SECTIONAL PROPERTY: Long- Term Leases.

INTRODUCTION

The property market is increasingly booming in Kenya and the prices are getting affordable by the day. Many Kenyans, opt for acquiring and selling properties as a safe way to secure their future and one of the properties is Sectional properties. Sectional property was introduced in Kenya for the subdivision of buildings into Units and owned by individuals and the Common property is owned by owners of the units as Tenants in common.

The concept of Sectional properties is also referred to as Condominium system. The word is Latin for “Con” for together and “dominium” for right of ownership therefore meaning “common ownership.” It entails the dividing the ownership of the real property erected on one parcel of property into horizontal layers.

The enactment of the Sectional Properties Act, 1987 attempted to provide a legal framework for long term leases and it became successful by introduction of the requirement of Sectional plans for issuance of title deeds. It was also based on the Registered Lands Act (RLA).

In addition, it brought about provision that the Companies Act (2015) does not apply to Corporation created. It shall be governed by provisions of Sectional Properties Act, 2020.
The incoming Sectional Properties Act 2020 which commenced on 28th December, 2020 repealed the Sectional Properties Act, 1987.

KEY CHANGES IN THE NEW SECTIONAL PROPERTIES ACT, 2020

1. The registrable titles to those leases with unexpired term of 21 years. This is applicable to freehold and Leasehold properties with unexpired residue term of not less than 21 years.

2. Creation of a statutory body to be termed as a Corporation.

3. Provides for division of building into units.

4. Corporation not to acquire or dispose of an interest in immovable property.

5. Conversion of long- term leases within Two (2) years registered before 28th December 2020.

6. Inclusion of a Dispute Resolution Committee to determine disputes.
If a party is dissatisfied with the determination of a committee, the party may appeal to court.

The Process of Conversion of Long- term Leases

We’re going to mainly focus on the Conversion of Long- term leases under the Sectional Property Act, 2020.

The Act brings about the simplification of the procedure of the conversion by the submission of Form SP 13 which is a MUTATION FORM.

Conversion of long-term leases that are sub-leases for apartments, flats, maisonettes, town houses or offices that were registered before the commencement of the Act are to be converted in virtue of the New Act and in line with the Land Registration Act 2012 within two years after 28th December 2020.

Timeline of the conversion.

No long term leases shall be registered after 10th May 2021. It is well advised to note, it is the deadline of the registration and not the whole conversion process that should be done by 10th May 2021.

If the conversion is not executed within the timeline, the Registrar shall put a Restriction on the land to prevent any further dealings in regards to the property. On that line, failure to adhere to this requirement, shall attract a fine of Kshs 250,000/- so it is prudent for the proprietor or the developer to act within the prescribed time.

Who can apply for the conversion?

The Proprietor, developer, management company or owner of a lease of a unit can make an application for replacement of title in Form LRA 97. For this to be effective, they shall attach the following documents;

• The sectional Plan
• Original title
• Long term lease
• Rent apportionment for the unit where applicable.

CONCLUSION.

Once a sectional plan is registered, the original registers shall be closed and new registers opened with respect to each of the units described in the plan. There will be no requirement to pay stamp duty if the same had been previously paid while registering the long – term lease.
It is judicious for any proprietor or developer to be informed on what entails the process of conversion.