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Why Nairobi Landowners Must Convert to Sectional Titles: Understanding the Legal Requirement

Kenya's real estate sector has undergone significant transformation in recent years, driven by legislative reforms aimed at modernizing property ownership and management. One of the most pivotal changes is the enactment of the Sectional Properties Act, 2020, which has introduced a mandatory requirement for landowners, developers, and apartment owners to convert properties from long-term leases to sectional titles. This legal obligation, enforced through various gazette notices by the Ministry of Lands and Physical Planning, applies particularly to Nairobi and other urban areas across Kenya. This article explores the reasons behind this requirement, its implications, the conversion process, and why compliance is critical for property owners.

Understanding the Sectional Properties Act, 2020

The Sectional Properties Act, 2020 is a landmark legislation that replaced the Sectional Properties Act of 1987. The new law aligns with the Land Act, 2012 and the Land Registration Act, 2012, aiming to streamline property ownership in multi-dwelling units such as apartments, flats, maisonettes, townhouses, and commercial complexes. The Act introduces a modern framework for managing sectional properties, emphasizing clarity in ownership, enhanced property rights, and efficient dispute resolution.

A sectional title refers to a form of ownership where an individual owns a specific unit (e.g., an apartment or office space) within a larger property, along with a share of the common areas such as staircases, parking lots, and recreational facilities. Unlike long-term leases, which grant temporary rights to use a property, sectional titles confer full ownership of a unit, registered under a separate title deed.

The Act mandates that all properties previously registered under long-term leases or sub-leases, particularly in multi-dwelling developments, must be converted to sectional titles. This requirement is not optional and is being enforced through directives issued by the Ministry of Lands and Physical Planning.

Why the Conversion Is Mandatory

The transition from long-term leases to sectional titles is driven by several key objectives, each addressing longstanding challenges in Kenya's real estate sector:

1. Alignment with Constitutional and Legal Reforms

The Constitution of Kenya, 2010 and subsequent land laws emphasize the need for clear, secure, and equitable property ownership. Long-term leases, which were common in the past, often led to ambiguity in ownership rights, especially in multi-dwelling units. Converting to sectional titles ensures that each unit owner has a distinct title deed, providing legal certainty and aligning with the constitutional principle of secure land tenure.

2. Protection of Property Owners' Rights

Sectional titles offer stronger legal protection compared to leases. A sectional title deed grants perpetual ownership of a unit, which can be transferred, sold, or inherited without the restrictions often associated with leases. This enhances the value of the property and provides owners with greater control over their investment.

3. Improved Management of Common Areas

In multi-dwelling developments, common areas such as lobbies, elevators, and gardens are critical to the property's functionality. Under the old lease system, disputes over the management and maintenance of these areas were common. The Sectional Properties Act establishes clear guidelines for the creation of management corporations, which are responsible for maintaining common areas, resolving disputes, and ensuring compliance with property regulations.

4. Compliance with Urban Development Goals

Nairobi, as Kenya's capital and a rapidly growing urban center, faces increasing demand for housing and commercial spaces. The conversion to sectional titles supports the government's urban development agenda by promoting efficient land use, reducing title disputes, and facilitating access to financing for property development. It also aligns with the National Land Use Policy, which seeks to optimize urban land resources.

5. Response to Gazette Notices

The Ministry of Lands and Physical Planning has issued several gazette notices mandating the conversion of long-term leases to sectional titles. These notices specify deadlines and procedures for compliance, particularly targeting Nairobi and other urban areas with high concentrations of multi-dwelling units. Non-compliance may result in legal penalties, including fines or restrictions on property transactions.

The Conversion Process

Converting a property from a long-term lease to a sectional title involves several steps, as outlined by the Sectional Properties Regulations, 2021. The process requires coordination between landowners, developers, surveyors, and legal professionals. Below is an overview of the key steps:

  1. Engage a Licensed Surveyor: A registered surveyor must prepare a sectional plan, which includes detailed drawings of the units, common areas, and the overall property layout. The plan must comply with the standards set by the Land Survey Act and the Sectional Properties Act.

  2. Submit the Sectional Plan: The sectional plan, along with the original title deed and other required documents, must be submitted to the Land Registry for approval. The registry verifies the plan's accuracy and ensures compliance with legal requirements.

  3. Obtain Consent from Relevant Parties: For properties with multiple owners or leaseholders, consent from all parties may be required. This includes obtaining approval from the head lessor (if applicable) and ensuring that all stakeholders are informed of the conversion.

  4. Pay Applicable Fees: The conversion process involves payment of statutory fees, including stamp duty, registration fees, and surveyor charges. The exact costs depend on the property's value and the complexity of the sectional plan.

  5. Issuance of Sectional Title Deeds: Once the sectional plan is approved and all requirements are met, the Land Registry issues individual title deeds for each unit. These deeds reflect the owner's exclusive ownership of their unit and a proportional share of the common areas.

  6. Establish a Management Corporation: For multi-dwelling properties, a management corporation must be formed to oversee the maintenance and governance of common areas. This body is legally recognized under the Sectional Properties Act and operates according to a set of by-laws.

Implications for Nairobi Landowners

The mandatory conversion to sectional titles has significant implications for landowners, developers, and apartment owners in Nairobi:

  • Enhanced Property Value: Properties with sectional titles are generally more marketable, as they offer clear ownership rights and are easier to transfer or use as collateral for loans.

  • Legal Compliance: Failure to comply with the conversion requirement may lead to penalties, including restrictions on selling or transferring the property. Non-compliant properties may also face challenges in obtaining financing or insurance.

  • Improved Dispute Resolution: The establishment of management corporations under the Sectional Properties Act provides a structured framework for resolving disputes among unit owners, reducing conflicts over common areas and maintenance responsibilities.

  • Access to Financing: Banks and financial institutions prefer properties with clear title deeds, as they reduce the risk of legal disputes. Sectional titles make it easier for owners to secure mortgages or loans against their properties.

Challenges in the Conversion Process

While the benefits of converting to sectional titles are clear, the process is not without challenges. Some of the common obstacles include:

  • High Costs: The fees associated with hiring surveyors, preparing sectional plans, and paying stamp duty can be substantial, particularly for small-scale property owners.

  • Complex Documentation: The conversion process requires extensive documentation, including land surveys, title deeds, and consents from multiple parties. Errors or delays in documentation can prolong the process.

  • Resistance from Leaseholders: In some cases, leaseholders may resist the conversion due to concerns about costs or changes in property management structures.

  • Lack of Awareness: Some property owners may not be fully aware of the legal requirement or the steps involved in conversion, leading to delays in compliance.

To address these challenges, landowners are encouraged to work with experienced legal and surveying professionals who can guide them through the process and ensure compliance with all regulations.

Why Compliance Is Critical

Compliance with the Sectional Properties Act is not just a legal obligation; it is a strategic move to protect property investments and align with Kenya's evolving real estate landscape. By converting to sectional titles, Nairobi landowners can:

  • Secure their ownership rights and enhance the value of their properties.

  • Avoid legal penalties and restrictions on property transactions.

  • Contribute to the modernization of Kenya's real estate sector.

  • Benefit from improved property management and dispute resolution mechanisms.

The Ministry of Lands and Physical Planning has emphasized that the conversion process is a priority, and enforcement measures will intensify in the coming years. Landowners who fail to comply risk facing significant legal and financial consequences.

Conclusion

The shift from long-term leases to sectional titles under the Sectional Properties Act, 2020 marks a significant step toward modernizing property ownership in Kenya. For Nairobi landowners, developers, and apartment owners, this transition is not optional but a mandatory requirement backed by law. By understanding the legal framework, engaging professionals, and acting promptly, property owners can navigate the conversion process successfully and unlock the full potential of their investments.

For assistance with the conversion process or to learn more about your obligations under the Sectional Properties Act, contact us at +254 716 808 104 or info@lawguide.co.ke.