, we will disengage and seek assistance from the National Police Service as provided for under the law, rather than using force.
Step 3: Post-Repossession Notices and Sale. Immediately after securing the vehicle, a post-repossession notice is issued to the borrower. This notice gives them a final chance to 'redeem' the vehicle by paying the outstanding balance plus repossession costs. If they fail to do so within the stipulated timeframe, the lender can then proceed to sell the car, typically via public auction conducted by a licensed auctioneer, to recover the debt.
Understanding the Costs of Car Repossession
The costs associated with the decision to repossess cars are recoverable from the borrower, but it's important for the lender to understand the typical expenses involved. These costs are directly related to the enforcement of the security right and must be reasonable.
Primary costs include:
- Repossession Agent Fees: This is the fee paid to the professional firm conducting the repossession. It can range from KES 30,000 to KES 70,000+, depending on the vehicle's location, its value, and the difficulty of the recovery. High-value vehicles or those in remote locations will command higher fees.
- Towing Fees: The cost of transporting the repossessed vehicle from its location to a secure storage yard.
- Storage Fees: A daily fee charged by the storage yard for securely holding the vehicle pending its redemption or sale.
- Auctioneer's Fees: If the vehicle is sold at auction, the licensed auctioneer will charge fees and commission as stipulated in the Auctioneers Rules.
At Swipe Recoveries, we provide a clear and itemized estimate of all expected costs before initiating a repossession action, ensuring full transparency for our lending partners.
