What is a Sectional Property Title in Kenya? The 2020 Act Explained Simply

For most of Kenya's post-independence history, buying an apartment meant you were not actually buying land or a building. You were buying shares in a company that owned the land and the building. The company allowed shareholders to occupy specific units. Your "ownership" of the apartment was really a contractual right tied to your shares.

The Sectional Properties Act 2020, which came into force in December 2020, changed this. It introduced a mechanism for apartment owners to hold individual title deeds for their specific units. The unit itself becomes a registered property. The buyer of a unit in a sectional title scheme owns their apartment the way a homeowner owns a house.

This is a significant shift. But it is not yet universal. And the conversion from the old company-share model to sectional titles has created a new category of risk for buyers of apartments in Nairobi and Mombasa.

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The Old System: Shares in a Company

Before the 2020 Act, the standard structure for apartment ownership in Kenya was the company system. A developer would incorporate a company, usually a limited liability company, to hold the land and the building as an asset. When a unit was sold, the buyer did not receive a title deed. They received shares in the company, allotted in proportion to the unit's value or size relative to the whole block.

Occupation was governed by a share certificate and a management agreement between the company and the shareholders. The company remained the registered landowner. A search of the land registry would show the company, not the individual flat owner.

This created several problems. The shares could be charged to a bank, but the security was the shares, not the land. If the bank needed to enforce, it was enforcing against shares in a private company, not against land, which is a slower and less certain process. If the company had debts, those debts could attach to the company's main asset, the land, threatening all unit holders even if they individually had paid for their units. If the company was wound up for any reason, the unit holders' position was that of creditors of the company, not as landowners.

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What Sectional Title Does Differently

Under the Sectional Properties Act 2020, the developer registers a sectional plan with the land registry. The plan divides the building into defined units and common areas. Each unit is allocated a unit number and described by reference to the sectional plan.

The registrar then issues a sectional title certificate for each unit. This certificate is a title deed for that unit. The owner holds a registered proprietary interest in their specific unit, not shares in a company. They can mortgage their unit in their own name. They can sell it through a standard conveyancing process. The ownership is visible in the land registry under the unit's unique identifier.

The common areas, staircases, hallways, roof, external walls, and parking areas not allocated to specific units, are held collectively by all unit owners through a body corporate that is automatically constituted under the Act. Every unit owner is automatically a member of the body corporate. The body corporate manages and maintains the common areas and enforces the rules of the scheme.

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Key Checks for Apartment Buyers in Nairobi and Mombasa

If you are buying an apartment, the first question is which system applies to the building you are considering.

For a building where sectional titles have been properly issued, you should ask to see the sectional plan registered at the land registry, the sectional title certificate for the specific unit you are buying, the body corporate rules, and the management accounts or levy schedule for the common areas.

Confirm with a land registry search that the sectional plan exists and that the specific unit number appears in the register with the current owner named. The search should also show any charges over the unit, any cautions, and any court orders.

For a building that has not yet converted to sectional titles and still operates under the company-share system, additional checks apply. You need to see the company's register of shareholders, the company's most recent annual return filed with the Business Registration Service, the company's constitution, and evidence that the company is in good standing with no outstanding debts, judgments, or winding-up proceedings.

A company with unpaid directors' loans, outstanding contractor claims, or management disputes can create liabilities that attach to the land and affect all unit holders.

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The Conversion Problem in Older Buildings

The 2020 Act provided a framework for existing buildings to convert from the company-share model to sectional titles. This conversion has been happening in Nairobi and Mombasa, but it has not been straightforward.

A conversion requires all shareholders to agree to the process, or at least a sufficient majority. Some buildings have shareholders who are deceased, missing, or have transferred their shares informally without updating the company register. In these cases, obtaining the required consents for conversion is difficult or impossible until the underlying ownership issues are resolved.

In some conversions, disputes have arisen about how units are mapped to sections of the sectional plan, particularly in buildings where the original flats were sold at different sizes or on different floors with different views. The valuation of units for the purpose of assigning sectional areas can be contested.

Some conversions have been done carelessly. The sectional plan may not accurately describe the unit you are buying. The description in the plan may not match what is physically on the ground. This creates a potential mismatch between the document you receive and the actual space you occupy.

If you are buying in a building that recently converted from company shares to sectional titles, it is worth understanding exactly how and when the conversion happened. Ask to see the conversion documents. Check whether any shareholders challenged the conversion. Verify that the sectional plan matches the physical unit by inspecting both the plan and the space.

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What Sectional Title Does Not Cover

The Act covers units in multi-storey buildings and horizontal schemes like townhouse complexes. It does not apply to stand-alone houses on individually subdivided plots. Those continue to be held under standard freehold or leasehold title.

The Act also does not resolve every management problem that arises in apartment buildings. A body corporate can be poorly run. Levies can be unpaid by some members, undermining maintenance budgets. Buildings with chronic levy arrears have deteriorating common areas and can face legal action from service providers.

Before buying, ask about the body corporate's levy compliance rate and whether there are outstanding judgments against the body corporate. This is information that affects the building you are buying into, not just the unit.

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Using Litmus to Verify an Apartment Purchase

A Litmus verification report for an apartment in a sectional scheme covers the unit's sectional title registration, any encumbrances on the specific unit, and confirmation that the sectional plan is properly registered. For a building still on the company-share system, Litmus can verify the company's land holding and check for charges or cautions on the underlying title.

The standard report is KSh 21,500. Field verification, which includes a physical inspection of the unit by a named agent, is KSh 25,500. Ongoing monitoring, which is particularly useful for tracking whether any new charges appear on a unit after purchase, is KSh 5,200 per month.

Order at litmus.co.ke before you sign any agreement or pay any deposit.

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This article is for general information only and does not constitute legal advice. Consult a qualified Kenya advocate for specific advice on sectional property purchases.