The enactment of the Sectional Properties Act 2020 and the gazettement of the Sectional Properties Regulations 2021 brought about numerous changes in the ownership of sectional titles including establishing corporations to administer common areas amongst other functions.

Establishment of the Corporation

A corporation is established on the registration of the sectional plan. One is required to fill out an application form detailing the registered Sectional Plan Registration Number, and the details of the units and owners. The duly filled form is submitted on the Ardhisasa Portal under the Sectional Properties tab for registration. This form can be lodged by either an Advocate or a developer. Once the corporation is registered, the Registrar issues a certificate of registration.

Mandate Corporation

The mandate of the corporation is to control, manage, and administer common areas for the sectional units, apartments, or offices, insure the building and all the improvements thereon, pay insurance premiums, manage all subsequent transfers of the units and the common areas, manage an administrative fund and handle all estate disputes as regards payment of any charges.

Conversion of Sub-leases to Sectional Units

Sub-leases that intend to confer ownership, registered before the operationalization of the current Sectional Properties Act needed to be registered within two years of the Act’s commencement. This notwithstanding, this process is still ongoing despite the timelines issued in the Act.

To initiate the conversion process, an applicant (management company, developer, unit owner, chargee, or the proprietor) must submit a request to the registrar for conversion, along with the sectional plan, the registered sub-lease, and the original mother title (if the original title is unavailable a deed of indemnity). Subsequently, the registrar shall then call for the original title by publishing a Gazette Notice. After the expiry of 60 days from the date of the notice, the Registrar shall, if the title is not availed, proceed with registering the sectional plans and issue the unit holders with certificates of title or lease.

The advantages of converting the long-term leases/ sub-leases to sectional units are:-

• All unit owners will now own a portion of the common areas with the share indicated on each owner’s title;
• A purchaser of a sectional unit will not pay any company incorporation costs as well as the reversionary interest cost as it has been abolished;
• The unit owners will now own independent titles;
• Each unit owner will pay their apportioned land rates and rents;

Transition from a Management Company to a Corporation.

The management company undertaking the above conversion shall transfer all assets and liabilities to the corporation as soon as the conversion process is complete and in any case within one year from the date of registration of the corporation. These transfers will be done based on the laws governing the ownership of those assets and liabilities. The management company will then be wound up as per the Companies Act and Regulations.

In conclusion, this legislation has established a comprehensive structure that makes sectional unit ownership, acquisition, and maintenance easier. It is now possible for buyers of townhouses and sectional units/apartments to have independent titles and to have the corporation manage the estate’s operations.

Please contact us at info@cfllegal.com  should you require further information.