A lender cannot lawfully repossess and sell a car taken on a logbook loan unless it has first properly served the borrower with a written default notice. Falling behind on repayments is not enough on its own. The notice comes first.
What a logbook loan is
A logbook loan is a loan secured by a charge over your vehicle. The lender holds the car as security for the money it has lent. In Kenya, these loans are largely governed by the Movable Property Security Rights Act, 2017.
What the rule requires
Before a lender can enforce its security, which means repossessing and selling the car, the borrower must have been properly served with a written notice of default. The borrower must also have been given the time allowed to put things right.
The High Court dealt with this in Momentum Credit Ltd v Idd [2026] KEHC 15896 (KLR). It held that serving the notice is a precondition to the lender using its remedies. Repossession and sale carried out without it do not meet the legal requirement.
In practice, the lender’s right to enforce does not arise merely because you have defaulted. The notice must be:
- in writing;
- proper in form and content;
- actually served on you before any step is taken to seize or dispose of the car.
When the lender skips the notice
If a lender skips the notice or serves a defective one, the repossession and any resulting sale are open to challenge. A court can stop or set aside the repossession or sale, and can award the borrower remedies. A secured lender must also sell in a commercially reasonable way.
This does not mean a borrower who defaults is safe forever. Once a valid notice has been served and the time to remedy the default has run out, the lender may still enforce its security. Repossessions are usually done by auctioneers or recovery agents, so do not be surprised if a third party arrives. What matters is whether the notice was properly served beforehand.
Practical steps
- Keep copies of your loan agreement and every letter or message you receive from the lender.
- Note the dates on which you received anything in writing, and how it reached you.
- If you are behind on payments, ask the lender in writing what it says you owe and what time you have to put things right.
- If your car has been taken and you do not recall receiving any written notice, speak to an advocate quickly about your position.
Each case depends on its own facts, so an advocate can look at your papers and tell you where you stand.
📚 Momentum Credit Ltd v Idd [2026] KEHC 15896 (KLR)
Entertainment and general information, not legal advice. For advice on your own situation, speak to an advocate.