Sectional Property Act 2020
The repealed Sectional Property Act of 1987 was unpopular to developers because of its harsh provisions favouring the property’s purchaser. Before the enactment of the Sectional Properties Act of 2020, developers of off-plan townhouses and sectional units used to register the specific units under long term leases which amounted to ownership. The current law is appealing and attractive to the developers due to modification of harsh provisions such as the one that required the property buyers to deposit the initial amount with a trustee instead of paying it directly to the developer.
The Sectional Properties Act, 2020 applies in respect of land held on freehold title or on leasehold title where the unexpired residue of the term is not less than twenty-one (21) years, and there is an intention to confer ownership. The law requires registration of sectional plans, which ought to describe two or more units and be presented to the Land Registrar.
The new law protects the purchaser by establishing a corporation that allows the unit owners to manage the apartment, flat or townhouses. The Act provides that a sectional plan should be accompanied by an application for registration of a corporation and a list of the owners of the units, which can be updated from time to time. Once a sectional plan is registered, the registrar is required to close the register of the mother title of the land where the sectional property sits and open a separate register for each unit described in the sectional plan.
The registrar will then issue a certificate of title if the property is freehold or a certificate of lease if the property is leasehold in respect of each unit of the sectional plan. The owners will then acquire shares in the formed corporation to own the common spaces as tenants in common in shares proportional to the unit ownership. The above law streamlines owning sectional properties in Kenya. Consequently, more investors will venture into the real estate business as developers of sectional units, improving the economy and making it easy to own homes in Kenya. The unit owners will also be able to take a loan using the certificate of ownership as security, hence boosting financial inclusion in the country.