This is part of a series of articles from the book: The ABC of REAL ESTATE investment in Kenya 

The rapidly escalating value of land and the ever rising cost of building materials have forced developers to shift from individual houses and maisonettes to flats and apartments. This not only increases occupancy density but also lowers unit prices. (Kobado 2009)

The law that governs the sale of apartments in Kenya is found in the sectional Properties Act, 1987 which was introduced "to provide for the subdivision of buildings into units being owned by individual proprietors and common property to be owned by the proprietors of the units as tenants-in common, and to provide for the use and management of the units and common property and for connected purposes" This Act shall apply only in respect of land held on freehold title or on a leasehold title where the unexpired residue of the term is not less than forty five (45) years.

 What is a purchase agreement and what does it contain?

Purchase agreement‖ means an agreement with a developer whereby a person purchases a unit or proposed unit or acquires a right to purchase a unit or proposed unit;

― it contains:

(a) the purchase agreement;

(b) the by-laws or proposed by-laws;

(c) any management agreement or proposed management agreement;

(d)any recreational agreement or proposed recreational agreement;

(e) the lease of the parcel, if the parcel on which the unit is located

is held under a lease and the certificate of sectional property.

(f) any charge that affects or proposed charge that will affect the

title to the unit or proposed unit e.g. if the land owner had borrowed money to construct the houses.

(g) the sectional plan or proposed sectional plan described below.

Which document is kept in the land office and what does it contain?

―sectional plan means a plan registered in a land registry which complies with the following requirements.

(a) Be described in the heading of the plan as a sectional plan;

(b) Delineate the external surface boundaries of the parcel and the location of the building in relation to them;

(c) Bear a statement containing those particulars as may be necessary to identify the title to the parcel;

(d) Include a drawing illustrating the units and distinguishing the units by numbers or other symbols;

(e) Define the boundaries of each unit;

(f) Show the approximate floor area of each unit;

(g) Have endorsed on it a schedule specifying in whole numbers the unit factor (there is a formula for calculating that) for each unit in the parcel;

(h) Be signed by the landowner;

(i) Have endorsed on it the address at which documents may be served on the Corporation / company selling the apartment.

(j) Contain any other particulars prescribed by the regulations.

On the registration of a sectional plan the Registrar (at the district lands office or Ardhi house) –

(a) shall close the register of the parcel described in it (meaning that you cant transact with the original title deed or lease certificate since the original title is cancelled to be replaced by the individual titles);

(b) shall open a separate register for each unit described in the plan

(c) shall on the payment of the prescribed fee, issue title deed for sectional property in respect of each unit meaning that the individual titles can therefore be easily transferred, charged or mortgaged and owners can manage their obligations directly, which enhances safety of their registered rights.

Rights to the common property

The common property and each unit on a sectional plan shall, have all such rights for the passage or provision of water, sewerage, drainage, gas, electricity, garbage, air and all other services of whatsoever nature.

A Management Company

The common areas are managed by a management company whose mandate is

(a) To keep in a state of good and serviceable repair and properly maintain the movable (e.g. generators) and immovable property (e.g. parking spaces, gym and swimming pools)

(b) To comply with notices or orders by any local authority or public authority requiring repairs to or work to be done in respect of the parcel. E.g. external paintings and getting approvals for repairs or modification of common areas, if necessary)

What if the apartments are registered as sub-leases under the Registration of Documents Act Chapter 285 of our laws?

Unfortunately, this arrangement bequeaths a bundle of rights subordinate to the head lease.

So if for instance the head lease holder (original owner of the land) defaults in payment of premiums or rates, the head lease can be determined whether the sub-lease holders met their obligations or not. If he defaulted in applying for the renewal of his head lease, the land can revert back to the Government, the rights of sub-lease holders notwithstanding. Therefore the apartment owners are tied to the head lessee for life. His mistakes of omission or commission impact on their ownership. They pay fees to him or to a company registered under the Companies Act to service obligations to the Commissioner of lands (read the Government).

And when the head lease is renewed, they have to redraw the individual sub-leases all over again…perhaps at an extra fee.

This becomes an endless cyclic routine. Worse, the apartment holders have limitations when selling, charging or mortgaging their units since any such transaction must be tied to the head lease. It can get quite complicated.

Sectional Property Titles is therefore the best security for flats and apartments.

 Reference:

Republic of Kenya (2009) The Sectional Properties Act No. 21 of 1987. Government Printer, Nairobi.

Mwenda Jasper N. (2001). Registration of properties in strata in Kenya. University of Nairobi.

Standard Newspaper (November 4 2009) Do you own a sectional property title for your flat? Julius Kobado

Business Daily (October 4, 2010) Sectional properties a safer option. Ibrahim Mwathane

The ABC  of REAL ESTATE investment in Kenya   “The Law, The Logic, The Math”

Click here to get your copy of the book.

Written by: Kariuki Waweru. BA (Land Econ) Hons, UoN, G.M.I.S.K (VEMS)

@kariukiwaweru               www.kariukiwaweru.com