Understanding Management Corporations Under Kenya’s Sectional Properties Act

Multi‐unit developments in Kenya such as apartment blocks and gated estates are now governed by the 2020 Sectional Properties Act (Cap. 286). This law replaces informal homeowner setups with a clear statutory framework. As soon as a developer registers a sectional plan, a management corporation (technically the “body corporate”) is created by law. That corporation is automatically made up of all unit owners, and it has perpetual existence to manage the shared elements of the property. In practice, this means your apartment building or townhouse complex will have a legal entity (often named “The Owners, Sectional Plan No. X”) whose job is to maintain common areas, enforce community rules, handle insurance, and generally administer the property. Put simply, the management corporation is the official, democratically controlled body that stands in for what used to be informal management companies or developers’ committees.

 In Kenya’s sectional-title system, a corporation of unit owners is created for each development to manage shared property and services

Service Charges and Fund Management

To keep the common property in good condition, the Act empowers the corporation to set up a common fund and levy contributions (service charges) on the owners. In practical terms, the board of the corporation proposes an annual budget for expenses like repairs, cleaning, security, and insurance, and each owner pays a share based on their unit’s size (“unit entitlement” or factor). The law explicitly requires the corporation to “raise [the] amounts so determined by levying contributions on the proprietors in proportion to the unit entitlement of their respective units”. These contributions are collected and held by the corporation (often through its appointed manager or treasurer). The board (through its treasurer) must keep proper financial records, bank the monies, and present audited statements at the annual meeting. If an owner falls behind on payments, the corporation can charge interest and even register a caution (a lien) against the unit title for unpaid levies. In all of this, control remains with the owners via the corporation and only a lawful resolution (typically an owners’ vote) can authorize spending or special charges. In short, the corporation, not an outside developer, decides the budget and collects the fees, and owners have the right to inspect records or question expenditures if needed.

• Contributions are set by a budget and apportioned by unit factor.

• The elected board/treasurer manages the account, presents budgets and audits at meetings.

• Unpaid levies may incur interest and be secured by a charge on the unit title.

Voting Rights and Unit Entitlement

Every unit on a sectional plan is assigned a unit factor (often adding up to 10,000 for the whole scheme), which reflects its size or value. This unit factor determines each owner’s share of the common property and their cost share of services. Crucially, voting in the corporation uses these unit factors too. By default, each owner gets one vote per unit if a show-of-hands is used, but any owner can demand a poll; on a poll vote, each owner’s voting power is weighted by the sum of the unit factors for the units they hold. This means larger units carry proportionately more votes. Major decisions (like changing by-laws or common areas) require a special resolution which is approval by at least 75% of owners and at least 75% of the total unit factors. Truly fundamental moves (like selling all the land or dissolving the scheme) need unanimous consent of all owners . In practice, this democratic structure ensures that every owner has a formal say, and that larger-property owners bear a larger share of responsibility.

• Unit factors determine each owner’s share of common property and voting weight.

• At meetings, a poll uses unit-factor weighting; a show-of-hands gives one vote per person.

• “Special” and “unanimous” resolutions have high thresholds (75% and 100% of unit factors, respectively).

Dispute Resolution within the Corporation

The Act encourages owners to resolve issues internally first. It allows the corporation (through its board) to establish an Internal Dispute Resolution Committee as needed. This small panel (often drawn from owners) can hear complaints about by-law breaches, unpaid charges, or other internal conflicts. For example, if an owner violates the corporation’s by-laws, the corporation or any aggrieved owner can refer the matter to this Committee under Section 30. The Committee then holds a fair hearing and issues a written decision. Its orders are binding: if an owner defies a Committee order, the aggrieved party can apply to the Environment & Land Court to enforce it. Conversely, any party unhappy with the Committee’s ruling can appeal to the Court on points of law. In effect, this system provides a quick, expert forum for most community disputes before resorting to court. It keeps resolution “in‐house” and avoids the expense of litigation for routine issues.

• Corporations may form a Dispute Resolution Committee to handle owner disputes.

• Owners and the corporation can refer by-law or maintenance disputes to this Committee.

• Committee orders are in writing; non-compliance can be enforced in court, and decisions are appealable.

Changing or Removing Ineffective Management

Owners have several levers if the current management, whether the board or its hired management company, is underperforming or acting improperly. First, the board of management is elected by owners, and any director can be removed by a vote. In fact, by-law rules state that the corporation “may, by special resolution at a meeting, remove a member of the Board before the expiration of [their] term”. Also, the regulations allow owners representing just 25% of the units to requisition an extraordinary general meeting, for example, to table a vote of no confidence. In practice, this means a minority of owners can force an EGM to address problems or change the board.

If a developer-installed management company or agent is the concern, the Act specifically regulates their contracts. Under Section 44, the corporation can terminate its management agreement (typically after an initial period) by giving written notice. In plain terms, once control has passed to owner‐elected directors (i.e. after the developer loses majority control), the owners can dismiss the manager (subject to any contractual notice) even if the original contract was developer-favorable. Practically, owners can vote to remove or replace an unfair management company, either under the terms of its contract or through a corporation resolution. Throughout all of this, the law insists the corporation (i.e. the owners) holds the decision-making power: a management company cannot override owners’ votes, increase levies, or change by-laws without their consent.

• Board members are removable by a special resolution of owners.

• Owners holding ≥25% can force the board to call an extraordinary meeting to vote on any issue.

• A management company’s contract may be lawfully terminated by the corporation once owners are in control.

• Importantly, any service contract or developer clauses that hamper owners’ rights are void to the extent they conflict with the Act.

In short, Kenyan law empowers unit owners with multiple checks on ineffective management. Owners should note their rights to inspect accounts, attend/hold meetings, and vote out mismanagement, all grounded in the Act’s provisions.

This statutory framework can be complex for first-time buyers or overseas investors. For expert guidance on any sectional title purchase or ownership issue contact us. Our team specializes in pre-purchase due diligence and post-sale advice under Kenya’s Sectional Properties Act. Schedule a strategy session today to ensure your investment and your rights are fully protected.

Sources:

• Sectional Properties Act (Cap. 286)