State spells out ownership terms of affordable housing units

Gichugu affordable housing project in Kianyaga market, Kirinyaga county. [File, Standard] The government has said affordable houses will have sectional property title deeds as proof of ownership. This is according to Affordable Housing Board Acting Chief Executive Sheila Waweru. "All the properties are being done on either county or national government, and we shall be able to process sectional property title deeds once you are done with payment. The residents will set up a management company to manage the common areas. Therefore, Kenyans need not worry that the houses will be taken over by the government," said Ms Waweru. She spoke last week when Lands, Public Works, Housing and Urban Development Cabinet Secretary Alice Wahome briefed the press at Ardhi House in Nairobi on the progress of the AHP. The CS among other things said the government would release the first 4,800 units constructed under AHP to the owners by the end of next month. Sectional property registration is guided by the Sectional Properties Act, 2020 and the Sectional Properties Regulations, 2021. The registration and ownership of the affordable housing units, Ms Wachira said, shall therefore be guided by this legislation. The Sectional Properties Act was first enacted in 1987. It was then reviewed in 2020 to align with the 2010 Constitution, the Land Registration Act and the Land Act, 2012. The Act provides for the division of buildings into units to be owned by individual proprietors and common property to be owned by proprietors of the units as tenants. The regulations operationalise the Act and outline the procedure for registration of sectional plans and conversion of long-term leases registered under the Land Registration Act, no 3 of 2012 (LRA) to sectional titles, among others. The Act provides for the division of buildings into units (either residential or commercial units) owned by individual owners as well as the ownership of the common property in the building by all the unit owners proportionately. "The Act requires that a sectional plan in respect of the units is prepared by a surveyor and registered. Upon registration of a sectional plan, it is mandatory to form a Corporation whose members will be the owners of the units and this Corporation will be responsible for the control, management and administration of the units and the common property," said Ms Wachira. She added: "Unlike the management companies which are companies formed in accordance with the provisions of the Companies Act (2015), the corporation is registered under and regulated by the Act and the regulations." The Sectional Properties Act Regulations, 2021 operationalises the provisions of the Act and provides for the implementation of the Act. Broadly, the regulations cover the requirements for registering a sectional plan, conversion of long-term leases to sectional units, the long-term leases that are exempt from conversion and finally the prescribed forms for registration under the Act. The Act provides that a developer shall not sell or agree to sell a unit or proposed unit unless the developer has delivered to a purchaser copies of the purchase agreement, that is an agreement whereby a person acquires a right to purchase a unit or proposed unit, the by-laws or proposed by-laws of the corporation and the management agreement or proposed management agreement (if any). Others are the recreational agreement (if any), the lease or title of the parcel on which the unit is located or the certificate of title/lease of the unit, any charge or proposed charge affecting the unit and finally the sectional plan or proposed sectional plan. Upon registration of a sectional plan, the registrar shall close the register pertaining to the parcel of land on which the building is comprised and open a separate register in respect of each unit. The proportionate share in the common property will be noted in the respective unit registers as well as those interests (if any) affecting the parcel of land on which the building is comprised. Each unit will have its own title (a certificate of title or certificate of lease, as the case may be). The Act also provides that for assessment of rates and ground rent, each unit (including its share in the common property) constitutes a separate parcel of land and improvements. "This means that each unit owner will be liable for payment of the applicable rates and ground rent (if any) in respect of their unit," said Ms Wachira. Further, upon registration of the sectional plan, a corporation is also formed comprising the owners of the units to which a sectional plan relates. The registrar shall issue the certificate of registration of the Corporation, and there is no need for registration under the Companies Act (2015). So, how will the process of registration of affordable housing sectional titles under the Sectional Property Act happen? It is envisaged that the affordable housing units being developed shall be registered under the Sectional Properties Act (SPA). The envisaged process for registration of sectional titles under affordable housing shall have six steps. Step one will be surveying and titling, where the process shall commence first by ensuring all sites where the affordable housing projects are being undertaken are titled. "The titling process for these sites shall be as per the Land Registration Act and Land Act," said Ms Wachira. Step two will involve the transfer of titles from Cabinet Secretary National Treasury and Economic Planning to the Affordable Housing Board. Currently, she said, the titles for land under National Government are held in trust by the Cabinet Secretary. "Where the Land is held by County Governments, the same process shall be undertaken and approval sought from the County Assembly for transfer of the parcels to the Affordable Housing Board," she said. Step three will be the preparation of sectional plans. The Act envisages that for registration, a sectional plan shall be prepared by the surveyor and registered by the Registrar. "This means once the project is completed the sectional survey will be undertaken to allow preparation of sectional plan and registration," said Ms Wachira. Registration of the sectional plan and the corporation will be the fourth step. The Act mandates the register to register the sectional plan concurrently with the corporation and issue a certificate of incorporation. The corporation shall comprise the list of unit owners who have purchased the units. Step five will be the issuance of titles. Upon registration of the sectional plans, the registrar shall issue sectional titles in the name of the Affordable Housing Board. Finally, step six will be the transfer of unit titles and the corporation interests. "Upon completion of payment as per the sale agreement, the sectional titles will be transferred to the purchasers of the units giving them absolute legal ownership of the property," she said. "Unit owners will be given a sectional title certificate of lease. A sectional unit owner's interest in the common areas will be endorsed on their certificate of lease."

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