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What you must know about condominiums
What you need to know:
Under leasehold property, after the expiration of the lease, ownership reverts to the lessor, Alex Matovu writes.
Many prospective first-time home-owners are appreciating the need to consider purchasing a condominium as opposed to a fully-fledged stand-alone house. For an average middle-class consumer, the idea of paying for a separate ownership of individual units in a multiple unit building is a natural step up from the grueling monthly rent payments that majority have to endure in their early professional life. Indeed, there is an intuitive advantage in paying for an apartment that you will eventually own, instead of incessantly paying for residence in an apartment until you find a place of your own.
As such, investors, in their attempt to satisfy the demand for residential apartments have begun to tailor their offerings to the reality that most people would rather own the apartment than rent it. It is therefore pertinent to understand the legal prerequisites for condominium property development straight from the genesis of a project.
The development and ownership of condominiums is governed by the Condominium Property Act, 2001 and the regulations thereunder. As with most other construction projects, the Act requires a proprietor or developer of an existing or planned building to submit to the registrar of titles a condominium plan conforming to certain requirements. This plan is effectively what permits the division of a building on a piece of land (called a parcel) into condominium units each of which will have their own separate titles. The plan, which may be wholesome or phased, must meet the requirements under Section 9 of the Act.
Delineation of boundaries
Key to note under that provision, besides the requirements for delineation and particularisation of the boundaries of each unit, is the requirement that the plan is accompanied by certificates set out under Section 10. These crucial certificates include that of a registered surveyor, that of the local authority, and that of a registered architect.
The surveyor’s certificate shows that the planned structure is within the external surface boundaries of the piece of land on which the units are to be developed. The local authority in this case refers to the district, urban or local physical planning committees, as the case may be, whose roles, as specified under the Physical Planning Act, 2010 (as amended in 2020) include the approval of development applications relating to various real estate developments. The local authority’s certificate is meant to confirm that the plan has met all the laws regulating building construction and accordingly been approved by the physical planning authorities. The architect’s certificate on the other hand is required where there is already a building in place that is sought to be divided into condominium units. This certificate serves the purpose of ensuring that the units indicated in the condominium plan correlate with the existing structure.
Discernibly, the law requires that before developing condominium property, one must have complied with the physical planning legal and regulatory framework. It is thus crucial that the developer, even when acquiring a parcel for eventual development, ascertains that the physical planning laws and regulations were duly complied with. Failure to ascertain that, exposes the developer to a risk of having a parcel which will be denied approval by the physical planning committee for infractions of a previous owner/developer.
Parcels under leasehold
Notably, condominium property arises from existing registered land, and the law accords it rights equivalent to those enjoyed by any other title holder under the Registration of Titles Act, Cap 230. This mundane fact carries an implication that both developers, owners and financiers must be alive to, especially when it concerns units arising from a parcel that was under the leasehold tenure.
The uniqueness of leasehold property is that after the expiration of the lease, ownership reverts to the lessor. The effect is that where condominium units are derived from a parcel under leasehold tenure, the reversionary interest therein lies with whoever leased that property. This is a very important fact to disclose to people purchasing condominium property since in such a case, they may find themselves dispossessed in a manner they did not envisage. As Maya Angelou remarked, “the ache for home lives in all of us, the safe place where we can go as we are and not be questioned.” Developers and purchasers alike should thus be keen not to create a home where the owner will be “questioned” some twenty or fifty years later.
The author is a partner at Signum Advocates.
