Owners’ Associations Under the Sectional Properties Act

An owners association sectional properties act framework now governs every unit title in Kenya: buy a unit in an apartment block or gated development and you automatically become a member of a corporation you never applied to join and likely never met. That corporation, not the developer and not an informal residents’ committee, is the legal entity responsible for maintaining the building, collecting service charges, and enforcing the rules everyone living there is bound by. This article sets out how that corporation comes into existence under the Sectional Properties Act, 2020, what it is required to do, how disputes with individual owners get resolved, and what happens when someone simply stops paying.

The corporation exists the moment the sectional plan is registered

Section 17 of the Sectional Properties Act, 2020 provides that registration of a sectional plan automatically constitutes a corporation, named “The Owners, Sectional Plan No.” followed by the plan’s registration number. No separate incorporation step is needed, and the Companies Act does not apply to it. The corporation consists of everyone who owns a unit in the parcel, plus anyone who would be entitled to the parcel if the sectional arrangement were ever terminated, and it has perpetual succession and a common seal. This means ownership of a single unit carries membership in the corporation as a matter of law, not as a matter of choice, and that membership changes automatically as units are sold.

What the corporation is legally required to do

Section 20 sets out the corporation’s duties, and they go well beyond simply collecting money. It must keep the common property in a state of good repair, comply with notices or orders from the county government requiring repairs or works, control and manage the common property, and enforce the by-laws and any lease or licence under which the land is held. Unless every proprietor unanimously agrees otherwise, it must also insure the buildings and other improvements against fire and pay the premiums. To fund all of this, section 20(2) requires the corporation to establish and maintain a fund for administrative expenses sufficient for managing the common property and meeting its other obligations, and to raise that money by levying contributions on proprietors in proportion to each unit’s entitlement. This is the statutory basis for what most owners simply call the service charge.

Who actually runs the corporation: owners association Sectional Properties Act governance

Section 26 requires every corporation to have a board of management, constituted as the by-laws provide, and the board exercises the corporation’s powers and duties subject to any restriction or direction given at a general meeting. Any change in board membership has to be filed at the land registry within fifteen days. Section 29 governs the by-laws themselves: on first registration, the standard by-laws set out in the regulations automatically apply, and the corporation can later amend, repeal, or replace them by special resolution, though a by-law amendment only takes effect once it is filed with the Registrar and noted on the sectional plan. Section 29(5) puts one firm limit on this power: no by-law can prohibit or restrict the transfer, lease, or other dealing with a unit, or destroy or modify an easement created by the Act itself, so the corporation cannot use its rule-making power to control who an owner sells to.

Resolving a dispute between an owner and the corporation

Section 30 sets out a specific internal mechanism before a dispute over a by-law contravention has to go anywhere near a courtroom. If an owner breaches a by-law, either the corporation or an aggrieved owner can refer the dispute to a Committee, specifying which by-law was contravened. The Committee hears the matter and issues a written, signed finding and order, and referring a dispute this way does not take away any other remedy the corporation or the owner might otherwise have. If a party simply ignores the Committee’s order, section 30(6) allows the aggrieved party to apply to the court to enforce it, which gives the internal process real teeth without requiring every dispute to start as full civil litigation.

Recovering unpaid service charges

Non-payment is the dispute owners’ associations deal with most often in practice, and the Act gives the corporation a specific set of tools for it. Section 31 allows the corporation to recover an unpaid contribution as a debt, from whoever was the owner when the resolution levying it was passed and from whoever is the owner when the recovery action is actually brought, both jointly and severally, which matters a great deal to a buyer inheriting a unit with an arrears history. Section 31(4) goes further and allows the corporation to register a caution against the title to the unit for the unpaid amount, which under section 31(5) and (6) gives it a charge over the unit ranking with the same priority as a charge under the Land Registration Act. The corporation must withdraw that caution within thirty days of being paid. Section 32 allows interest to be charged on the outstanding balance if the by-laws permit it, and sections 33 and 34 let the corporation recover that interest, and the cost of registering and discharging the caution itself, in the same manner as the underlying contribution.