TRANSFORMATION OF THE LONG TERM LEASES IN LIGHT OF THE NEW SECTIONAL PROPERTIES ACT, 2020

 LONG TERM LEASES TRANSFORMATIONS IN LIGHT OF THE NEW SECTIONAL PROPERTIES ACT, 2020

Introduction

Leases as a tenure has been adequately defined and captured in the Kenyan land laws. It has also further been undeniably facing transformations for a while now. It can be stated that the transitions as required by the current land laws more particularly the Sectional Properties Act, 2020 of Kenya is taking slow progress but eventually will get there. This paper thus is an assessment of some of the changes introduced by the Sectional Properties Act, 2020 but with key emphasis on the long term leases.

The long term periodical requirement

The new Sectional Properties Act of 2020 brought a shift in the long-term leasehold tenure in relation to converting the units to sectional units. The Act introduces a 21-year period as a minimum for the conversion of property into sectional units contrasted to the repealed period of 45 years, this therefore maintains the long term lease status.

Long terms leases is one of the types of leases that is now having a migration to align itself with the current laws. The detailed analysis in this paper is majorly going to focus on the changes that are currently in place or anticipated to.

Pursuant to the recent resolution adopted by the Law Society of Kenya (LSK) dated 18^th May, 2021, the major points of discussion touched on the new migration requirements on the existing titles under the long-term leases in sectional properties, the already ongoing transactions, partial registered developments and those new developments where no lease has been registered.

Periodical ultimatum for conversion of long-term leases/ sub leases in sectional properties

With the recent enactment of the Sectional Properties Act 2020 repealing that of 1987, property holders including those on a long-term lease/ sublease period have been given a two-year ultimatum to ensure that they get to register their title to conform with the current Sectional Properties Act, 2020. Further, the title requirements will need to comply with the Land Registration Act, 2012 which was not necessarily the case with the 1987 statute. The other changes brought about in connection with leasehold interest is that of the requirement for Geo-referencing which has now been put as a mandatory requirement to make use of the topographical technology in the current dispensation.

The Ministry of Lands and Physical Planning (MOLPP) recently launched National Lands Information Management System (NLIMS) which is going to be the main platform for the digitization of land entries and records, from searches to registration of transactions, its going to be the major player in this field.

The following steps shall be taken for land parcels within Nairobi which has taken the immediate steps to ensure the fruition of the new regulations:

-       Upon presenting the registration instrument, the MOLPP shall ensure that the land is Geo-referenced with costs borne by them;

-         The sectional plan as it was shall then be registered and units opened for each unit;

-        The records as opened shall then be uploaded to the NLIMS platform for its data keeping and digitization purposes and eventually continue with the registration process to the final steps of issuance of certificate of lease or title.

As for the lands outside Nairobi falling within the repealed land registration regimes, a transition period is given as they shall continue applying the old methods as per the repealed act but shall have a transition period to upgrade and update the same to meet the current laws threshold as stated above. This requirement has been captured under section 13(2) of the Sectional Properties Act, 2020.

The ongoing or pending transactions

This generally relate to the documents that had been lodged in the registry pending registration, those which stamp duty had already been paid for or presented for stamp duty assessment.

The documents that had been presented in the registry but not dealt with will now be completed using the new registration system.  The same applies for those to which stamp duty had already been paid for or presented for stamp duty assessment. The registrar shall however be at liberty to ensure that the documents are compliant with the current requirements and can therefore summon the parties doing the registration and seek for further particulars or requirements.

Where no lease has been presented for registration

With the NLIMS platform being a fully fledged program hinted to ease the registration process, the need to ensure conformity from the word go is of essence, therefore the leases that have not yet been lodged will therefore be lodged pursuant to the current system as introduced in the 2020 Sectional properties Act.

Conclusion

The long-term leases requirement for sectional units conversion has retained but never the less the prescribed period changing drastically, this is to ease the burden and open up the opportunities of doing or converting properties into sectional properties but still maintaining the long term leasehold requirement. The recent launch of NLIMS platform is going to be of much probative value considering the prevailing COVID situation. Weaknesses and challenges are bound to happen as it is a technological platform but the future looks brighter with this program as the merits seem to outdo ant anticipated demerits. Further, the new changes on the long term leases are going to conform with the substantive and procedural land laws legislation being the Land registration Act, 2012 and the Land Act, 2012 which thus assures more harmony and assuredness for the system.