The Sectional Properties Act, 2020 (SPA) marked a significant shift from its predecessor, the Sectional Properties Act, 1987 in regulating management of sectional properties. One distinction between the two statutes lies in the governance structure, with the SPA mandating the formation of a corporation.

Previously, property management was entrusted to management companies, whose responsibilities were: the payment of statutory outgoings, management of common areas and provision of common services. This structure was riddled with disputes over control, financial mismanagement and weak enforcement mechanisms. The SPA addresses these challenges by establishing corporations, with a clearly defined mandate.

Several differences can be noted between the two regimes aimed at protecting the individual unit owners.

Previously, a manager was appointed to manage the property.  Their responsibilities included managing common areas, collecting service charge, resolving disputes among owners, enforcing the by-laws, repairs and maintenance and provision of essential services such as security, waste management, and utilities. Under the SPA, managers are appointed at the discretion of the board. This presents some challenges including lack of proper maintenance and management of common areas which may lead to the deterioration of shared amenities, hence impacting the property value. Issues also arise in managing of the service charge, leading to deficits and the inability to pay for necessary services. The absence of professional oversight also weakens enforcement of by-laws, as there is no neutral individual to ensure compliance with rules regarding noise control, waste disposal, parking and unauthorized alterations. This can create disputes between unit owners and result in deteriorating order and governance. Compliance challenges also arise, as statutory obligations such as filing tax returns, renewing insurance, and complying with regulatory requirements may be neglected where there is no designated person responsible for it, exposing the corporation to potential fines, legal disputes, or even deregistration. Additionally, the absence of a property manager may slow down dispute resolution since there is no intermediary to mediate conflicts before escalating matters to the board.

The general responsibility of management is now left to the board of directors, aiming at increasing accountability in management of common resources. For instance, under the prescribed by-laws the corporation seal may only be used after a resolution of the board and in the presence of at least two members of the board who shall sign the instrument.

The corporation may establish an Internal Dispute Resolution Committee to hear and determine disputes. The decisions of the Committee are enforceable before a court of law and may be appealed before the courts. Previously, disputes were raised before the Business Premises Rent Tribunal. The SPA provides faster, cost-effective, and less adversarial dispute resolution mechanisms which though structured, are flexible. Appeals from the decisions of the Committee are raised before the Environment and Land Court. Under the 1987 Act, the decisions of the tribunal were final.

In the past, the disposition of common property did not require execution by all members. Management companies took advantage of this by dealing with common areas without involving unit owners. The new regime  prevents unilateral decisions that could disadvantage individual unit owners.  It also ensures that decisions regarding common property are made in accordance with the by-laws.

Additionally, County Government approval is required before material change in the use or density of the common property. The SPA expressly permits the corporation to integrate technology into its operations, including digital voting and communication, enhancing efficiency, transparency, and accessibility. 

Despite improvements, several challenges still exist within the SPA. For instance, although the Committee has the authority to impose penalties, court intervention is required for enforcement. Court enforcement, while intended to provide a structured framework, introduces delays and increases costs. Creation of a tribunal to handle disputes and granting the Committee enforcement powers for smaller penalties would address these challenges.

Active participation of unit owners is paramount. Many corporations struggle with non-compliance in service charge payments by unit owners, causing deficit in funds for repairs and essential services. Additionally, decision-making on common property matters is often slow and contentious, as major decisions, such as alterations, leasing, or disposal, require a unanimous resolution. Lastly, technological adoption in property management remains slow, despite provisions promoting digital communication and voting, which enhance governance and transparency.The transition from management companies to corporations under the SPA represents a significant step toward enhancing accountability and efficiency in sectional property management. However, challenges still need to be addressed to realize the full potential of the SPA. Implementing robust conversion campaigns, enforcing compliance measures, and strengthening dispute resolution mechanisms will ensure that sectional property management in Kenya remains transparent, fair, and sustainable.