Apartment Owners Association: Acts and legal aspects
As Bangalore draws housing demand from all across the country; growing number of multi-storey apartments and high rises are dotting the Bangalore city scape. Formation of apartment association is a vital task and apartment owners or residents need to be aware of all the related laws and regulations as they would ensure the future protection of their rights.
Apartment Owners Association is a statutory body that manages and operates all common resources and amenities. The onus lies on the residents that they enroll themselves as members of their apartment owners association or cooperative housing society to safeguard their rights and titles.
As per norms, builders are supposed to form the Association or housing society within 4 months of the sale of 60 per cent of flats in the complex. The apartment ownes association is then to be handed over from the builder. However, if the builder fails to form and register a society, then the residents can form the association on their own.
Registering the Apartment Association
There are three Acts for registering an apartment or a housing society.
1. Karnataka Apartment Ownership Act, 1972
The Act exclusively deals with residential apartments in Bangalore. If an association is formed under the Act, then each apartment becomes a transferable and heritable property with separate khata and specific undivided interest in land. The apartment buyers need to submit their apartments to this Act by executing a deed of execution.
Disadvantage in forming an association under this Act is that it is often difficult to gather all the owners of the apartment all at the same time for the registration of the association. The builder can obtain the power of attorney from all apartment owners and subsequently can submit the entire property to this Act.
2. Karnataka Societies Registration Act 1960
In Bangalore most of the associations are formed under this Act. The societies formed under this Act are for the promotion of charity, educational, science, art, literature or for the promotion of sports. The Act does not bind anybody who is not a member.
The advantage of the Act is that it can be formed with a minimum of seven members who are not less than 18 years. Both residential and commercial building owners can become members of the society.
The flat owners society formed under this Act can be effective for the limited purpose of managing the day to day affairs of maintenance.
The flat owners society formed under this act can be effective for the limited purpose of managing the day to day affairs of maintenance.
3. The Ownership Flats Act and The Companies Act:
Under this Act, a private company can be formed for the maintenance of an apartment, both residential and commercial. All the owners will be issued shares and rules for governing the allotment and transfer of shares would be formulated. It may not be very effective in Karnataka because undivided interest in land is sold off routinely in Bangalore and the co-operative societies may not have companies as its members. In Mumbai, London which the buildings are built are owned by a company or co-operative society, making this Act effective.
Any type of association has to hold Annual General Body meetings and elect its office bearers. It also has to file audited balance sheets before the concerned authorities every year.
Legal aspects of KAOA
Apartments in Bangalore seem to be following the route to register themselves under the Karnataka Societies Registration Act, 1960. However, as has been witnessed, the Societies Registration Act is unlikely to safeguard the owners’ rights. Section 3 of the Societies Act defines the various types of societies that can be registered under the Act and none of them meet the definition of an apartment association.
Due to this, many legal tussles have been going on between builders and apartment owners in Bangalore. An apartment association can be formed under two acts – the Karnataka Ownership Flats Act (KOFA) and the Karnataka Apartment Owners Association (KAOA). KOFA regulates the process of promotion, construction, sale, management and transfer of the apartment. KAOA was created with a view to make apartments heritable, transferable and mortgageable and to address issues related to management of the property.
In a Cooperative Society setup, the building, common area and land is vested with the Cooperative Society and the allottees of the flat are deemed as “tenants” in legal parlance. It implies that a member has all rights to occupy his or her flat, but does not own an undivided share as is commonly understood. This is because all common property is vested with the Society. Hence, if your Society is registered under the Societies Act, 1960, then you would not be able to claim a mortgaged loan against the apartment you own. The reason being that banks may not be willing to sanction a loan against a mortgaged property (the flat) which you do not wholly own.
It was under these circumstances that the Karnataka Apartment Owners’ Association came up in 1972. In India, the sale and purchase of immovable property is governed by the Transfer of Property Act of 1882, which does not cover apartments. The KAOA equates the ownership of an apartment with undivided share in land and common areas with ownership of immovable properties under the Transfer of Property Act.
Apartment Owners Association
Apartment Association is pivotal in legal handover of an apartment to the owner from the builder. Before the property can be legally handed over to the owners, the builder has to register the Society within four months of sale of 60 per cent of the flats. In case the builder fails to do so, residents can themselves form an apartment association. Following are the requirements for formation of apartment owners association:
(I) Need seven or more members who must be above 18 years.
(II) Memorandum of association with name and objects of association, details of members of governing body with name, address and occupation.
(III) By-laws (rules and regulations) of the association.
(IV) Fee for registration
Legal hand over from builders
Memorandum of Association and By-laws of the Association are pivotal while forming an association or housing society. Ensure that builder has obtained Occupancy Certificate for the apartment. Occupancy Certificate evidences the completion of the building as per the approved plan and assures its compliance to local laws. Here are all the documents for legal handover from the builder.
1. Deed of Declaration under 1972 Act.
2. Occupancy Certificate
3. NOC – Airports Authority of India
4. NOC- Ministry of Environment & Forests
5. Karnataka State Pollution Control Board – Consent
6. NOC from BDA for Construction
7. NOC – BSNL
8. NOC – BESCOM
9. BESCOM Approvals for Transformer & LT Panels.
10. BESCOM Sanction letter and Deposit Receipts
11. NOC- Karnataka Fire & Emergency Services & Conditional
12. Gas Approvals From Oil Corporations & Allotment Order
13. BDA Approved Plans & Modified Plans
14. Lift Approvals from Deputy Chief Electrical Inspector
15. BWSSB Sanction letter/Payment Receipt copy
16. List of Club House Movable Assets
17. Hand over of DG, Transformer & Fire Pump Details
18. Sump & Tank Capacity Details
19. Hand over -STP Pump Details
20. Hand Over – Pump Room Asset Details
21. Hand Over – Swimming Pool Room with List of Assets
22. Hand Over – Sewage Treatment Plant ……….KLD
23. Hand Over – Play Area Assets
24. Hand Over – Basement Fire Hydrant Equipment Details
25. Hand Over – All Block Yard Hydrant Equipment Details
26. Hand Over – Fire Hydrant Details Block wise
27. Hand Over – Fire Extinguisher Details
28. Hand Over – Security Room Main Gate
29. Hand Over – Gas Bank Equipment Details
30. Hand Over – Gym Room Equipment
31. Hand Over – Club house Key List Details
32. Hand Over – Common Area Key list Details
33. Hand Over – List of Manuals & Service Report Files
34. Hand Over – Fire Pump Details
35. Hand Over – List of Architectural Working Drawing
36. Statement of Maintenance Deposit or Corpus Fund
37. Renewals – Annexure – E
38. Address Book of all the Flat Owners.
39. RR.No. Of all the Flats
40. Title Deed
