The Sectional Properties Act 2020: How to Convert Sub-Leases into Sectional Titles in Kenya

For decades, property ownership in Kenya's urban areas—particularly in high-density residential and commercial hubs such as Kilimani, Kileleshwa, Westlands, and Syokimau—was dominated by long-term subleases. Developers would construct apartment blocks or office suites on a single parcel of land, register a management company, and issue purchasers with subleases carved out of the mother title. Under this old system, individual buyers held a leasehold interest, while the reversionary interest (the ownership of the soil itself) remained with the developer or the management company.

However, the enactment of the Sectional Properties Act No. 21 of 2020 (which repealed the older Sectional Properties Act of 1987) and the subsequent Sectional Properties Regulations 2021 marked a seismic shift in Kenya's land administration landscape. The law mandates the conversion of all long-term subleases (with unexpired terms of over 21 years) into individual sectional titles. This guide provides a comprehensive overview of the Sectional Properties Act 2020, why this transition is necessary, and a step-by-step breakdown of how to convert your sublease into a sectional title.

Why the Shift? Understanding the Limitations of Subleases

The historical sublease structure suffered from significant structural and legal vulnerabilities. Because the ownership of the entire block was tied to a single "mother title," individual apartment owners found themselves at the mercy of the developer or the management company. If the developer defaulted on land rates or land rent, or if the mother title was charged to a bank, the individual buyers faced the risk of losing their properties.

Furthermore, securing financing or bank loans using a sublease was notoriously difficult. Commercial banks in Kenya were hesitant to accept subleases as collateral without the consent of the reversionary owner (the management company) and confirmation that all rates and rents on the mother title were fully paid up.

The Sectional Properties Act 2020 solves these issues by establishing that:
1. Individual Ownership: A sectional title gives the owner absolute ownership of their unit (the section) and a share in the common property.
2. Independent Titles: Each unit receives a unique register and title deed, completely decoupled from the mother title.
3. No Joint Liability: The default of one owner (e.g., regarding land rates or taxes) does not affect other owners in the development.

Sublease vs. Sectional Title: A Head-to-Head Comparison

To understand the practical implications of this transition, consider the key structural differences between the old sublease model and the modern sectional title framework:

The Legal Framework: Sectional Properties Act 2020 & Regulations 2021

The Sectional Properties Act 2020 works in tandem with the Land Registration Act 2012 and the Physical and Land Use Planning Act 2019. The law strictly applies to all buildings where there are two or more independent units.

The Sectional Properties Regulations 2021 set out the operational guidelines for registration, including the role of licensed surveyors in preparing geo-referenced sectional plans and the operational mechanisms of the newly formed "Corporation."

Unlike the old management companies, the Corporation is established automatically upon the registration of the sectional plan. The owners of the units are the sole shareholders of the Corporation. Crucially, the Corporation does not own the common property; instead, the common property is held by the unit owners as tenants in common in shares proportional to their unit factors.

Step-by-Step Guide to Converting Sub-Leases to Sectional Titles

The conversion process is a multi-stakeholder exercise involving property owners, management companies, surveyors, and the Ministry of Lands. Here is the step-by-step procedure:

Step 1: Verification and Preliminary Search

Before starting the process, the management company or individual unit owners must verify the status of the mother title. This is done by executing an official land search on the government's digital land management portal, Ardhisasa. Ensure that:
* The mother title is clean (no active court disputes, illegal caveats, or undisclosed charges).
* All land rates owed to the County Government (e.g., Nairobi City County, Kiambu County) are fully paid.
* All land rent owed to the national government is paid, and a clearance certificate is obtained.

Step 2: Engaging a Licensed Land Surveyor

A registered and licensed land surveyor must be hired to draft the Sectional Plan. The surveyor's job is to:
* Geo-reference the parcel of land in accordance with the national spatial reference system.
* Measure and map out each individual unit (section) and the common areas (corridors, parking, swimming pool, gardens).
* Assign a "unit factor" to each section. The unit factor determines the owner's share of common expenses and voting power within the Corporation, usually calculated based on the floor area of the unit relative to the total area of all units.

Step 3: Approval of Sectional Plans

Once the surveyor drafts the sectional plans, they must be submitted to the local county government physical planning department for approval. Additionally, the Director of Surveys at the Ministry of Lands must approve and register the sectional plans.

Step 4: Submission of Conversion Documents to the Land Registry

The management company, developer, or individual owners (in cases where the developer fails to initiate the process) must submit the application for conversion to the Land Registrar. The package of documents must include:
* The approved geo-referenced Sectional Plan.
* The original mother title deed.
* The original subleases previously issued to owners.
* Form LRA 97 (Application for registration of sectional plan) completed and signed.
* Land Rates and Land Rent Clearance Certificates.
* KRA PINs and national ID/passport copies of the unit owners.

Step 5: Closure of the Mother Register and Issuance of Sectional Titles

Upon verification of the documents, the Land Registrar will:
1. Close the register of the mother title.
2. Register the sectional plan.
3. Open a new register for each individual section.
4. Issue a Certificate of Sectional Title (for leasehold properties) or a Certificate of Title (for freehold properties) to each owner.
5. Issue a certificate for the common property in the name of the Corporation.

Step 6: Dissolution of the Old Management Company

With the registration of the sectional plan, the old management company must transfer its assets, liabilities, and reversionary interest to the newly created Corporation. The management company is then formally wound up or dissolved in accordance with the Companies Act.

Documents Required for Sectional Title Conversion Checklist

To avoid delays at the Land Registry or on the Ardhisasa portal, ensure you have gathered all the necessary documentation beforehand. Use this checklist:

• [ ] Original Mother Title Deed: The master title of the land on which the building stands.
• [ ] Approved Sectional Plan: Prepared and signed by a licensed land surveyor and approved by the Director of Surveys.
• [ ] Original Subleases: The existing lease agreement documents held by the unit owners.
• [ ] Ardhisasa Account Registration: Fully verified individual and corporate profiles on the Ardhisasa platform.
• [ ] Land Rates Clearance Certificate: Issued by the relevant County Government (valid for the current calendar year).
• [ ] Land Rent Clearance Certificate: Issued by the Ministry of Lands.
• [ ] KRA PIN Certificates: For all individual unit owners and the management company/Corporation.
• [ ] Valuation Report: If required by the registrar for stamp duty or assessment purposes.
• [ ] Board Resolution: A resolution by the old management company approving the conversion and dissolution.

Challenges in the Conversion Process

While the Sectional Properties Act 2020 provides a clear path forward, property owners frequently encounter several operational challenges:

1. Non-Cooperative Developers: Some developers refuse to surrender the mother title or assist in the conversion because they still want to exploit the reversionary interest or charge ground rent. Fortunately, the law allows unit owners to initiate the conversion process independently if the developer is unresponsive.
2. High Surveyor Costs: Hiring a licensed surveyor to geo-reference and draft plans for a large apartment block can be expensive. Owners should pool resources through their resident associations to negotiate bulk surveying fees.
3. Ardhisasa Portal Technical Glitches: Since the migration of land records in Nairobi to the digital Ardhisasa platform, users occasionally experience slow response times, document rejection due to formatting errors, or missing historical data. It is advisable to consult a conveyance lawyer familiar with navigating digital land registries.
4. Outstanding Debt on Mother Titles: If the developer took a construction loan and charged the mother title, the bank must consent to the conversion. The bank's charge will be prorated and registered against the individual sectional titles.

Practical Financial & Payment Steps

The costs associated with conversion include survey fees, county physical planning approval fees, registry filing fees, and legal fees.

For registry fees and official searches on Ardhisasa, payments are processed digitally. Users must load funds into their Ardhisasa e-wallets. The system integrates directly with M-Pesa. When completing a transaction, you will receive an M-Pesa STK push prompt on your registered mobile number to enter your PIN and authorize the payment. Always ensure that the phone number linked to your Ardhisasa account has a sufficient M-Pesa balance before initiating the transfer.

Take Control of Your Property Portfolio Today

Navigating sectional property compliance, tracking individual land rates, and managing tenant portfolios can quickly become overwhelming for property owners and landlords. Ensure you are fully compliant with the Sectional Properties Act 2020 by structuring your properties correctly.

Streamline your real estate management with our digital tools. Sign up for our Landlord Dashboard today to easily track property titles, manage compliance documents, monitor rental income, and stay ahead of KRA and Ministry of Lands updates.

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