Law on apartment ownership shifts mortgage clearance

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Economy

Law on apartment ownership shifts mortgage clearance


Lands CS Farida Karoney

Ministry of Lands Cabinet Secretary Farida Karoney. PHOTO | NMG

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Summary

  • Newly published regulations by the Ministry of Land allow a purchaser to get fully discharged by a financial institution on completing the payment of a loan.

Financial institutions like commercial banks will be required to immediately give up the full rights to individual apartment buyers when they finish paying up their mortgages or loans under new regulations aimed at boosting home ownership.

This is opposed to the past where buyers purchasing property on loan under a mortgage scheme could only get a partial discharge from a financial institution upon completion of payment of the loan.

Newly published regulations by the Ministry of Land reform this practice by allowing such a purchaser to get fully discharged by a financial institution on completing the payment of a loan.

The ministry published the regulations meant to guide the long-waited law on sectional property ownership, which President Uhuru Kenyatta’s administration hopes will boost home ownership by allowing apartment owners to possess title documents.

The regulations guide the creation of sectional titles for developed housing units in highrise buildings, in place of land title deeds for the whole developed multi-storied properties.

The titles confer absolute ownership to the unit owners who can deal or transact without seeking any consent from the developer as then was the practice.

The ministry is now collecting public views on the draft Sectional Properties Regulations 2021, which outline the issuance of title documents for individual houses on multi-storeyed buildings paving the way for the gazettement of the rules.

The new law will empower individual housing units owner(s) to utilise their properties as they wish without jeopardising the interests of other units’ owners.

This will allow the sale of property and the use of the sectional property as collateral for a loan.

When you take out a mortgage, the lender registers an interest in, or a charge on, your property. This means the lender has a legal right to take your property. They can take your property if you do not respect the terms and conditions of your mortgage contract. This includes paying on time and maintaining your home.

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