Breakthrough Attorneys, a corporate Law Firm in Tanzania, is well versed with the law and practice regarding the Unit Titles. It also harbours abundant expertise in real estate sector’s consultancy. We consult on the rules governing Unit Titles, the procedures entailed in establishing or obtaining Unit Titles and termination of the same as well as their applicability in real estate development. The law on Unit Titles being new in Tanzania jurisdiction, it is crucial for us to highlight the essential rules governing the subject and what Unit Title entails.
A. What is Unit Title?
Unit Title is a form of property ownership in which a person can own a certain portion of property in a building for his exclusive use. With the rapid development and increase of population in Tanzania, there has arisen the need of modern residential structures that will accommodate a great number of people at one place as well as maintaining a well-structured city planning.
In the case of unit title developments, various individuals own their units and they share the ownership of the common land (common areas).The common areas include, verandas or balconies, land or yards, gardens and parks, passage ways and halls, stairway and elevators, basements, parking, storage areas and main walls of the property. It also includes central heating and air conditioning systems, piping, wiring, partitions and walls that separate a unit from a common area.
B. The main laws governing Unit Titles in Tanzania:
Whenever people share ownership of anything, there is a need for established rules. In Tanzania, the legislation which govern unit ownership by way of Unit Titles are:
i. The Unit Titles Act, No. 16 of 2008 (The Act),
ii. The Unit Titles Regulation GN No 357 of 2009;
iii. The Mortgage Financing (Special Provisions) Act 2008 and,
iv. The Land Registration Act Cap. 334.
The Act allows separate ownership of 3 dimensional spaces (such as apartments or offices) and shared ownership of common facilities such as driveways and lifts. The Act provides the rules for the unit owners to exercise their joint responsibility. Moreover, the Act also provides for the rules governing ownership of the units.
Our private equity and land acquisition lawyers at Breakthrough Attorneys, highlight the crucial matters in relation to ownership of property by way of Unit titles i.e. from registration of the Unit Plan, to getting the Certificate of title of a Unit, the rights and responsibilities of the owners of such units and developers as well as disposition of the unit.
C. How is a Unit title established?
A Unit Title is established when certain portions of a single real property are owned by individual owners for their exclusive use (Principal Unit) and certain portions of the same property are held in co-ownership for their common use (Common Property).
Under Section 4(3) of The Act, the developer or proprietor is required to register the Unit Plan of such property which should show drawings illustrating the units, boundaries of the common property in relation to the units illustrated as well as boundaries of such units and the approximate floor areas of such units.
D. Forms of Unit property (Building structures) registrable in Tanzania.
The Unit property registrable in Tanzania may be in three forms. It may either be a building in a form of a high rise structure or buildings in rows or terraces or buildings in a cluster form.
E. Can the owner of a Unit be granted a Certificate of Title in respect of a Unit?
Yes. Where appropriate, the Registrar of Titles during application for registration of a Unit Plan, may enter each unit under the Unit Plan separately and issue certificate of Title for each of the Units when a prescribed fee has been paid. Therefore, it is possible for each unit to have its separate Certificate of Title. The Certificate of Title issued for each unit is as good as a certificate of title issued under the Land Registration Act.
F. Can a Unit (Portion) under the Unit Property be disposed of?
The answer to this key part, is yes. As a form of ownership, unit title is similar to leasehold titles in that it can be bought, sold, leased, mortgaged, surrendered, assigned, transferred, bequeathed, partitioned or have an easement created on it. Therefore, under the Act, Breakthrough Attorneys has recorded the key concepts with regards to concept of disposition as follows;
i. Each unit of the unit property is considered as a distinct object of real property which is capable of being alienated or disposed by the owner in whole or in part.
ii. A developer (proprietor) of a building or a co-owner can sell a unit. But, it should be noted that, a portion share in the right to the use of a common area cannot be alienated separately from the principal unit, or be subject of an action for partition or considered separately as real property for purposes of real property tax assessment.
iii. A person cannot dispose of or alienate a divided portion of a principal unit unless the by-laws of co-ownership as established by the Association of co-owners had been altered or the plan of the property had been altered, given a separate property number and recorded with the registrar prior to such alienation. Alienation of a divided portion of a unit contrary to that will have no legal effect whatsoever.
a. A common property comprised in the registered Unit Plan shall be held by owners of such units as co-owners.
b. A common property included in the units in respect of which certificate of title is issued will be held by the co-owners as tenants in common. Furthermore, when the owner of the unit property disposes the unit subject to a certificate of title is deemed to have also disposed of or charged his share on the common property even when the disposition does not refer to such share in the common property.
G. Sale of premises not included in the Unit Plan:
When a building subject of a Unit Plan to be registered contains premises that are not included in the Unit Plan or the premises are occupied by a tenant who is not a party to a sale agreement, the owner of such premises cannot sell the premises until the Unit Plan has been registered with the Registrar of Titles.
H. Other matters to consider:
- Establishment of Unit Titles Association:
Under the Act, it is a mandatory requirement that whenever there are 5 or more co-owners of a Unit property, an Association of such co-owners should be established. The Association should be a body corporate, with perpetual succession, having a common seal and capable of suing and being sued. The Association shall be registered with the Registrar of Titles. Upon registration of such Association it shall be given a plan number by the Registrar of Titles. The Plan number allotted to the Association will be the number assigned to the Units plan when it was registered.
The Association’s main responsibility entails an overall management of the Common Property, receiving notices from government authorities and Planning Authorities and submission of new plans to the registrar incase the unit property has been altered.
- Registration of by-laws of Unit Property:
When a number of co-owners is below five, then the Act requires that by-laws on the use of common areas and management of the Unit Property to be registered with the Registrar of Titles. The Association will be entitled to open a case against the owner or tenant of the unit who habitually violates the by-laws.
- Differences between Unit Titles and Subtitles.
It is easy to confuse between Unit Titles and Subtitles. The two entail different features which are very distinct when it comes to their establishment, their mother titles, disposition and their overall management. The differences entail the following:
– Existence of mother title:
Once Unit Titles are established from the mother title (the main title), the mother title becomes irrelevant. This means that the mother title ceases to have legal power and cannot be dealt with in any way including by disposition i.e. sale, lease, mortgage and so on. The Unit titles created from the mother title can be dealt with in any way including their disposition. On the contrary under Subtitles, once the subtitles are created from the mother title, the mother title does not cease to legally exist and can be dealt with in any way including by way of disposition.
– Titles’ Management:
The Unit Titles are well structured and systematically managed by the established Association of Unit Titles which establishment is mandatory under the Act (The Unit Titles Act). On the contrary, Subtitles’ management is not mandatorily provided under any legislation and their overall management are not well structured unless the owners of the subtitles resort on their own volition to establish an association under other legislation to manage such titles.
– Transfer Process:
The transfer of Unit Titles is different from other forms of transfer when it comes to the registration process. Under the Act, it is a mandatory requirement during registration of a transfer of a Unit Titles to the Registrar of Titles to present a certificate from the Association of Unit Titles stating that a resolution for such transfer was properly passed by the Board of the Association and all necessary consents are obtained. Under subtitles the transfer process is the same as any other transfer of titles.
I. Termination of Unit Status of a property:
An Association has a power to make an application for termination of the Unit status of a building or land. Such an application shall be lodged to the High Court (Land Division). The court’s determination of such application will be based on whether it is just to terminate the Unit Status taking into consideration the rights and interests of owners as a whole.
Unit Title was not introduced in Tanzania until 2008, when the Unit Titles Act was enacted. We, Breakthrough Attorneys are of a strong view that introduction of Unit Titles in Tanzania has and will facilitate town planning at large. This includes good residential infrastructures, access to shops and smooth running of the business and easy access to offices. It also facilitates housing Finance such as Mortgage and Lease. It is easy and less expensive for the government to organize and facilitate provision of social services example sewage, electricity hospitals and others.
On that note therefore, investment in Unit Title Properties is highly inevitable and advised. Breakthrough Attorneys as a corporate firm is built with professional experts in the legal field and other real estate consultants who work hand in hand in providing expert opinion (consultation) and in establishing, maintaining as well as termination of the unit titles.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Breakthrough Attorneys, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.