You own a unit in a building, with common areas
Sectional property ownership is not well understood by many people, so to discuss it, let’s begin with a story.
Among the interesting tales in Swahili folklore are stories about a hilarious and witty character named Abunwasi.
In one such tale, Abunwasi built a storey building and sold the upper floor to someone who was looking for a new home. A few months down the line, however, the neighbour upstairs crossed Abunwasi and matters escalated to a point where Abunwasi wanted his neighbour out.
So Abunwasi approached the neighbour and asked him to move out. But even after several eviction notices, the neighbour remained resolute that he had legally bought the house from Abunwasi and would not be forced to move out.
One day, Abunwasi went up to his neighbours’ house and told him: “It seems like you’ve decided you’ll live in this house forever. That’s all fine by me. I have come to let you know that from midnight tonight, I’ll be demolishing my ground floor home and you can’t stop me because it’s my house.”
“What am I supposed to do?” asked the agitated neighbour. “It seems that you love your house very much,” Abunwasi said cockily. “I suggest is that as I’m demolishing my house, you hold tightly to your upstairs apartment so it doesn’t come tumbling down.” The stubborn neighbour moved out that very night.
According to several experts who spoke at the Institution of Surveyors of Kenya (ISK) 2017 Regional Conference in November, many Kenyans hesitate to buy apartments because they are ignorant of the law says regarding sectional property.
Mr Peter Kaluma, a property valuer with the National Land Commission, says that some of the questions that Kenyans ask when contemplating buying an apartment are: Will I get a title deed? Can I use the apartment to secure a loan with the bank? What if my neighbours behave in a manner that displeases me?
“A person who buys such property is given a sectional title, which is just like a normal title deed. However, the concept of sectional property is highly misunderstood in terms of ownership, responsibilities, and legalities,” notes Mr Kaluma, adding that the laws and regulations governing sectional property are included in the Sectional Properties Act of 1987.
Luckily, for those suffering from what Mr Kaluma refers to as the “Abunwasi Complex”, there is no cause for alarm because when they buy an apartment on an upper floor, their neighbours on the floors below won’t threaten to demolish their homes in order to evict them. This is because holders of a sectional title are prohibited from making any structural modifications to their units, which includes demolishing a wall or a pillar.
The valuer says that when one receives a full a title or a leasehold, full ownership rights of the land and all the buildings in it are transferred to them.
A sectional title, on the other hand, gives you only a specific section (unit) of an undivided share of common property. Sectional title property include semi-detached houses, town-houses, flats, and apartments.
“Because of the high costs and scarcity of land in Kenya, sectional titles are only going to increase in popularity. Kenyans, who are used to using land horizontally, need to shift their mindsets and realise that land can just as well be used vertically,” adds Mr Kaunda.
Speaking at the Institution of Surveyors of Kenya (ISK) Regional Conference, Prof Cornelius Van Der Merwe, a senior research fellow at South Africa’s University of Stellenbosch who has taught about sectional property in several universities across the world, hailed Kenya’s Sectional Properties Act as a revolutionary piece of legislation because it not only borrowed some aspects from countries with progressive sectional property laws such as Australia, but also improved on the laws and adapted them to the Kenyan environment.
Prof Van Der Merwe traced the origin of sectional properties to a Jewish colony in Egypt —living in Elephantine, an island in the River Nile —around about 500 BC. He said the practice was later adopted by the Romans, who lived in walled cities.
However, it wasn’t until the early 1900s that global acceptance of sectional property increased when European states such as Belgium, Greece, Italy and France sought to settle their people after their countries had been ravaged by world wars.
“Across the world, such building units, in which each unit is individually owned, are widely referred to as condominiums. The condominiums are not only for residential and commercial use, but we also have a trend in places such as Catalonia, where graveyards are shared spaces like condominiums,” said Mr Van Der Merwe, who has written a book titled Sectional Titles, Share Blocks and Time-Sharing.
Speaking at the same conference, Mr Peter Mwangi, a lawyer and senior partner at Walker Kontos Advocates, expressed optimism that sectional titles are the future of Kenya’s real estate industry.
Mr Mwangi observed that when considering buying sectional property, many buyers are put off by the fear that they might buy a house standing on a parcel of land whose lease is about to expire. However, he assured prospective buyers that the Sectional Properties Act applies only to freehold land or leaseholds whose residues of the term limit is not less than 45 years.
Another major concern among buyers looking to buy sectional property is the use of outside space since, according to Mr Mwangi, “The lease ends at your door. Outside is common land.”
In fact, there are prospective buyers who are hesitant because they do not understand how the common areas will be maintained, and how the day-to-day operations of the property will be run. In this regard the law provides that the developer form a corporation that manages the scheme (the units plus common areas). The buyers of the units join the corporation and the developer quits the corporation when most of the units have been sold off.
The members of the corporation then appoint an institutional manager who takes charge of the administration of the scheme, with roles varying from ensuring insurance compliance to procuring security. Such a manager must be an accredited accountant, an advocate of the High Court, or an estate agent.
POOL OR GYM
Mr Mwangi adds that section 30 (1) (A) of the Sectional Properties Act provides for the formation of by-laws that are intended to regulate the relationship between the owners of the housing units. “If a particular unit owner is in breach of the by-laws, they can be referred to a special tribunal where they can be charged a fee of up to Sh25,000,” revealed the lawyer.
Mr Mwangi noted that members of the corporation can enter into a recreation agreement with non-owners to raise revenue for the day-to-day running of the scheme. For instance, if a scheme has a swimming pool or gym, they can let outsiders use these facilities for a fee.
However, each owner pays their own rates and taxes since Section 60 of the aforementioned Act provides that each unit constitutes a separate parcel of land for the purposes of rates and taxes.
The corporation’s board can decide to sell the entire property to an agent if the individual unit owners agree on the decision unanimously.
However, Mr Mwangi notes that there have been of cases, especially in which apartments are involved, where the owners might want to sell the building and cash out but one unit owner does not agree, thereby halting the planned sale.
What if you own a property jointly with another party but you aren’t happy with the way they are conducting the affairs of the property? There are certain steps you can take to have the property registered as a sectional property in order to achieve a semblance of autonomy, says the lawyer.
To illustrate this, Mr Mwangi narrates the case of one Damaris Nduta Gitau, who sued a Mr Harji Karsah Kanji in 2007. Mrs Gitau had inherited a five-storey building on Kirinyaga Road in Nairobi from her husband, who co-owned it with Mr Kanji. Mr Kanji managed the building and remitted Mrs Gitau’s share of the profits to her every month.
However, Mrs Gitau was not satisfied with the arrangement and asked the court to divide the building under the sectional properties act, which it eventually did.