According to section 13(2) of the Sectional Properties Act No. 21 of 2020, long-term leases intended to confer ownership of an apartment, flat, maisonette, townhouse, go down or an office should be converted to sectional units to conform to section 54 (5) of the Land Registration Act No. 3 of 2012 with the deadline been two years after commencement of the Sectional Properties Act No. 21 of 2020 which is 15th December 2022.
This could mean that transactions on such units will not be possible after the expiration of the period until they are included in a sectional plan and registered in a registry. Long-term leases can be converted to sectional units where;
- All Units have been transferred to the respective owners and the reversionary interest has been converted to the management company to hold in trust for the owners as noted in the title.
- All the units have been transferred to the respective owners and the reversionary interests are by written agreement intended to be transferred to the management company to hold in trust of the owners.
- Part of the unit has been transferred to the respective owners and the reversionary interests are by written agreement intended to be transferred to the management company to hold in trust of the owners.
The developer, owner or the management company can apply for conversion of the units.
Where shares in the management company have been transferred to the owners, the conversion can be initiated by the management company. If the shares in the management company have not been issued to the owners as per agreement and the management company has failed to apply for conversion under paragraph, any owner or owners may apply for conversion.
A developer can also apply for conversion, if a developer fails to apply for conversion, the management company or any owner or owners may apply for registration. If the developer is not willing or is unavailable to surrender the title to the parcel for conversion. The Registrar shall register a restriction against the title of the parcel to prevent any further dealings on it if a proprietor or developer fails to comply.
Where the management company or owners of the units intend to apply for conversion but are unable to avail the original title to the parcel, which is not otherwise encumbered, an indemnity shall be provided under regulations 27 and 28 of Land Registration (General) Regulations, 2017 and the Registrar shall by notice in the Gazette called for the title for purpose of conversion.
Upon the expiry of sixty days from the date of the notice, the Registrar shall, if the title is not availed.
- register the sectional plan.
- issue the respective unit owners with a certificate of title or lease for sectional units under this Act, and
- close the parcel register.
Where a property is charged or otherwise encumbered, the application for conversion shall be made by the respective applicants and be delivered to the encumbrancer or appointed representative who shall submit for issuance of a new certificate of lease or certificate of title noted with the encumbrances, to the encumbrancer. The failure by a registered proprietor of a parcel, a developer, a management company, or an owner of a unit to submit a sectional plan to the Registrar for registration shall not invalidate the security or interest held by the encumbrancer.
An application for conversion shall be accompanied by;
- the sectional Plan.
- the sublease or long-term lease.
- certificate of lease; or
- the parcel title or a copy of the parcel title.
Where the management company or owners have initiated the preparation of a sectional plan during conversion and where they fail to avail the approved architectural plans, or the available approved architectural plan is at variance with the development.
- the management company or the owners shall avail an affidavit detailing the loss or inability to avail of the said documents.
- the sectional plan may be prepared by the surveyor without necessarily relying on the approved architectural plan.
- the county government may endorse its certificate on the sectional plan without the production of the approved architectural plans based on the affidavits.
The conversion of long-term leases to sectional units shall not apply to long-term leases not falling into the categories discussed above in respect of.
- which it is expressly provided by an agreement that reversionary interest belongs to the developer or lessor or management company as legal owner and not as trustee.
- large mixed-use developments and phased developments where it is by agreement provided that the reversion shall be retained by the developer or to be otherwise held by a management company; or
- projects of strategic national importance, substantial transactions, and special economic zones, which by their nature, renders it impractical to relinquish reversionary interest.
To engage us in conversion of long term leases to sectional units and registration, contact us.