Managing estates, gated communities and apartment blocks may be made easier due to the enactment of the Sectional Properties Act, 2020. The Sectional Properties Act, 1987, has been overhauled.
A sectional property allows ownership of individual units in buildings or real estate projects and simultaneous ownership of common areas. How is it possible to own an apartment block on the third floor of a building, for example?
Kenya’s real estate landscape has transformed over the years.
There has been an increase in the concept of gated communities.
In this concept, owners buy individual units or homes and jointly own the common areas such as playground, gardens and access ways.
They own these common areas through a company incorporated for that purpose.
Apartments follow the same trend.
Conventionally, ownership of such units has taken place in two main ways.
The first is by issuance of a defeasible title deed to the owner. If the property is of appropriate size, then some sellers have opted to sub-divide the units into separate parcels with individual title deeds.
A management company is formed to own the common areas jointly.
The second method happens when the seller forms a company to own the entire parcel and issues the buyers with long-term leases usually of 99 years.
These leases are deemed to be titles. Upon the expiry of the lease term, the company renews the same. A management company is formed to jointly own and manage the common areas.
Both methods have worked well.
The Sectional Properties Act 2020, provides an even easier and better way for persons to own such units.
While there is no much difference as the concept of owning the common areas jointly still applies, the Act provides statutory guidance for such transactions.
Owning property under this Act is a technical process that begins with the surveyor registering a sectional plan showing the list of owners.
Under the new law, a corporation is formed to manage the common areas. What I particularly like about this corporation is that it is specialised. The governance structure is well defined in the Act; its roles, responsibilities and powers are also defined by statute.
It doesn’t have to strictly adhere to the provisions of the Companies Act on management of corporations as it is a specialised corporation.
In my view, management and governance of gated communities and apartment blocks will be enhanced by this registration.
Under the conventional methods, management of the corporation had been subject to the Companies Act.
The second attraction of the new Act over the conventional systems is that this law provides some statutory rights to members.
These rights include the right to shelter, protection, and support, provision of water, gas and light.
The rights to the common areas is well set out, avoiding instances of disputes about the common areas.
The Act provides for a highly detailed conveyancing process, meaning the transaction and rights are well defined.
Gated communities, fractional homes and other real estate concepts can consider converting to ownership under the new Act due to the added attractions.
New real estate concepts ought to consider registration under this Act for its more detailed provisions.