When auctioneers come calling, stick to the letter of the law
The Auctioneers Act rules out dishonesty, immorality, violence and malicious damage to property. Photo/GRAPHICS
Failing to meet financial obligations invites the wrath of creditors.
A number of times, they turn to auctioneers to fight the war.
While debtors have “genuine reasons” for not obeying the credit terms, auctioneers, who have been accused of ruthlessness, say those who cannot own up to debts are to blame.
While auction is allowed in the law, seeking quality legal advice can save your property from going under the hammer if only to get time to reorganise the debts.
“By explaining the prevailing circumstances to your lawyer, you can negotiate terms of payment and save your property from being auctioned,” said John Ohaga, lawyer and managing partner at Ochieng’, Onyango, Kibet and Ohaga Advocates.
While this is an avenue, courts always handle disputes between debtors and auctioneers who accuse each other of unfairness.
Mr Simon Ngomonge, an auctioneer and director of Dollar Auctions Limited, attributes the confrontations to two things: auctioneers failing to follow due process or a debtor failing to own up.
“I am not ruling out that there are auctioneers who do not follow the legal procedure of auction. However, our society is made up of some people who never want to own up to debts,” Mr Ngomonge said.
Auction starts with instructions from the court, advocate or a principal party with interest in the property, for example, a real estate agent.
Experts say it is the duty of the debtor to demand identification from the auctioneer as the first step to stopping illegal handling of one’s property.
However, the bulk of disputes between debtors and the auctioneers is rarely about identification or making intentions known to the former, says Mr Ngomonge.
“How will it be possible to fail to introduce yourself as an auctioneer whereas the law requires that an auctioneer proclaim the property to be attached?” he asks.
Experts warn that when paying rent, repaying a loan or meeting certain obligations become a source of worry, an individual should sense danger.
This knowledge should serve as the first warning of the possibility of being auctioned to recover what is due to the aggrieved party.
Since the law requires an auctioneer to present a notice of attachment of property — called the proclamation notice — a debtor who has considered such a possibility should find ways to avert occurrence.
Accept the proclamation notice, say legal experts.
“When one has received the proclamation notice, they can present it to the lawyer and activate their legal rights as they seek a solution to the matter,” says Mr Ohaga.
Not all auction processes end up with property placed under the hammer.
Mr Ohaga says that depending on the calibre of the lawyer, favourable negotiations are possible.
Once the proclamation notice is presented to a lawyer, one can access the courts to explain the cause of his financial instability so as to allow him extra time to pay.
How best one handles a situation that warrants auction depends on the quality of legal advice.
Decisions like refusing to receive a proclamation notice can be blamed on lack of knowledge while poor legal advice limits one’s choices.
However, there is the dilemma of working with the best legal minds at a time one cannot meet financial obligations.
Where one establishes that the auctioneer flouted the law, raise a complaint with the firm licensing board that may, among other actions, suspend, revoke or reprimand the licensee.
The Auctioneers Act provides that complaints be filed within a year after an incident occurs.
According to the Act, while in pursuit of a directive to attach property, an auctioneer should not exercise dishonesty, immorality, violence and malicious damage.
Similarly, it is the duty of the auctioneer to have the property valued in order to protect the interest of the owner.
When valuation is not done, the debtor can object to the auction.
The provisions cater for the interest of the debtor and those familiar with the provision can move to stop the auction if they can prove that an offence was committed.
Where the property being attached does not belong to the debtor, the real owner can use the courts to stop the auction on proving ownership.
Auction process is classified into three main categories; distress for rent, a court judgment also referred to as warrant of attachment and realisation of property like in the case of a mortgage company or a bank recovering their money.
A 14-day proclamation notice is given in the case of distress for rent, seven days for a warrant of attachment and 60 days when handling immovable property like land and buildings.
