SECTIONAL PROPERTY:

REGISTRATION, MANAGEMENT AND TERMINATION

A sectional title or can be held both on land held in freehold and leasehold. Section 2 of the Act
provides that application of the Act is exclusive both to land held on freehold and leasehold
where the unexpired residue is for a term not less than 45 years.1

1. REGISTRATION

REGISTRATION OF SECTIONAL PLANS AND UNITS

In Kenya the governing statue as regards sectional properties is the Sectional Properties Act, No
21 of 1987. The preamble describes this Act as:

An Act of Parliament to provide for the division of buildings into units to be owned by
individual proprietors and common property to be owned by 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.

The concept of sectional property entails the subdivision of a building into two or more units,
following which every unit will be acquired by different persons. There must be a sectional plan,
which lays out a description of the sectional property, the parcel on which it situates as well as
the units therein. This plan must be registered by the Land Registrar. At Section 4, the Act
provides that a sectional plan cannot be registered unless it describes two or more units. This
Section also provides that the sectional plan must be presented for registration in quadruplicate.2

Section 5 provides that once a sectional plan is registered, the Registrar closes the register of the
parcel described in it, and opens a separate register for each unit. The register referred to under
the Sectional Properties is the same as that maintained under Section 7 of the Land Registration

1
Sectional Properties Act, no 21 of 1987
2
ibid, s 4(2).

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Act 2012 (LRA).3 According to Section 104 of this Act, upon its commencement, a register
maintained under any of the repealed Acts becomes the land register for the corresponding
registration unit established under the LRA.

A title deed is then issued in respect of each unit, subject to the payment of a prescribed fee.
Therefore, the owner of each unit will have their own separate title. The Title Deed is issued
under the Registered Land Act (repealled). However, pursuant to Section 105 of the LRA, it shall
be deemed to be a certificate of title or certificate of lease as the case may be. The Section
provides that:

If the title to a parcel of land is comprised in a grant or certificate of title registered under the
repealed Registered Land Act, the grant or certificate of title shall be deemed to be a
certificate of title or certificate of lease, as the case may be, issued under this Act. (LRA)

All interests affecting the parcel on which the sectional property is erected, are noted on the
register. Once the register of the parcel is closed, the interests shall be endorsed on the new
registers opened in respect of each unit. The interests are also endorsed on the deed of sectional
property issued to each unit owner. (See annexure) According to Section 5(6), upon the
registration of a unit, that unit becomes capable of being transferred, charged or leased.

3
Land Registration Act 2012, s 54(4).

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SECTIONAL PLAN REGISTER

3
UNIT REGISTER FOR ABSOLUTE TITLE

4
UNIT REGISTER FOR LEASEHOLD TITLE

The Sectional Properties Act provides that each register must only refer to one unit. 4 The only
land that can be referred to in the register is the share in common property that is apportioned to
the owner of that unit. Common property refers to that property held by the owners of all the
units as tenants in common.5

Section 9 sets out the contents that must be featured in a Sectional plan. A sectional plan must be
signed by the proprietor. The heading of the plan must clearly describe it as a sectional plan.
Further, the plan must describe the external boundaries of the parcel of land on which the
building sits, as well as the location of the building in relation to those boundaries. The
boundaries of each unit must also be defined. The plan must show the approximate floor area aid
each unit, and have a drawing that illustrates the units. The units may be distinguished by
numbers or symbols. Finally the plan must bear a statement containing any particulars necessary
to identify the title to the parcel. The Act requires the Registrar to submit to the local authority of
the area in which the parcel is located, a copy of the registered sectional plan. This must be done
within twenty-one days from the day the sectional plan is registered.6

4
Sectional Properties Act 2012, s 5(3).
5
ibid s 6(2).
6
ibid s 9(3).

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Section 11 provides for various certificates that must accompany the sectional plan during
registration. The proprietor of sectional property must obtain a certificate of a surveyor as
defined under the Survey Act (Cap. 299). This certificate will state that the structure shown on
the plan is within the external surface boundaries of the parcel which is the subject of the plan. If
the gutterings of the building project beyond the external boundaries, there must be as easement
granted as an appurtenance of the parcel. There must also be a certificate from the local
authority, indicating its approval of subdivision of the building into units.

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 2. MANAGEMENT

MANAGEMENT COMPANY(CORPORATION)

Part III of the Sectional Property Act 1987 deals with a significant feature of sectional properties
which is management of the sectional units through the establishment of a Corporation.

Upon registration of a sectional plan, there is constituted a Corporation whose name constitutes
the owner’s name the sectional plan registration number. 7 The corporation is to be governed by
the Sectional Properties Act and the regulations thereto.8 Noteworthy, the Act excludes
application of the Companies Act to the Corporation.9

Composition, duties and powers of the Corporation.

Composition

The Corporation shall consist of all persons:

 who are the owners of units in the parcel to which the sectional plan relates; or
 who are entitled to the parcel when the sectional arrangement is terminated under the
Act.10

Duties of the Corporation.

The Corporation shall:11
 Control, manage, and administer the common property and do all things reasonably
necessary for the enforcement of the by-laws;
 do all things reasonably necessary for the enforcement of any lease or licence under
which the land is held;
 keep the common property in a state of good repair;
 pay the premiums in respect of any policies of insurance effected by it;
 effect such other insurance as it is required by law to effect or as it may consider
expedient;

7
Sectional Properties Act, S 17(1).
8
Ibid, S 17(4).
9
Ibid, (5).
10
Ibid, S 17 (2).
11
Ibid , S 20.

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  comply with any notice or order duly served on it by any competent local authority or
public body requiring repairs to, or work to be performed in respect of, the land or any
building or improvements;
 unless by unanimous resolution all the proprietors otherwise resolve, insure and keep
insured buildings and other improvements on the parcel against fire; and
 carry out any duties imposed on it by the by-laws;

Further, the corporation is required to establish and maintain fund for administrative expenses.12

Powers of the Corporation

The Corporation shall have power to make by-laws/ rules .However, the Corporation is
proscribed from carrying any trading activities.13There shall also be a board of management
responsible for the appointment of institutional manager to perform such functions as may be
delegated to him by the Corporation. Persons eligible for the appointment as an institutional
manager are:

 an accountant registered under the Accountants Act (Cap. 531) who has held a practising
certificate for a period of not less than five years or an accountancy firm that has had an
office in Kenya for period of not less than five years;
 a person registered as an estate agent under the Estate Agents Act; and
 an advocate.

12
Sectional Properties Act, S 20(2)(a).
13
Ibid section 21,26 and 29.

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Summary process of the appointment of the Board, Institutional Manager and the interval
of such appointments.

90 days from the day 50% of residential units

are sold; or
Developer convenes a 108 days from the day that the first residential
Corporation meeting
to elect the Board
unit is sold whichever is sooner.

Not more than twenty-eight days after its

Board appoints its
election
Instiitutional Manager

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Insurance of sectional property

Prior to the registration of a sectional plan, the developer is mandated by the Act to insure a
purchaser of such a unit against: loss or damage by fire and other perils prescribed in the by-laws
and damages in an action for occupier’s liability against either the developer, unit owner or the
Corporation. Additional perils can be covered besides those provided in the Act or the by-laws.14

Upon the registration of the sectional plan, the insurable interest in the units and the common
property passes to the Corporation. However, where no insurance had been taken on the units
and common property, the corporation will undertake to take out an insurance cover.15

The corporation has a duty to maintain insurance policies until an institutional manager is
appointed.16

The insurance must provide that upon the destruction or damage and replacement and repair of
the insured property, no deduction shall be made from the settlement for depreciation of the
property.17

The insurance of the additional perils covered, besides those provided in the Act or the by-laws
may be continued by the Corporation, unless it is prohibited from doing so by a resolution passed
at a properly convened meeting of the Corporation.18

The by-laws should designate an insurance trustee who shall receive any payment by an insurer
under a policy of insurance. Where an insurance trustee is not provided for in the by-laws, the
payments will be made to the corporation to repair or replace the destroyed or damaged unit or
the common property. This is notwithstanding the terms of the policy.19

Upon damage caused to a building, the Court may make orders for giving effect to the scheme,
including orders directing the application of insurance money received by the Corporation in
respect of damage to the building.20

14
Section 40(1)
15
Ibid, (2)
16
Sectional Properties Act, S 40(3) and (4),
17
Ibid, (5),
18
ibid , (6),
19
Ibid, Section 40(7),
20
Section 54(3)(a),Ibid

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Notwithstanding the Insurance Act or any other policy of insurance, where insurance policy is
placed by both a developer or a body corporate, that placed by the developer or the body
corporate is deemed to be first loss insurance. The other placed by the owner of the unit in
respect to the same property, already paid by the developer or body corporate is deemed to be
excess insurance.21

Upon making a request in writing from an owner or a person authorized in writing by an owner
or the chargee of a unit, a corporation or an institutional manager, will issue copies of the
policies of insurance placed by the developer or the Corporation. This is subject to the payment
of such charge as is prescribed in the by-laws.22

Sale of a residential unit in a sectional property

Section 46, Sectional Properties Act.
Provides for the procedure and documents required to effect the sale of a Sectional Residential
Unit. The developer is required to submit the following documents to the purchaser depending
on whether the property is sold developed or off-plan;
a) the purchase agreement
b) by laws or proposed by-laws
c) any management agreement or proposed management agreement
d) any recreational agreement or proposed recreational agreement
e) lease of the parcel where the sectional unit sits on is held under a leasehold interest, and
the certificate of sectional property as provided for under section 5 (1) (c)
f) any charge that affects or proposed charge that will affect the unit or proposed unit, or
with respect to that charge a charge notice as provided for under subsection 2
g) the sectional plan or proposed sectional plan
The certificate of sectional property required under subsection 1 (e) is the title deed of sectional
property issued upon registration of sectional plans under section 5 (1) of the Act.
Contents of the Notice of Charge
Section 46 (2)

21
Section 40(8),Ibid.
22
Section 41,Ibid

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The developer is required to deliver to the purchaser a notice of charge where the purchaser
intends to register a charge over the sectional unit. The Notice shall contain;
a) maximum principal amount available under the charge
b) maximum monthly payment payable under the charge
c) the amortization period
d) the term
e) the interest rate or formula for calculating the interest rate, if any, for determining the rate
f) Prepayment privileges, if any.
Rescission of the Purchase agreement
Section 46 (3), (4) and (5)
A purchaser of a unit can without incurring any liability rescind the purchase agreement within
10 days (ten) of execution of the agreement by delivering a written notice to the developer.
However, the purchaser may not rescind the agreement if all the documents required under
subsection (1) have been delivered within not less than 10 days (ten) prior to the execution of the
purchase agreement by both parties to it.
If the purchase agreement is rescinded by the purchaser under subsection (3), the developer is
required within 10 days of receiving of the written notice of rescission from the purchaser to
return all the money paid by the purchaser with respect to the unit.

Contents of a purchase agreement

Section 47
The developer is required to draft the agreement and the following are the statutory requirements
that must be included in the purchase agreement.
a) Notification of rescission clause.
Required to be printed preferable in red ink on the front cover page the following clause.
“The purchaser may, without incurring any liability for doing so, rescind this agreement
within ten days of its execution by the parties to it unless all of the documents required to
be delivered to the purchaser under section 46 of the Sectional Properties Act, 1987 have
been delivered to the purchaser not less than ten days prior to the execution of this
agreement by the parties to it.”
b) Description, drawing or photograph showing.

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 i. The interior finishing of all major improvements to the common places within the
building
ii. The recreational facilities, equipment and other amenities to be used by the person
residing in the units
iii. The equipment to be used for the maintenance of the common property
iv. The location of walkways, roadways, fences, parking areas and recreational
facilities
v. The landscaping
vi. The exterior finishing of the building as it will exist when the developer finishes
his obligations under the purchase agreement
c) The monthly payable amount with respect to the unit
d) The unit factor of a residential unit and the basis of the unit factor apportionment.

Rental of residential units

Before an owner of a residential unit can rent their unit, they must give written notice to the
Corporation setting out their intention to rent the unit. This is enshrined in section 51(1) of the
Sectional Properties Act No. 21 of 1987. The written notice must contain the address at which
the owner may be served with a notice given by the Corporation under section 52 or an order
referred to in section 53 as well as the amount of rent to be charged for the unit. 23 The notice
given under section 52 is the notice to give possession. This is a notice given by the Corporation
to a tenant renting a residential unit informing the tenant that they need to give up possession of
that unit in instances where a person residing in that unit causes damage, other than normal wear
and tear, to the movable or immovable property of the Corporation or to the common property or
where they contravene a by-law.24 If, after being given the notice under section 52, the tenant
fails to give up possession, the Corporation or the landlord, as the case may be, may initiate
tribunal proceedings for an order requiring the tenant to give up possession of the residential
unit.25

23
Sectional Properties Act No. 21 of 1987, s 51(1).
24
ibid s 52(1).
25
ibid s 53(1).

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Where the owner of a residential unit rents their unit, one condition of that tenancy shall be, that
the persons residing in that unit shall not cause damage to the movable or immovable property of
the Corporation or the common property or contravene the by-laws. 26 This condition must be
present regardless of anything in the tenancy agreement.27

The owner who rents their residential unit may be required by the Corporation to pay to and
maintain with the Corporation a deposit that the Corporation may use for the repair or
replacement of the movable and immovable property of the Corporation or of the common
property.28 The deposit may also be used for the maintenance, repair or replacement of any
common property that is subject to a lease granted to the owner of the unit under section 42 that
is damaged, destroyed, lost or removed, as the case may be, by a person residing in the rented
unit.29 Section 51(4) states that this deposit shall not be more than one month’s rent charged for
the unit.

The Corporation must receive from the owner of a residential unit written notice of the name of
the tenant residing in the unit within twenty days from the commencement of the tenancy. 30
Moreover, within twenty days of ceasing to rent their residential unit, the owner shall give the
Corporation written notice that the unit is no longer rented. 31 The Corporation shall, within
twenty days from the date of receiving this notice, return the deposit to the owner. 32 On the other
hand, if the Corporation has made use of the deposit for one or more of the purposes referred to
under section 51(3), a statement of account showing the amount used and the balance of the
deposit not used, if any; shall be delivered to the owner. 33 If the Corporation is entitled to make
use of the deposit, the owner must be furnished with an estimated statement of account showing
the amount the Corporation intends to use and, within sixty days of delivery to the owner of the
estimated statement of account, the Corporation must deliver to the owner a final statement of
account showing the amount used, and the balance of the deposit not used, if any.34

26
ibid s 51(2).
27
ibid.
28
ibid s 51(3)(a).
29
ibid s 51(3)(b).
30
ibid s 51(5).
31
ibid s 51(6).
32
ibid s 51(7)(a).
33
ibid s 51(7)(b).
34
ibid s 51(7)(c).

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 3. TERMINATION OF SECTIONAL PROPERTY

Section 55 of the Sectional Properties Act provides that the sectional status of a building may be
terminated by a unanimous resolution.

Where to apply for termination

 Court

Who may apply for termination of sectional status of a building?

1. The corporation
2. An owner
3. A registered charge of a unit
4. A purchaser under an agreement for sale of a unit

The Court regards the rights and interests of the owners as a whole, registered chargee, purchaser
under agreement for sale of units and make a declaration of termination when satisfied that it is
just and equitable terminate sectional status of the building.35

For the purpose effecting the declaration and adjusting between Corporation and owners and
amongst the owners, the court may by order:

 Impose any conditions

 Give any directions including payment of money
 Any condition it thinks fit

An insurer who has affected insurance on the building against destruction of units or damage to
the building has the right to appear in person, by agent or by advocate on an application to the
court for termination under Section 55 of Sectional Properties Act.

Effect of termination of sectional property as per Section 56

 On the sectional status of the building being terminated under section 55;

35
Section 55(3) sectional property Act 1987

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 The Corporation shall forthwith file with the Registrar a notice of the termination in the
prescribed form;
 On the receipt of a notice the Registrar shall make a notification in respect of the notice
on the sectional plan in the manner prescribed by the regulations;
 On the notification being made, the owners of the units in the plan are entitled to the
parcel as tenants in common in shares proportional to the unit factors of their respective
units.

THE END

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