A condominium or ‘condo’ is a building structure divided into several units that are separately owned and which are surrounded by common areas that are jointly owned by all owners of the units. The common areas may include the compound, staircase, hallways and amenities such as a swimming pool, children’s play area and gym. The difference between an apartment building and condominium is entirely based on ownership.
The term condominium is an invented Latin word as a result of joining two words ‘con’ and ‘dominium’. From its Latin origin, the term can be loosely translated as co-ownership. The plural of the term is either condominiums or condominia depending on the writer. For this paper, I shall use ‘condominiums’.
Condominiums in Uganda are regulated by a number of laws including general laws on land, taxation, ordinances of the area where the condominium maybe located but specifically by the Condominium Property Act of 2001 and Condominium Property Regulations of 2002. The Regulations were amended in 2012. In this paper, I shall briefly discuss aspects of the Condominium Property Act and Regulations.
A condominium status of any building or planned building starts with registration. Before registration however one must first obtain approval of the Condominium plan from the relevant local authorities. The considerations for approval differ depending on location but include legitimate architectural drawings and civil structural plans.
After obtaining approval from the local authorities, the next step is to apply for registration of the condominium plan with the registrar of titles. The condominium plan may be registered as one whole in respect of the entire development or as a phased plan at the developer’s discretion.
Upon registering the condominium plan, the registrar closes the part of the land register relating to the parcel of land described in the plan and opens a separate part for each unit described in the plan. The Registrar then issues new certificates in respect of each unit upon payment of the prescribed fee.
The certificate of title issued in respect of a condominium unit has the same effect as a certificate of title issued for land under the Registration of Title Act Cap. 230. Therefore the certificate of title is transferable through sale and transmittable upon death as part of the unit owner’s estate.
The registered condominium plan is very important because unit owners’ interests are limited to only what is registered. As such in addition to the Certificate of title, an intending purchaser of a condominium unit ought to specifically examine the condominium plan before concluding a sale transaction.
After acquiring a unit, a unit owner who desires to sub-divide his or her unit or consolidate two or more units may only subdivide or consolidate after obtaining approval of the local authorities of the area where the condominium is located. After obtaining the approval, he or she is also required to register with the Registrar of titles a modified condominium plan relating to the unit intended to be subdivided or consolidated.
A condominium property is developed for a particular use which is commonly residential but it may also be for non-residential purposes such as shops or warehousing. Therefore any unit owner who intends to change the use of his or her unit will require a unanimous consent by all unit owners and approval by the local authorities. If the change intended will result in a modification of the condominium plan then the owner has to submit to the Registrar a modified condominium plan.
The common property of the condominium is owned by all the unit owners as tenants in common in shares proportional to the unit factor. This means that if one owns fifty percent of the total units comprised in a condominium, then he or she also owns fifty percent of the common property. Key to note however is that although the tenants in common hold distinct and independent interests in the common area, according to the law their interest is undivided and as such there are no demarcations or boundaries drawn in favour of each unit owner.
By law, the unit owners are required to constitute themselves as a ‘corporation’. The corporation is thus composed of all unit owners who may at inception include the developer. Vital to note is that the obligation to convene the first corporation meeting is on the developer and there are strict timelines within which the meeting ought to be convened.
The corporation like a company has perpetual succession with capacity to sue and be sued although the Act specifically provides that the Companies Act does not apply to the formalization of the corporation.
The corporation is supposed to make by-laws for the management of the units and the common property. The said by-laws are binding on all unit owners and violation or breach of the by-laws by a unit owner would result in a fine and in case of non-payment of the fine the unit owner maybe sued by the corporation for civil penalties.
The corporation is also supposed to elect a management board from amongst themselves. The management board has the obligation to convene a general meeting of the unit owners at least once every year. The voting rights of a unit owner at a meeting are dependent on the unit factor thus every unit owned confers a vote. The management board then elects a managing Agent to deal with the day today running of the corporation and condominium.
The Act also provides for sharing of common property by two or more corporations and in such a case, each corporation is obligated to contribute to the maintenance of the common property.
Where it becomes impractical to continue with the condominium status, it can be terminated. The first step to terminating is a unanimous resolution by the corporation. After the resolution, the corporation then applies to court for an order terminating the condominium. The court will only make an order terminating the condominium if it is satisfied that it is just and equitable for the condominium to be terminated.
After obtaining the order of court terminating the condominium, the Corporation is obligated to immediately file with the Registrar of Titles a notice of termination.
Upon receipt of such notice the Registrar makes notification to that effect on the condominium plan and upon making such notification, the owners of the units in the plan are entitled to the earlier parcel as tenants in common in shares proportional to the unit factors.
An investment in a condominium property just like any other real estate investment is undoubtedly a prime investment for anyone to make. Therefore an investor whether as developer or unit owner ought to understand and follow the Condominium Properties Act and Regulations because they are filled with mandatory provisions that cannot be derogated from and strict timelines within which specific actions must be done.
Disclaimer
This article provides general information only. It is not intended to provide advice with respect to any specific set of facts, nor is it intended to be relied on as legal advice.
About the Author;
Allen Kagoya is a commercial lawyer and a Partner of M/s TARA Advocates. For comments and inquiries contact her at allen@tadvocates.com or +256782923852 or for other services by the firm check out the firm’s website on www.tadvocates.com