Introduction
The development of housing estates on unified titles has historically presented numerous challenges, particularly concerning the management of communal facilities. Traditionally, developers would establish a management company responsible for these facilities, with this entity often holding the land title for the entire development. Purchasers of individual units—whether they be townhouses, apartments, or office spaces—would receive a lease specific to their unit, acting as their title document. Furthermore, each owner would obtain a share in the management company, which held the overarching title.
However, complications have arisen when developers failed to transfer the “mother” title to the management company or retained shares within it. Additionally, previous structures lacked formal methods for georeferencing individual units, leading to confusion and potential disputes.
Recognizing these challenges, tThe Sectional Property Act 2020 was enacted and effectively repealed the Sectional Properties Act of 1987 laws of Kenya, marking a significant evolution in property law. This Act facilitates direct ownership by allowing buyers within a development to acquire conventional titles for their units. It ensures that shared amenities like clubhouses, pathways, and gyms are co-owned through an entity introduced by the Act, known as the Management Corporation.
Under this new legislation, a unit owner receives a certificate of title—indicating freehold or leasehold ownership—reflecting their share in the communal property. Owners are bound by the Management Corporation’s by-laws, which are established by the majority of unit purchasers.
Key Provisions of the Sectional Property Act
Enacted on December 28, 2020, the Sectional Properties Act repealed the outdated Sectional Properties Act of 1987. This legislative update was driven by several factors:
- Difficulties with the application of the old law necessitated an initial conversion of the land law regime.
- This is in alignment with the Constitution of Kenya, 2010, which sought to integrate and standardize the country’s land laws.
- Developments in the banking and construction sectors that had surpassed outdated legal principles.
- A need for clearer regulations for stakeholders in the development of sectional properties.
Key Provisions of the Sectional Properties Act, 2020
- Leasehold Tenure: The new law has reduced the leasehold period to twenty-one years from the forty-five years required under the repealed law. This enlarges the purview of the sectional properties laws to extend to proprietors of all long-term leaseholds, which are defined in law as leases for twenty-one years and above.
- Integration with the Land Registration Act, 2012: The new law expressly refers to the Land Registration Act, 2012 (“LRA”), and all dealings in or dispositions of land shall be registered under the LRA.
- Conversion of Sub-Leases: Existing long-term sub-leases that confer ownership must be revised within two years to align with the LRA, ensuring owners can deal directly with their properties without additional stamp duty.
- Management and Governance by the Corporation: Upon registration, a Corporation is formed, charged with managing common property and resolving disputes through an internal committee. This represents a shift from the repealed law, where an institutional manager was typically required.
- Enhanced Dispute Resolution: The new law introduces a more robust internal dispute resolution mechanism, allowing for appeals to the Environment and Land Court if necessary.
Important Considerations for Sectional Unit Purchasers
- Buyers using financing may find that financiers have enhanced voting rights within the corporation.
- The law clearly defines the obligations of individual unit owners and the collective responsibilities within the corporation.
- The corporation can take actions such as evicting troublesome tenants or imposing charges on units for unpaid service fees.
- Failure by the corporation to disclose necessary information about a unit can lead to significant penalties.
Conclusion
The Sectional Properties Act 2020 provides a comprehensive framework for apartment and townhouse ownership in Kenya. It simplifies the acquisition and management of sectional units, granting owners more autonomy and facilitating collaboration in maintaining shared spaces. As the law continues to evolve, further enhancements are anticipated to address emerging challenges in sectional property applications.
For detailed guidance on how to navigate these changes, contact Njaga & Co Advocates. Our experienced team is ready to provide comprehensive legal support tailored to the new sectional property landscape.
