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<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on May 27, 2025, 9:24 pm</div><div id="pl-6061" class="panel-layout" ><div id="pg-6061-0" class="panel-grid panel-no-style" ><div id="pgc-6061-0-0" class="panel-grid-cell" data-weight="1" ><div id="panel-6061-0-0-0" class="so-panel widget widget_sow-editor panel-first-child panel-last-child" data-index="0" data-style="{&quot;background_image_attachment&quot;:false,&quot;background_display&quot;:&quot;tile&quot;,&quot;background_image_size&quot;:&quot;full&quot;,&quot;background_image_opacity&quot;:&quot;100&quot;,&quot;border_thickness&quot;:&quot;1px&quot;}" ><div
			
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	The real estate landscape in Kenya has undergone a transformative shift with the enactment of the Sectional Properties Act, 2020 (SPA), which repealed the outdated Sectional Properties Act of 1987. This legislation, signed into law on December 11, 2020, by President Uhuru Kenyatta, has revolutionized the way apartment ownership is structured, offering greater clarity, security, and autonomy for buyers. By addressing longstanding challenges in property ownership, particularly for apartments, flats, maisonettes, townhouses, and office units, the SPA aligns with modern land laws, including the Constitution of Kenya 2010, the Land Act No. 6 of 2012, and the Land Registration Act No. 3 of 2012. This article explores how the SPA impacts ownership rights for sectional titles and outlines its key benefits for apartment buyers in Kenya.
A sectional property, often referred to as a "strata property" or "condominium" in other jurisdictions, is a form of property ownership where an individual owns a specific unit (e.g., an apartment) within a larger development while sharing ownership of common areas—such as hallways, parking bays, gardens, recreational facilities, and driveways—with other unit owners as tenants in common. The SPA provides a legal framework for dividing buildings into individually owned units, each with its own title deed or certificate of lease, depending on whether the land is freehold or leasehold. This is a significant departure from the previous regime, which relied heavily on sub-leases and management companies.
Under the old system, developers would purchase land, construct a block of apartments, and form a management company under the Companies Act of Kenya. Buyers received long-term sub-leases (typically 99 years) derived from the developer’s "mother title," along with shares in the management company. This structure created dependency on the mother title, exposing buyers to risks such as developer mismanagement, fraud, or repossession if the developer defaulted on loans. The SPA addresses these issues by granting buyers independent sectional titles, thereby enhancing their ownership rights and control over their units.
The SPA introduces several critical provisions that redefine apartment ownership in Kenya:
1. Individual Ownership with Sectional Titles:
- The Act allows buildings to be subdivided into units, each with its own certificate of title (for freehold land) or certificate of lease (for leasehold land with an unexpired term of at least 21 years). This ensures that buyers have direct ownership of their units, independent of the developer’s mother title.
- The title includes a proportionate share of the common property, clearly outlined in the sectional plan, which is prepared by a registered surveyor and must be geo-referenced to meet modern land registration standards.
2. Mandatory Conversion of Long-Term Leases:
Long-term sub-leases (21 years or more) registered before December 28, 2020, that were intended to confer ownership must be converted into sectional titles by December 28, 2022. This process, which can be initiated by developers, management companies, or unit owners, does not require additional stamp duty if it was paid during the initial sub-lease registration.
3. Establishment of a Corporation:
- Upon registration of a sectional plan, a Sectional Properties Corporation (SPC) is automatically formed, comprising all unit owners. Unlike management companies under the Companies Act, the SPC is regulated by the SPA, eliminating incorporation costs, filing fees, and tax obligations. The SPC is responsible for managing common areas, such as parking, walkways, and recreational facilities, and can appoint a property manager or use technology to execute its duties.
- The SPC establishes bylaws to govern the operation and maintenance of common areas and includes an internal dispute resolution committee to address conflicts among unit owners, reducing the cost and complexity of legal proceedings.
4. Protection Against Developer Misconduct:
- The SPA prohibits developers from selling units without a registered sectional plan, ensuring that buyers receive proper title documents. It also prevents developers from constructing additional buildings on a plot after selling units, protecting buyers from misleading promises about open spaces.
- Developers must provide prospective buyers with critical documents, including the sale agreement, bylaws, management agreement, sectional plan, and details of any charges or encumbrances on the property. This enhances transparency and safeguards buyers from unforeseen liabilities.
5. Simplified Transactions and Financing:
- Sectional titles can be transferred in the same manner as land, eliminating the need for cumbersome lease documents. This simplifies the process of selling, transferring, or bequeathing units.
- Individual titles enable owners to use their units as collateral for loans, making it easier to secure financing from banks and other lenders.
6. Regulation of Common Property:
- Common areas are jointly owned by unit owners, and their share is noted in the title. The Act ensures that common property cannot be sold or auctioned without the consent of all unit owners, providing additional security.
- Each unit is treated as a separate parcel of land for the assessment of rates and ground rent, making owners directly responsible for these payments.
7. Dispute Resolution and Termination:
- Disputes over bylaws or management are handled by the SPC’s internal committee, with appeals or enforcement actions referred to the Environment and Land Court. This contrasts with the previous regime, where disputes were escalated to the Resident Magistrate Court or High Court.
- Sectional property status can be terminated by unanimous resolution of unit owners, substantial destruction of the building, or compulsory acquisition by the government, with the SPC dissolving upon termination.
The SPA offers numerous advantages for apartment buyers, empowering them with greater control, security, and flexibility in property ownership:
a.) Enhanced Ownership Rights:
- Buyers receive independent sectional titles, granting them full ownership of their units without reliance on the developer’s mother title. This eliminates risks associated with developer defaults or mismanagement, such as repossession by banks due to unpaid developer loans.
- For Kenyan citizens, titles can be freehold or leasehold, while foreign nationals can hold leasehold titles for up to 99 years, providing clarity for all buyers.
b.) Simplified Transactions:
The ability to transfer sectional titles like regular land simplifies the process of selling, transferring, or inheriting units. Buyers no longer need developer approval or complex lease extensions, making transactions more efficient and secure.
c.) Improved Access to Financing:
Sectional titles serve as clear collateral, enabling buyers to secure mortgages or loans more easily. Banks are more willing to lend when charges can be registered directly against individual titles, enhancing buyers’ financial flexibility.
d.) Greater Transparency:
The SPA mandates full disclosure of encumbrances, charges, or loans on the property, ensuring buyers are fully informed before purchase. This reduces the risk of hidden liabilities and promotes trust in real estate transactions.
e.) Protection of Common Property:
Buyers gain a proportionate share in common areas, which are managed by the SPC. The Act ensures that common property cannot be sold without collective consent, safeguarding shared spaces like gardens and parking areas.
f.) Cost Efficiency:
The elimination of management companies under the Companies Act reduces incorporation and operational costs. Buyers benefit from lower purchase costs, as they are not responsible for the vendor’s legal fees unless otherwise agreed. Additionally, no stamp duty is required for converting existing sub-leases into sectional titles.
g.) Dispute Resolution and Management:
The SPC’s internal dispute resolution committee offers a cost-effective and accessible mechanism for resolving conflicts, reducing the need for expensive litigation. The SPC’s management of common areas ensures professional administration of shared spaces, enhancing the living experience.
h.) Support for Urban Development:
By promoting vertical development, the SPA optimizes land use in high-density areas, increasing the availability of housing units. This is particularly beneficial for urban dwellers seeking affordable apartments in cities like Nairobi.
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