The Buganda Land Board (BLB) has advised the public to consult them when purchasing mailo land. This advisory comes in the wake of the Commercial Court’s decision to overturn a Shs1.3 billion Kibanja mortgage that was approved without clearance from BLB, causing concern among several banks.
BLB reported that more than ten commercial banks have since reached out for guidance on complying with the court ruling on bibanja mortgages.
The case involved the attempted sale of a piece of land in Nansana Municipality by Opportunity Bank. The land was purchased by Dr. Esau Wangi Waswa from Mr. Muhamood Byaruhanga after the latter defaulted on a loan. BLB’s deputy chief executive officer, Bashir Kizito Juma, emphasized the importance of obtaining consent from BLB when dealing with mortgages involving kibanja.
“The Land Act Section 34 gives a tenant on registered land the right to mortgage his or her kibanja, provided they obtain consent from the landlord,” Kizito said. “Financial institutions shouldn’t accept bibanja mortgages without our consent. We grant this consent, and it comes with benefits.”
The executive director of the Uganda Bankers Association, Wilbrod Humphreys Owor, declined to comment, stating he needed to consult with their legal department.
In a June 21 judgment, Commercial Court Judge Patricia Kahiigi Asiimwe ruled that Opportunity Bank should have obtained consent from BLB for the mortgage. The ruling clarified that a mortgage obtained without the landlord’s consent is invalid.
Court documents revealed that on August 28, 2019, Dr. Waswa entered into a purchase agreement with Mr. Byaruhanga for the land, with the leasehold title to be transferred later. Despite making further payments and taking possession of the land, Dr. Waswa found that Mr. Byaruhanga had mortgaged the land to Opportunity Bank without a title.
Mr. Byaruhanga defended himself, claiming he fulfilled his obligations by introducing Dr. Waswa to BLB and that Dr. Waswa should have followed up on the titling process. Opportunity Bank contended it had a prevailing interest over Dr. Waswa as the land had been collateral for the loan.
