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Long wait for apartment titles

By Amrit Soar and Josphat Nthata

Kenya enacted its first sectional properties law in 1987 but the law came into force in 1990. Its main purpose was to provide for the division of buildings into units to be owned by individual proprietors. Under this law, owners of apartments were to be issued with title deeds, as opposed to long-term leases. However, since the statute did not apply in exclusion of other statutes relating to land, most developers have been structuring their projects in such a way that buyers are issued with registered long-term leases as the documents of title, and this has become the norm over the years.

Thirty years later, parliament enacted the Sectional Properties Act, 2020 (Act) which repealed the 1987 statute. With the introduction of new land statutes and repeal of others pursuant to the provisions of the Constitution, 2010, the 1987 statute was no longer aligned with the new land statutes, among them the Land Registration Act and the Land Act which were enacted in 2012, an issue that has been addressed by the 2020 legislation.

The sectional properties law is practical for buyers of apartments as it requires them to be involved in the day-to-day management of the development. This is to be done through the management corporation whose members are the owners of the units in the development. Unlike with the long-term leases where some developers may continue to maintain control of the development indefinitely, the sectional properties law requires a developer to convene a meeting of the corporation at which a board is to be elected within 90 days from the day that fifty percent of the units are sold or 180 days from the day that the first unit is sold, whichever is sooner.

Under the Act, all existing long-term leases are supposed to be converted into sectional titles within two years from December 2020, the date when the Act came into force. With less than five months left before expiry of the two years period, the affected properties are yet to be geo-referenced, which is a prerequisite for conversion of long-term leases into sectional titles. Given the large number of long-term leases that need conversion, it would be difficult to geo-reference the affected properties and convert the long-term leases into title deeds within such a short time. Several factors may have contributed to the delay in the implementation of this law.

Firstly, while the Act came into force in December 2020 and the two years’ period for implementation started running immediately, the regulations which were meant to guide the implementation of the Act were gazetted and came into force in December 2021, almost one year from the date the Act came into force. This means that the time within which existing long term leases are to be converted into sectional titles was reduced from two years stated in the statute to one year.

Secondly, the law came into force when the Covid-19 pandemic was at its peak in Kenya. As a result of the pandemic, the ministry of lands’ staff could not operate optimally as ministry staff were not spared by the virus. Some may have had to stay at home while others were hospitalized. Indeed, the government required any person diagnosed with the virus to self-quarantine or be quarantined in designated quarantine centers.

Thirdly, the program of digitization of land records was prioritized and may have occupied the ministry of lands’ staff leaving little room for them to focus on implementation of the sectional properties law. Indeed, from about 2019, the government scaled down operations at the Nairobi land registry to concentrate on digitization of land records. From the look of things, digitization of land records is a priority project that the ministry of lands has been pre-occupied with since 2019. Obviously, the digitization project is of great significance to all stakeholders including the government, landowners as well as real estate practitioners as it is meant to reduce incidences of fraud, increase efficiency by reducing time taken to transact in land and ultimately reduce cost and time spent in land transactions.

 In addition, the current government has been racing against time to issue title deeds to property owners in various parts of the country, in line with its election manifesto. The production of new title deeds has meant mobilization of land registrars and other staff of the ministry of lands leaving little room for them to focus on implementation of the sectional properties law.

Moreover, as part of the digitization exercise, the ministry has gazetted many parcels of land particularly in Nairobi assigning them new parcel numbers that comply with the current law. The ministry has directed that no manual dealing, including applications for conversion into sectional titles, should be undertaken in connection with the properties that have been gazetted for conversion. For one to transact on these properties, the title concerned should first be converted into the new parcel number as indicated in the relevant gazette notice. The process of conversion and issuance of new titles could take time given the large number of titles expected to be converted as compared to the number of ministry of lands officials expected to handle the conversion process while still handling other day to day duties.

Other than the inevitable failure to meet the implementation timelines set out in the Act, there is lack of clarity and alignment resulting from apparent contradictions between the Act and the regulations which are meant to guide its implementation. For instance, while the Act requires all existing long-term leases to be converted into sectional titles, the regulations have introduced some exceptions. There is need to ensure that the Act and the regulations are aligned for effective implementation.

There is a race against time in implementation of the Act and regulations, and it would assist if the next parliament amends the Act and extends time to allow for conversion of long-term lease into sectional titles, having regard to all prevailing circumstances, including the large number of long-term leases that would need to be converted into sectional titles. All interested stakeholders, including owners of units, developers, management corporations and legal practitioners are keenly watching as the timelines under the Act are fast approaching.

The article was published in the Business Daily and can be accessed here.