7 Key Provisions of the Sectional Properties Act, 2020
The Sectional Properties Act, 2020 laws of Kenya (the “new law”) has effectively
repealed the Sectional Properties Act of 1987, laws of Kenya (the “repealed
law”).
The sectional properties law seeks to sub-divide buildings into units to be owned
by individual proprietors and common property to be owned jointly by the proprietors
as tenants in common.
The new law seeks to simplify the process of registration of sectional properties and
create an enabling environment for investors and property owners. It seeks to
guarantee the rights of property owners by conferring absolute rights to
individual unit owners over their units and vest in them the reversionary
interests thereto.
This will give the unit owners greater power and liberty to deal with their units as they
please and it is anticipated that their transactional ability to access
financing and dispose their units will be dramatically expanded. This will also
motivate lenders and financiers to offer credit facilities to the individual
unit owners as they may now charge the individual units directly without
requiring the consent of the developer and or the manager.
We highlight the salient features of the Sectional Properties Act, 2020 as below: –
1. Leasehold Tenure
The sectional properties law applies to land held on a freehold tenure or on land
held on leasehold tenure where the intention is to confer ownership. 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years required under the repealed law.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 a period of twenty-one years and above.
Related: Types of title deeds in Kenya
2. Conversion of Sub-Leases
The new law
further provides that all long term sub-leases intended to confer ownership on
a mansionette, apartment, flat, town house or office that were registered
before the new law shall be reviewed to conform with section 54(5) of the LRA
and the proprietors thereto shall be issued with certificates of lease. The provision
is meant to
transition all buildings to sectional status and guarantee the absolute rights
of the owners of such units to deal with the same without being subject to the
power and direction of the developer and or the management company.
This said review and transition of sub-leases shall be done within a period of two years
from the date of commencement of the new law. This will not entail a
transaction from scratch and an owner who has already paid stamp duty in
respect of the said sub-leases shall not be required to pay stamp duty during
the revision.
The process of conversion may be commenced by the developers, the management company or the
individual unit owner. If the developer is unwilling to surrender the mother
title for purposes of the conversion, the registrar may register a restriction
against the title to prevent any further dealings on it.
3. Registration and Mandate of the Management Corporation
Upon registration of a sectional property, the individual owners are constituted in
a Corporation which is responsible for management of the common property. The
new law provides that upon registration of the sectional plan, the registrar
shall issue a Certificate of Registration in respect of the Corporation. This
was not the case under the repealed law.
The new law mandates the Corporation to do all things to ensure the common property is well
managed and may engage the services of a property manager or any other person
to this end. The new law further mandates the Corporation to establish an
internal dispute resolution mechanism through a committee established under the Act to hear
and determine any disputes. It also empowers the Corporation to execute any of
its duties by the use of technology.
.4. Dispute Resolution
Under the repealed law, any disputes relating to the contravention of the by-laws of the
Corporation were referred to a tribunal established under the Landlords and
Tenants Act which was mandated to recover from an errant owner or tenant a
penalty not exceeding Kenya shillings twenty-five thousands. Under the new law,
disputes in relation to contravention of the by-laws are referred to the
Committee which is an internal dispute resolution mechanism of the Corporation
and without any prescribed limit as to the penalties to be levied.
Under the new law, in the event of non-compliance with an order of the Committee or if a
party is disgruntled with the decision of the Committee, both may apply to the
Environment and Land Court for enforcement of the order or in the case of an
appeal from the decision of the Committee as the case may be. The repealed law
provides that enforcement of an order of
the tribunal in the event of non-compliance would lie with the Resident
Magistrate Court and any right of appeal would be exercised at the High Court
of Kenya.
5. Registration And Removal Of Caution In Respect Of Unpaid Amounts
The Corporation may register a caution against the title to an owner’s unit for any
amounts due and unpaid by the owner, provided that upon payment of the amounts
due, the Corporation shall within thirty days of payment withdraw the caution.
The new law has prescribed the period within which the caution should be
withdrawn. The repealed law was silent on this.
6. Renting of Residential Units
Under the repealed law, an owner renting out their unit was required to disclose to the
Corporation the amount of rent chargeable to the unit as well as pay a deposit
to the Corporation for maintenance, repair and or replacement of the common
property. This is not a requirement under the new law which recognizes the
autonomy of an individual unit owner to deal with their individual unit as they
please independent of the common property and the mandate of the Corporation.
7. Termination of The Sectional Status Of A Building
Under the
new law, the sectional status of a building may be terminated by unanimous
resolution of the unit owners, the substantial all total destruction of the
building or pursuant to an order for compulsory acquisition and the Corporation
shall stand dissolved upon the termination of the said sectional property
status. Under the repealed law, the sectional status would only be terminated
by unanimous resolution or by an order of the Court. The Corporation was also
required to apply to court for an order winding up the affairs of the
Corporation.
Kindly get in touch with us on 0726982982 for any clarifications and assistance on the
above or
by contacting CM Advocates via +254 716209673