Ask a Lawyer Series : What entails the handover process from developer to homeowners?

 In Kenya, the handover of management responsibility for a property development from the developer to a management company (MC) or a unit-owners' corporation (depending on the type of development) is governed by the Sectional Properties Act, 2020. This process typically involves the developer appointing a board within a set timeframe after selling a certain percentage of units, followed by the handover of management to the unit-owners or their appointed board.
Key Steps in the Handover Process:
1. Developer's Responsibility:
Sectional Plan Registration: The developer must register the sectional plan, which defines the individual units and common areas.
Corporation Establishment: A corporation, often referred to as "The Owners, Sectional Plan No..." (based on the plan number), is established upon registration of the sectional plan.
Management Agreement: A management agreement should be in place to manage the handover process to the unit owners.
Board Appointment: The developer must appoint a board within 90 days of selling 50% of the units or 180 days after selling the first unit.
2. Unit-Owners' Role:
Election of Board: Unit owners elect their own board of directors.
Management Handover: The developer hands over the management of the estate (common areas, utilities, etc.) to the unit-owners' board.
Auditing: The new board should retain an independent auditor to review the books and records of the MC.
Transfer of Interest: Once the board is elected and the management is handed over, the developer typically conveys the reversionary interest in the mother title to the management company.
3. Legal Framework:
Sectional Properties Act, 2020: This act provides the legal framework for sectional properties, including the handover of management from the developer to the unit-owners.
Registration of Transfer: The transfer of ownership, including the handover of management, needs to be registered at the Lands Registry.
Corporation Notice: The corporation must notify the registrar of any changes in membership (unit owners entering or exiting).
In essence, the process ensures that the developer's initial control over the management of the development is transitioned to the unit-owners, allowing them to manage their common areas and shared facilities collectively through a democratically elected board.