Sectional Title After the Deadline: What an Unconverted Long-Term Sublease Is Worth Now, and How to Convert It

In short, the Sectional Properties Act, 2020 gave the owners of every registered long-term sublease over an apartment, flat, maisonette, townhouse or office two years from 28 December 2020 to convert it into a sectional title, and the two years ran out on 28 December 2022 with no extension. An unconverted sublease is not void and the owner’s interest has not been extinguished, but the registrar is directed to place a restriction on the mother parcel, so a unit on an unconverted sublease is one the owner is unable to sell, charge or transmit cleanly until it is converted. Conversion is still possible, the registries are still processing it, and this article explains what the position is, how conversion is done, what it costs, and what an owner does when the management company has vanished, the developer will not sign, or the head lease is running out.

Where you are

You bought your apartment in Kilimani, Lavington, Nyali or Westlands in 2009. You hold a registered sublease for ninety-nine years less ten days and a share certificate in the management company, and for a decade it was as good a title as anyone in the building had. Then the buyer’s bank declined to lend against it, or the buyer’s advocate asked whether the unit had been converted, or the registry declined to register a charge, and you learned the word sectional. You want to know whether you still own what you bought, what it is worth, and what it takes to put right.

What the Act did

Before 2021 an apartment in Kenya was owned through a long-term sublease from a management company which held the head title, and the sublease was registered under the Land Registration Act. The Sectional Properties Act, 2020, in force from 28 December 2020, replaced the old structure with the sectional unit, a unit shown on a registered sectional plan and carrying its own certificate of title or certificate of lease, with the common property held by a corporation of the owners. For new buildings the change was immediate. For existing buildings section 13(2) provided for every long-term sublease intended to confer ownership of an apartment, flat, maisonette, townhouse or office registered before the Act to be reviewed to conform to section 54(5) of the Land Registration Act within two years, which meant a sectional plan registered and unit titles issued by 28 December 2022. Regulation 18 of the Sectional Properties Regulations, 2021 set out how, and regulation 22 exempted a narrow class of leases.

The two years passed. No extension was gazetted and the Act was not amended. Most buildings in Nairobi missed the date, many owners never heard of it, and the profession spent 2023 and 2024 arguing about what the missed deadline meant.

What the position is now

The honest answer has two halves, and both matter. The first is reassurance. An unconverted sublease is not void. The owner’s registered interest, and any bank’s registered charge over it, are not extinguished by the passing of the date, and nothing in the Act says they are. A person who bought a flat on a registered sublease in 2009 owns the flat today.

The second is the difficulty. The Regulations direct the registrar to register a restriction against the mother parcel once the two years expired, to prevent further dealings until the building is brought into conformity, and in practice registries now decline to register transfers, charges, further subleases and transmissions over units in unconverted buildings. So the unit is owned but frozen. The owner is unable to sell it to a buyer who needs a registered transfer, unable to charge it to a bank, and unable to pass it to heirs by a registered transmission, until the building is converted. Whether an unconverted sublease is now unregistrable or merely awaiting conversion has not, as at January 2027, been decided by a reported judgment, and the position rests on the Regulations and on registry practice. The practice is consistent across Nairobi, and it is the practice an owner must plan around.

Which answers the question in the title. An unconverted sublease is worth the unit, less the cost and delay of conversion, less the discount a buyer applies to a title he is unable to register today. In the market the discount runs from a modest reduction where the building is organised and conversion is under way, to a severe one where the management company is defunct and nobody has started. The value is recovered by converting, and by nothing else.

How conversion is done

1. Someone applies. Under regulation 18(2) the application may be made by the developer, by the management company or by the unit owners themselves, on the prescribed forms, which are SP16 for the conversion and SP7 for the sectional plan. The last of the three matters, because it means the owners are not hostages to a developer who has moved on or a company which has been struck off.
2. A licensed surveyor prepares the sectional plan. The plan is drawn from the architect’s approved building plans, shows every unit and the common property, is geo-referenced, and is approved by the Director of Surveys before it goes to the registry. Where the building plans were never approved by the county, or the building as built departs from them, this is where the conversion stalls, and it is usually the most expensive step to cure.
3. The head title is checked. A freehold mother parcel converts to freehold unit titles. A leasehold mother parcel converts to certificates of lease, and the head lease must have at least twenty-one years to run. Many Nairobi buildings sit on ninety-nine year leases granted in the 1970s and 1980s, and a head lease with eighteen years left must be extended before the units are able to convert. The head title must also be clear of rates and rent arrears and of any charge which will not consent.
4. The sectional plan is registered. The registry registers the plan, closes the register of the mother parcel and the register of each sublease, and opens a new register for each unit.
5. Unit titles issue. Each owner receives a certificate of title or certificate of lease for the unit, on which the owner’s share of the common property is endorsed, so the share certificate is no longer needed. A bank which held a charge over the old sublease has the charge carried across to the new title.
6. The corporation takes over. The owners become a corporation under section 17 of the Act, which holds the common property and runs the building under registered by-laws. The management company transfers its assets and liabilities to the corporation within a year and is then wound up.

What it costs

Conversion is a building exercise, not a unit exercise, and the cost is shared. The surveyor’s fee for the sectional plan is the largest item and depends on the number of units and the state of the approved plans, and for a block of forty units it runs to several hundred thousand shillings shared among the owners, more where the plans must first be regularised with the county. The Director of Surveys and the registry charge fees for approval of the plan, registration and the issue of each unit title, all modest. Stamp duty is not payable again on conversion where it was paid on the original sublease, which for most owners it was, and is payable only where it was not. The advocate’s fee for coordinating the owners, preparing the application and the corporation’s by-laws and seeing the titles through the registry is quoted per building and divided per unit, and for a well-organised block it is a small fraction of the value each title recovers. A single owner who wants to move faster than the building is able to carry the shared costs and recover them under the by-laws, and often does.

When nobody will cooperate

The owners who write to us are rarely stopped by the procedure. They are stopped by people. The developer has sold out and will not sign anything. The management company has not filed a return in ten years and has been struck off. The directors are two of the original owners who moved abroad. The building plans are in a box nobody has found. Each of these has an answer.

Where the developer will not act, the owners act, because the Regulations let them. Where the management company is struck off, it is restored to the register on application to the Registrar of Companies so it may transfer the head title and its assets, or the owners apply to court for orders vesting the common property in the corporation. Where the directors are absent, the members remove them under the articles and appoint owners who are present. Where the plans are lost, the county’s records are searched and, failing those, the building is re-surveyed and the plans regularised, which the Regularisation of Unauthorised Developments law now makes possible for buildings which were never approved. Where a minority of owners refuses to join, the majority proceeds, because the sectional plan does not need every owner’s signature. And where the head lease is short, the lease extension application goes in first, and our article on extending a leasehold sets out the process.

Buying or selling an unconverted unit

A seller with an unconverted sublease should start the conversion before going to market, because a buyer’s advocate will make the sale conditional on it, a buyer’s bank will not lend without it, and a seller who waits to be asked negotiates from weakness. A buyer offered an unconverted unit has three positions. Walk away. Buy at a price which reflects the frozen title, with the conversion as the buyer’s project. Or, the position we prefer, sign a conditional agreement under which the seller converts, the deposit sits in the client account and completion follows the issue of the unit title. Our article on buying an apartment in Nairobi covers the rest of the checks.

Questions we are asked every week

Is my long-term sublease still valid after the December 2022 deadline?

Yes. Your registered interest is not extinguished. But the registrar is directed to restrict dealings on the mother parcel, so you are unable to sell, charge or transmit the unit by registered instrument until the building is converted.

Is it possible to sell my apartment with a share certificate and an old sublease?

Only to a buyer who will accept an unregistrable transfer at a discounted price, which few buyers and no banks will. Convert first, or sell conditionally on conversion.

Who is allowed to apply for conversion?

The developer, the management company or the unit owners themselves, under regulation 18(2) of the Sectional Properties Regulations, 2021. Owners do not need the developer’s permission.

How much does sectional title conversion cost in Kenya?

The surveyor’s sectional plan is the main cost and is shared across the building, running to several hundred thousand shillings for a mid-sized block. Registry fees are modest. Stamp duty is not paid again where it was paid on the original sublease. Advocate’s fees are quoted per building.

How long does conversion take?

Four to nine months for an organised building with approved plans and a clean head title. Longer where the plans must be regularised, the management company restored or the head lease extended.

The head lease has fewer than twenty-one years left. What now?

The lease must be extended before the units convert. The extension application is made by the management company or the owners to the Ministry or the county, and it is started first because it is the slower of the two.

Does the management company disappear?

Yes. It transfers its assets and liabilities to the owners’ corporation within a year of conversion and is wound up. The share certificates fall away, because each unit title carries the owner’s share of the common property.

Next step

Send us your sublease, your share certificate and, if you have it, a copy of the head title, by e-mail to peter@pmlaw.co.ke or WhatsApp through +254 714 644 080. We reply within one working day with the state of the building on the register, what conversion needs in your case, and a per-building quote which the owners share. Nothing is charged until you instruct us.

Peter Maina is a Partner of Peter Maina & Company Advocates, Hazina Towers, Nairobi. He is an Advocate of the High Court of Kenya practising in conveyancing and real estate, corporate and commercial, and capital markets law, and acts for apartment owners, management companies and developers on sectional title conversions in Nairobi and the coast.