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The Sectional Properties Act of Kenya, 2020 provides a means for units in buildings to be owned by individuals. The legislation also provides for ownership of common areas and the use and management of common areas.
An example is you can own a 2-bedroom unit in an apartment of 20 or more units.
In 2021, the Sectional Property Regulation was passed which made it possible to process a sectional title and hold it in your name.
The Sectional properties Act applies similarly for both foreign nationals and Kenyan citizens. The exception being that foreign nationals can only hold leasehold sectional titles for up to 99 years. Kenyan citizens can hold both leasehold sectional titles and freehold sectional titles. The Act provides that one can hold the title for more than 99 years.
Sectional Properties Act, 2020 Vs Past Unit Ownership Regimes
Before the passing of the SPA, the structure for ownership of units or apartments was through sub-leases.
A developer would buy a piece of land, construct it and then form a management company under the company act of Kenya. He then sells the units to buyers through sub-leases of 99 years.
With each purchase, the owner will grant them shares in the management company. After the entire unit is purchase, the developer would then handover the mother title to homeowners.
Problems with the previous regime
- The developer would not issue the share of the management company to the purchasers of units. This means the developer retained the ultimate ownership of the development.
- A developer would refuse to exit the company once all the units are sold.
- Some developers would forget to include the renewal clause on the contract for the sub-lease.
- Developers who took loans to complete construction would sometimes fail to clear their loans and put the units at risk of being repossessed.
How does SAP solve the above issues?
- Introduces sectional titles registrable for freeholds properties or leaseholds of over 21 years regardless of the nature of the title.
- Establishes a corporation which comprises all homeowners of units within an estate development. The corporation’s core mandate is to take care of the common areas of the Estate. The parking bays, walkways, garden areas, playgrounds and so forth. The advantage of the corporation is that it is not a company under the Companies Act. There are no filing fees or incorporation costs payable for its set up. Also, unit owners automatically become members by owning the unit. The developer doesn’t have to allot shares to them.
- It established a dispute resolution committee that determines disputes with the development between unit owners. This makes it cheaper and easier to resolve disputes.