Sectional Properties Act 2020: a complete guide to unit ownership in Kenya

Background: from company shares to real titles

For decades, apartment ownership in Kenya operated through an indirect model. A developer would register a management company, and buyers would receive shares in that company plus a long sub-lease over their unit. The arrangement was functional but awkward: selling meant transferring shares, not land; lenders were uneasy about taking security over a company share rather than a title; and disputes between shareholders and company directors were common.

The Sectional Properties Act of 1987 introduced the concept of sectional titles, but uptake was limited. Most developers continued to use the company-share model because the 1987 regime was not well integrated with the broader land-registration framework. The Sectional Properties Act 2020, which commenced on 24 December 2020, resolved that problem by aligning sectional property with the Land Registration Act 2012. Every unit now gets a genuine registered title, and the common areas are managed by a statutory body corporate rather than a private company.

What is a sectional title?

The unit

A sectional title is ownership of a defined unit within a building, together with a proportional share of the common property. The unit can be an apartment, a townhouse, an office suite, a retail space, or any other self-contained portion of a building that is shown on a registered sectional plan. Under Section 5 of the Sectional Properties Act 2020, each unit is assigned a “unit factor” that reflects its relative size or value within the scheme. The unit factor determines the owner’s share of the common property, their voting rights in the management corporation, and their contribution to levies.

Common property

Common property is everything on the parcel that is not comprised in a unit. This typically includes lobbies, lifts, staircases, driveways, gardens, swimming pools, parking bays (unless allocated as exclusive-use areas), roofs, external walls, and structural elements. Under the Act, common property is held by the management corporation on behalf of all unit owners. No single owner may alienate, mortgage, or alter common property without the approval of the corporation.

Exclusive-use areas

The Act allows the management corporation to grant an exclusive-use right over a portion of the common property to a particular owner, for example a specific parking bay or a garden area adjacent to a ground-floor unit. Under Section 40, this requires a unanimous resolution of the owners, so it is not something the developer or the corporation’s board can do unilaterally.

Registering a sectional plan

Who registers

The developer (or proprietor of the parcel) lodges a sectional plan with the Registrar under Section 9 of the Act. The plan must be prepared by a registered surveyor and must show the boundaries of each unit, the common property, and the unit factors. It must also include a certificate from the relevant county government confirming that the building complies with the applicable building regulations.

What registration creates

Once the Registrar is satisfied, registering the sectional plan has three effects simultaneously: it opens a register for each unit (giving each unit its own title), it creates the management corporation as a body corporate, and it vests the common property in the corporation. From that point, each unit can be dealt with independently: sold, mortgaged, leased, or inherited, all on its own title.

Freehold and leasehold schemes

The Act applies to both freehold and leasehold parcels. For a leasehold parcel, the unexpired term of the lease must be at least 21 years at the time the sectional plan is registered. The unit titles are then carved out of the head lease and expire when the head lease expires. Buyers of leasehold sectional units should check the remaining term and the terms of the head lease before committing.

The management corporation

Automatic formation

Under Section 17, the management corporation comes into existence automatically when the sectional plan is registered. It is a body corporate with perpetual succession, capable of suing and being sued, and it acts through a board of management elected by the unit owners. The developer must convene the first general meeting of the corporation within the period prescribed by the Act (Section 27), at which point the owners take over governance from the developer.

Duties of the corporation

The corporation’s primary duty under Section 20 is the control, management, and administration of the common property for the benefit of all owners. In practice this means maintaining lifts, managing security, keeping common areas clean and in good repair, insuring the building, and enforcing the by-laws. The corporation is not permitted to carry on any trade or business, and it may only invest its funds in the manner permitted by the Trustee Act.

The board of management

Day-to-day decisions are made by the board of management, which is elected at the annual general meeting. The board appoints a managing agent (if the owners decide to use one) and approves the annual budget. Major decisions, such as structural alterations to common property or the grant of exclusive-use rights, require a resolution of the owners in general meeting, and in some cases a unanimous resolution.

Voting rights

Each owner’s vote is weighted by their unit factor (Sections 24 and 25). An owner who holds a larger unit has a proportionally larger vote. This is fair in principle, but it can create problems in schemes where one owner (often the developer who has retained unsold units) holds a majority of the unit factors and can therefore control the corporation. Buyers should check the unit-factor allocation before purchasing.

Levies and service charges

How levies work

The management corporation recovers its administrative and maintenance expenses by levying contributions on the unit owners in proportion to their unit factors (Sections 31 to 34). The corporation must prepare an annual budget, and the levies are set at the annual general meeting. Owners are personally liable for their share of the levies, and this liability runs with the unit, meaning that a buyer inherits any arrears owed by the seller.

Non-payment and enforcement

If an owner fails to pay their levies, the corporation may charge interest on the outstanding balance (as provided in the by-laws) and may register a caution against the owner’s title under Section 34. This effectively prevents the owner from selling or mortgaging the unit until the arrears are cleared. In our view, this is the corporation’s most powerful enforcement tool, and it gives buyers an additional reason to obtain a clearance certificate from the corporation before completing a purchase.

Insurance requirements

The management corporation is required to insure the building against fire and other perils as prescribed (Section 38). This is a building-wide policy, not a unit-by-unit arrangement. Individual unit owners should nonetheless consider taking out separate contents insurance and, if they are landlords, landlord’s liability cover.

Under Section 39, the corporation must provide a copy of the insurance policy to any owner who requests it within 20 days of the request. Buyers should ask to see the policy before completing their purchase to confirm that the building is adequately insured and that the premiums are being paid.

Buying a sectional unit

Due diligence checklist

Purchasing a sectional-title unit is not the same as buying a standalone house. Beyond the standard conveyancing searches (title search, rates clearance, land-rent clearance), a buyer should carry out the following additional checks:

• Confirm the sectional plan is registered. Ask the seller for the sectional-plan number and verify at the land registry that a sectional plan has been registered for the building and that the unit has its own title.
• Obtain a levy-clearance certificate. Ask the management corporation to confirm in writing that the seller has no outstanding levies. Remember that levy arrears attach to the unit, not the person.
• Review the by-laws. The corporation’s by-laws govern what you can and cannot do with your unit, including restrictions on subletting, keeping pets, and making alterations. Read them before you buy.
• Check the insurance policy. Confirm that the building is insured and that premiums are current.
• Inspect the common property. Walk through the common areas and assess their condition. Deferred maintenance is a sign of a poorly managed scheme and will eventually lead to special levies.
• Check the management corporation’s finances. Ask for the latest audited accounts and the current budget. A healthy reserve fund is a good sign; an empty one is a red flag.

Transfer process

The transfer of a sectional unit follows the same process as any other land transfer under the Land Registration Act 2012. The seller and buyer execute a transfer instrument, the buyer pays stamp duty (currently four per cent of the value for properties in Nairobi and other municipalities, two per cent elsewhere), and the transfer is registered at the land registry. The management corporation must be notified of the change of ownership so that it can update its records and redirect levy notices.

Conversion of older schemes

The legal requirement

The Sectional Properties Act 2020 required existing developments that were held through company shares and long leases to convert to the sectional-title regime. Section 13 sets out the conversion procedure: the management company (or the proprietor) lodges a sectional plan with the Registrar, and upon registration, the individual unit titles replace the old share-and-lease structure.

Why conversion matters

Conversion is not a mere formality. A unit held through a company share is harder to sell, harder to mortgage, and offers weaker legal protection than a registered sectional title. Banks are increasingly reluctant to lend against company shares, and the secondary market for such units is shrinking. In our view, owners and management companies in older schemes should treat conversion as unfinished business, not a closed chapter.

Practical obstacles

Despite the legal requirement, many older schemes have not converted. The reasons vary: the cost of commissioning a surveyor to prepare the sectional plan, disputes among shareholders about unit factors, missing company records, and directors who are reluctant to give up control. These obstacles are real but not insurmountable. A competent real estate lawyer can guide the process and help resolve the disputes that typically arise during conversion.

Dispute resolution

Common disputes

Disputes in sectional-title schemes typically fall into one of four categories: levy disputes (non-payment or disagreements about the amount), by-law disputes (alleged breaches of the by-laws, such as unauthorised alterations or noise), management disputes (challenges to the board’s decisions or allegations of mismanagement), and developer disputes (delays in completing common property, inflated unit factors, or failure to convene the first general meeting).

Resolution mechanisms

The Act provides for internal dispute resolution through the management corporation’s by-laws and general meetings. Where internal resolution fails, disputes may be referred to the alternative dispute resolution mechanisms contemplated by the Act, including mediation and arbitration. Ultimately, parties retain the right to approach the Environment and Land Court, which has jurisdiction over land-related disputes under Article 162(2)(b) of the Constitution.

Old model vs new model

The future of sectional titles in Kenya

Affordability and accessibility

One of the most significant trends shaping sectional title development in Kenya is the drive toward affordable housing. The government’s target of delivering large numbers of affordable residential units annually has given developers an incentive to bring apartment blocks to market under the Sectional Properties Act 2020, since individual sectional titles can be mortgaged and transferred in a way that bare company shares under the pre-2020 model could not. For buyers at the lower end of the market, the ability to obtain a mortgage on a registered sectional unit — and to enforce that security through the conventional land registration system — has opened the apartment market to a broader pool of purchasers. The formal title certificate that comes with a registered sectional plan also gives buyers the same security of tenure they would have on a stand-alone plot, making the asset bankable and transferable in a way that share certificates and share transfer forms never reliably were.

Financial management challenges for management corporations

As sectional title developments grow in number and scale, the financial management of management corporations has emerged as one of the sector’s most persistent practical challenges. A management corporation depends on timely levy payments from all unit owners to fund maintenance, insurance and security of common property. When a significant proportion of owners fall into arrears — a risk that rises during economic downturns or in developments where a developer retains a large number of unsold units — the corporation may be unable to meet its obligations to service providers, creating a cycle of deteriorating common areas, falling resale values and further arrears. The Sectional Properties Act gives a management corporation a charge over a unit in respect of unpaid levies, but enforcement through the land registrar is still developing in practice. Professional financial management, with separate reserve and operating accounts, is the most reliable protection against this cycle from the outset.

Frequently asked questions

What is a sectional title?

A sectional title is ownership of a defined unit within a building, together with a proportional share of the common property, evidenced by a registered title deed. It is the standard form of apartment and unit ownership under Kenyan law.

What did the Sectional Properties Act 2020 change?

The 2020 Act replaced the 1987 Act and aligned sectional property with the Land Registration Act 2012. It strengthened the management-corporation regime, introduced clearer rules on levies and insurance, and required older company-share schemes to convert to sectional titles.

Do I need a lawyer to buy a sectional-title unit?

Yes. While you can technically handle some steps yourself, the additional due diligence required (levy clearance, by-law review, management-corporation check, insurance verification) makes professional guidance essential. A lawyer can also ensure that the sectional plan is validly registered and that the unit’s title is clean.

What happens if the management corporation is dysfunctional?

A dysfunctional corporation can lead to deteriorating common property, unpaid insurance premiums, and difficulty selling or refinancing your unit. Owners can call a special general meeting to replace the board, and in extreme cases can apply to court for the appointment of an administrator.

Can I sublet my sectional-title unit?

This depends on the corporation’s by-laws. Many schemes permit subletting but require the owner to notify the corporation and ensure that the tenant complies with the by-laws. Some schemes restrict short-term letting (such as Airbnb-style rentals). Check the by-laws before you commit to a letting arrangement.

What is a unit factor?

A unit factor is a number assigned to each unit under Section 5 of the Act. It reflects the unit’s relative size or value and determines the owner’s share of the common property, their voting weight, and their levy contribution. Unit factors are fixed at registration and can only be changed by amending the sectional plan.

Common pitfalls

• Buying without checking conversion status. If the building has not converted to the sectional-title regime, you may be buying a company share, not a title. Verify at the land registry.
• Ignoring levy arrears. Levy liability runs with the unit. If you buy without a clearance certificate, you inherit the seller’s debt.
• Not reading the by-laws. The by-laws may restrict alterations, pets, subletting, or commercial use. Discovering this after purchase is expensive.
• Assuming the building is insured. A dysfunctional corporation may have let the insurance lapse. Ask for proof of current cover.
• Overlooking the head-lease term. For leasehold schemes, the unit title expires with the head lease. A unit with 15 years remaining is worth far less than one with 80 years.

What you should do now

• Buyers: Before signing a sale agreement, confirm that the building has a registered sectional plan, the unit has its own title, the management corporation is functional, and there are no outstanding levies.
• Current owners in a converted scheme: Attend your corporation’s AGM, review the annual budget and accounts, and confirm that the building insurance is current.
• Owners in an unconverted scheme: Engage a lawyer to advise on the conversion process. The longer you wait, the harder it becomes as shareholders disperse and records deteriorate.
• Developers: Register the sectional plan before selling units. Selling on the basis of a “promised” sectional plan creates legal risk and makes bank financing difficult for your buyers.

This article is for general information only and does not constitute legal advice. For advice on your specific circumstances, please contact us.