Understanding Asset Repossession Services in Kenya: The MPSRA Framework

1. The Legislative Shift: Enactment of the MPSRA (2017)

Prior to 2017, repossession of movable assets in Kenya was fragmented across archaic colonial-era legislation, including the Chattels Transfer Act (Cap. 28). The enactment of the Movable Property Security Rights Act (MPSRA No. 13 of 2017) fundamentally revolutionized the landscape of secured lending and asset recovery in Kenya.

The MPSRA establishes a clear, unified, and modern legal regime governing the creation, perfection, priority, and enforcement of security rights in tangible and intangible movable assets—including motor vehicles, machinery, agricultural livestock, inventory, and accounts receivable.

2. The Electronic Collateral Registry Requirement

Under the MPSRA, perfection of a security right requires registration on the electronic Collateral Registry hosted on the Kenya eCitizen government portal. For a financial institution or private creditor to exercise lawful repossession upon loan default, the underlying security notice must be registered with priority.

Before executing any recovery instruction, Makuri Auctioneers conducts preliminary registry verification to ensure our clients hold enforceable first-ranking or subordinate security rights, shielding lenders from third-party ownership disputes or wrongful seizure claims.

3. Statutory Default Notice & The Cure Window

Repossession cannot occur by surprise. The law mandates that when a debtor defaults, the secured creditor must formally issue a written notice of default specifying:

• The nature of the default and the exact outstanding arrears.
• The contractual remedy required to rectify the default.
• A statutory cure period (typically not less than thirty days) during which the debtor may settle arrears without penalty.
• The consequences of non-compliance, including the repossession and disposal of the secured collateral.

4. Conducting Lawful Extrajudicial Repossession

Section 57 of the MPSRA permits secured creditors to take possession of collateral either through judicial process or extrajudicially without court intervention, provided the security agreement expressly provides for it and the repossession can proceed without a breach of the peace.

This is where professional licensed auctioneers play an essential role. Unlicensed recovery agents risk criminal liability for harassment, trespass, or breach of peace. Licensed officers from Makuri Auctioneers operate with diplomatic de-escalation protocols, presenting valid credentials, certified warrants, and inventory receipt documentation to secure the asset peacefully.

5. Storage, Condition Inventory & Debtor Redemption Rights

Once seized, the asset must be transported immediately to an accredited, fully guarded holding yard. In our facilities in Mombasa and Nairobi, an exhaustive condition checklist and high-resolution photographic evidence are recorded.

The debtor retains a statutory right of redemption prior to disposal. If the debtor cures the default and settles accrued recovery and storage expenses within the designated window, the collateral is released. If redemption fails, the creditor may proceed to liquidate the asset via transparent public auction to satisfy the debt.