Ownership of sectional property involves the subdivision of a building into two or more units, with each unit having a sectional title owned by different persons. A sectional plan is prepared, which lays out a description of the sectional property, the parcel on which it situated as well as the units therein.
Sectional titles are commonly used in vertical multi-level developments such as apartments, flats and offices as well as maisonette and townhouses where the title is held under long-term subleases. The concept of sectional property is not new in Kenya, having been in existence under the Sectional Property Act, 1987 (Act No. 21 of 1987). The Sectional Properties Act, 1987 was recently repealed and replaced by the new Sectional Property Act, 2020 (Act No. 21 of 2020) (the “Act”).
The new Act came into force on 28th December 2020. The Act seeks to align the registration regime for sectional property with the 2010 Constitution, and the Land Act and Land Registration Act of 2012. The Act simplifies and modernizes the process of registration and ownership of sectional property.
The Act provides for the division of buildings into units to be owned by individual owners with the common property to be owned by owners of the units as tenants in common. It also provides for the use and management of the units and common property. UNITS Under the Act, sectional property is to be registered and owned as Units.
A Unit is a space situated within a building and described in a sectional plan by reference to floors, walls and ceilings within the building and include its proportionate share in the common property. The building should be divided into two or more units as described in a sectional plan.
The sectional plan is prepared by a surveyor from a building plan duly approved by the relevant county government, georeferenced and signed by the Director of Survey. The application for registration of the sectional plan is accompanied by an application for registration of the corporation and a list of the persons who are the owners of the units in the parcel. On the registration of a sectional plan, the register of the parcel described in the plan is closed and separate registers for each unit in the plan are opened.
The Registrar issues a Certificate of Title, if it is freehold property, or a Certificate of Lease, if it is leasehold property, in respect of each unit of the sectional property. The sectional title includes the Units proportionate share in the common property.
The Common Property is that part of the parcel not comprised in a Unit shown in a sectional plan. The common property is apportioned to the owners of the units and the share indicated in the title document issued for the unit. The common property is held by the owners of all the units as tenants in common in shares proportional to the unit factors for their respective units. Any dealings or disposition affecting the common property should be approved by a unanimous resolution of the Corporation.
A Corporation is automatically registered upon registration of a sectional plan under the name “The Sectional Properties Owners, Sectional Plan No. … … … (the number given to the plan)”. The Registrar issues a certificate of registration of the corporation. The members of the Corporation are the owners of the units comprised in the sectional plan. It should be noted that the Corporation created under the Act is distinct from the traditional company created under the Companies Act.
The Corporation created under the Act is regulated in accordance with the Act and the Companies Act, 2015 will not be applicable to the Corporation. The Act creates a separate legal regime for the Corporation created under the Act distinct from a company created under the Companies Act, 2015. The duties and obligations of the Corporation are set out in the Act.
The Corporation will have all such powers as are reasonable necessary to carry out its duties but cannot carry out any trading activities. The Corporation is required to make by-laws to provide for the control, management and administration of the units, the movable and immovable property of the Corporation and the common property and for establishment of a Committee. Where there are no by-laws made, the by-laws specified in the regulations to the Act shall be the by-laws of the Corporation.
Where the premises in a building are rented for residential or commercial purposes to a tenant and the premises are not included in the sectional plan, such premises cannot be sold until the sectional plan that includes those premises is registered. In the case of long term sub-leases that are intended to confer ownership of an apartment, flat, maisonette, town house or an office that were registered before the commencement of the Act, the sub-leases are to be reviewed to conform to section 54 (5) of the Land Registration Act, 2012, on geo-referencing, within two (2) years of the commencement to the Act. The conversion process may be initiated by the developer, management company or an owner of a unit. No additional stamp duty will be payable for the conversion where the owner had already paid stamp duty.
The Ministry of Lands recently issued a public notice to the effect that the Lands Registrar shall no longer register long-term leases supported by architectural drawings with effect from 10th May 2021. It is therefore imperative that you ensure that your sectional titles are in conformity with the Act to avoid any potential legal hurdles, penalties and losses in future. We can assist in the registration of sectional plans and obtaining the sectional title. We also offer support in the conversion of existing long-term subleases for apartments and offices to comply with the Sectional Property Act. Do not hesitate to contact us for assistance.
For more information, please contact our corporate team through email info@bellmacconsulting.com
