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Insights Sectional property law regulating purchase of apartments and town houses in Kenya

Sectional property law regulating purchase of apartments and town houses in Kenya

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​​updated on 25 March 2024 | reading time approx. 2 minutes


The construction of numerous real estate buildings, including town houses, apartments, office floors and maisonettes together on a single piece of land registered on a single mother title or main title; has for a long time been considered a solution to the increasing demand for housing.


    

The construction of housing units on a single or main title poses various challenges especially when it comes to managing shared facilities within the development. It has been the practice that a developer of an estate or a building complex would register a management company which would maintain such shared facilities. The managing company would then be registered as the owner of the land upon which the entire estate or building complex sits. Individual purchasers or buyers of the town houses, apartments or office spaces would upon purchase be issued with a lease to the unit they own, which lease would be the owners document of title. The lease would also be registered against the main title as evidence of ownership of the unit. The owner would in addition be issued with a share in the management company, which company as stated before would hold the main title where the development sits. There have been instances where a developer does not transfer the mother title to the management company or retains shares in the management company. This structure also did not provide formal means of geo referencing the units.

In view of challenges such as the ones noted above, the Sectional Property Act (Act) was enacted and has now made it possible for individual purchasers or buyers of units that sit within an estate or a building complex, to acquire certificates of title in the conventional sense. The shared spaces within an estate or building complex including club house, pathways, gymnasium, playground, parking space, bore-hole or common water reservoir will be jointly owned by purchasers of the units through an entity introduced by the Act known as Management Corporation.

An owner of a unit will now be issued with a certificate of title in respect of the procured unit (a certificate of title if the property is freehold or a certificate of lease if the property is leasehold). The certificate of title shall reflect the proportionate share in the common property. The owner shall remain subject to the Management corporation by laws as passed by the majority members of the corporation who are the purchasers.

The Sectional Property Act

On 28 December 2020, the Sectional Properties Act was passed into law there by repealing the old Sectional Properties Act of 1987. The change of the law was inspired by the following factors:
  • ​The challenges experienced in applying the repealed Sectional Properties Act, 1987 that required preliminary conversion of the land law regime before application of the repealed Act.
  • The promulgation of the Constitution of Kenya, 2010 that sought to reconcile and consolidate the land regime in the country.
  • Advancements in the banking and building industries that had long outpaced the principles of the law that was repealed.
  • Improved specificity of the rules for various stakeholders involved in the creation of sectional property.

The Sectional Property Act requires a developer to do the following: 
  • Register past developments under the Sectional Property Act.
  • ​Convert the long-term lease of any development that meets the criteria of a sectional property within two years of the commencement of the Act. 
  • Put in place a management agreement to manage the process of handing over the sectional development to the subsequent unit owners.
  • Apply for the registration of a corporation that will replace management companies. This corporation will not be subject to the Companies Act.

When purchasing or buying a sectional unit it is imperative to take note of the following:
  • ​Financiers have superior voting rights in the corporation in the event the buyer is purchasing the property through mortgage/financing.
  • The law defines the responsibilities of the sectional unit owner at an individual level and at the corporate level of the collective owners.
  • The corporation, whilst being moved by the majority, can evict a troublesome tenant and or short-term board guest.
  • ​The management corporation can register a charge against a unit if the owner fails to remit service charge to the corporation kitty.
  • The corporation, upon request and payment of the necessary charges, has the obligation to provide information about a unit. Withholding of information by a corporation attracts a penalty of up to Kenya Shillings 250,000.

In conclusion, this legislation offers a solid basis on which to regularize apartments and town houses in Kenya. It provides a thorough framework that facilitates sectional unit acquisition, ownership and maintenance. The buyers of apartments and townhouses can now take pleasure in owning unique, autonomous titles while working together to oversee the maintenance of the shared property.

Further developments in the law are expected to manage emerging issues related to the application of the sectional property law.

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Arthur Wamae

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