Relevance of KAOA under RERA

9 September 2020 - 1:24pm — murali772

Typical case of KOFA/ KAOA compliance

Listed below are relevant extracts of Sections/ Clauses from KOFA and KAOA, along-with my comments against each (in italics), in support of my claim of the 132 unit high-rise apartment complex I own an a flat in (and currently reside in), having been satisfactorily submitted to the provisions under KAOA:

KOFA compliance

Sec 4: Promoter before accepting advance payment or deposit to enter into agreement and agreement to be registered.- Notwithstanding anything contained in any other law a promoter who intends to construct or constructs a block or building of flats, all or some of which are to be taken or are taken on ownership basis, shall, before he accepts any sum of money as advance payment or deposit, which shall not be more than twenty per cent of the sale price, enter into a written agreement for sale with each of such persons who are to take or have taken such flats, and the agreement shall be registered under the Registration Act, 1908 and such agreement shall contain the prescribed particulars; and to such agreement there shall be attached such documents or copies thereof, in respect of such matters, as may be prescribed.

We have individually entered into Agreements for Sale, of UDS, as per Sec4 of KOFA, between XYZ Housing, ABC Developers & the buyer, on 08-09-2003, along-with payment of 1^st payment instalment.

Sec 11: Promoter to convey title, etc., and execute documents, according to agreement.- A promoter shall take all necessary steps to complete his title and convey to the organisation of persons, who take flats, which is registered either as a co-operative society or as a company as aforesaid, or to an association of flat-takers his right, title and interest in the land and building and execute all relevant documents therefor in accordance with the agreement executed under section 4 and if no period for the execution of the conveyance is agreed upon, he shall execute the conveyance within the prescribed period and also deliver all documents of title relating to the property which may be in his possession or power.

"association of flat takers" includes us

Seec 15: Offences by Companies.-

(2) Notwithstanding anything contained in sub-section (1) where an offence under this Act, has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.- For the purpose of this section,- (a) ‘company’ means a body corporate and includes a firm or other association of individuals

significant

Sec 17: Act to be in addition to Transfer of Property Act and to over-ride contract to the contrary.-The provisions of this Act, except where otherwise provided, shall be in addition to the provisions of the Transfer of Property Act, 1882, and shall take effect notwithstanding anything to the contrary contained in any contract.

This should take care of property transfer

KAOA compliance:

Cl 1: An Act to provide for the ownership of an individual apartment in a building and to make such apartment heritable and transferable property and for matters connected therewith. WHEREAS it is expedient to provide for the ownership of an individual apartment in a building and to make such apartment heritable and transferable property and to provide for matters connected therewith

self-explanatory

Cl 3 (b): “apartment owner” means the person or persons owning an apartment and an undivided interest in the common areas and facilities in the percentage specified and established in the Declaration

self-explanatory

Cl 3 (i): “competent authority” means in relation to building constructed or to be constructed by the Housing Board, the Secretary of the Housing Board and in any other case, the Registrar of Co-operative Societies as defined in the Karnataka Co-operative Societies Act, 1959

This is the problem area, with RoCS not properly empowered

Cl 4: Status of apartments.- Each apartment, together with its undivided interest in the common areas and facilities appurtenant to such apartment, shall for all purposes constitute heritable and transferable immovable property within the meaning of any law for the time being in force in the State: and accordingly, an apartment owner may transfer his apartment and the percentage of undivided interest in the common areas and facilities appurtenant to such apartment by way of sale, mortgage, lease, gift, exchange or in any other manner whatsoever in the same manner to the same extent and subject to the same rights, privileges. obligations, liabilities, legal proceedings and remedies as any other immovable property, or make a bequest of the same under the laws applicable to the transfer and succession of immovable property.

self-explanatory

Cl 6: Common areas and facilities.- (1) Each apartment owner shall be entitled to an undivided interest in the common areas and facilities in the percentage expressed in the Declaration. Such percentage shall be computed by taking as a basis the value of the apartment in relation to the value of the property and such percentage shall reflect limited common areas and facilities. (2) The percentage of the undivided interest of each apartment owner in the common areas and facilities as expressed in the Declaration shall have permanent character, and shall not be altered without the consent of all of the apartment owners expressed in an amended Declaration duly executed and registered as provided in this Act. The percentage of the undivided interest in the common areas and facilities shall not be separated from the apartment to which it appertains, and shall be deemed to be conveyed or encumbered with the apartment even though such interest is not expressly mentioned in the conveyance or other instrument.

self-explanatory

Cl 9: Encumbrances against apartments; removal from, encumbrances, effect of part payment.- (1) Subsequent to recording the Declaration as provided in this Act, and while the property remains subject to this Act, no encumbrance of any nature shall thereafter arise or be effective against the property. During such period encumbrances may arise or be created only against each apartment and the percentage of undivided interest in the common areas and facilities appurtenant to such apartment, in the same manner and under the same conditions in every respect as encumbrances may arise or be created upon or against any other separate parcel of property subject to individual ownership.

self-explanatory

Cl 11: Contents of Declaration.-

(1) The Declaration shall contain the following particulars, namely:-

(a) description of the land on which the building and improvements are or are to be located; and whether the land is freehold or leasehold;

(b) description of the building stating the number of storeys and basements, the number of apartments and the principal materials of which it is or is to be constructed;

(c) the apartment number of each apartment, and a statement of its location, approximate area, number of rooms, and immediate common area to which it has

access, and any other data necessary for its proper identification;

(d) description of the common areas and facilities;

(e) description of the limited common areas and facilities, if any, stating to which apartments their use is reserved;

(f) value of the property and of each apartment, and the percentage of undivided interest in the common areas and facilities appurtaining to each apartment

and its owner for all purposes, including voting; and a statement that the apartment and such percentage of undivided interest are not encumbered in any manner whatsoever on the date of the Declaration;

(g) statement of the purposes for which the building and each of the apartments are intended and restricted as to use ;

(h) the name of a person to receive service of process in the cases hereinafter provided, together with the residence or place of business of such person which shall be within the city, town or village in which the building is located:

(i) provision as to the percentage of votes by the apartment owners which shall be determinative of whether to rebuild, repair, restore, or sell the property in the event of damage or destruction of all or part of the property;

(j) any other details in connection with the property which the person executing the Declaration may seem desirable to set forth consistent with this Act: and

(k) the method by which the Declaration may be amended, consistent with the provisions of this Act.

(2) A true copy each of the Declaration and bye-laws and all amendments to the Declaration or the bye-laws shall be filed in the office of the competent authority.

Self-explanatory - we filed a copy of the Deed of Declaration through registered post, for which we have an acknowledgement.

Cl 13 (5): The Sub-Registrar, or as the case may be, the Registrar shall register the Declaration along with floor plans of the building and the Deed of Apartment in the “Register of Declaration and Deeds of Apartments under the Karnataka Apartment Ownership Act, 1972” and shall also enter particulars in the Index kept under subsection (3). Any person acquiring any apartment or any apartment owner shall be deemed to have notice of the Declaration and of the Deed of Apartment as from the date of its registration under this section. (6) Except as provided in this section, the provisions of the Registration Act, 1908, shall mutatis mutandis apply to the registration of such Declarations and Deeds of Apartments, and the words and expression used in the section but not defined in this Act shall have the meaning assigned to them in the Registration Act, 1908.

self-explanatory

Cl 18: Separate assessment.- Notwithstanding anything to the contrary contained in any law relating to local authorities, each apartment and its percentage of undivided interest in the common areas and facilities appurtenant to such apartment (being an apartment submitted to the provisions of this Act) shall be deemed to be separate property for the purpose of assessment to tax on lands and buildings leviable under such law and shall be assessed and taxed, accordingly; and for this purpose, a local authority shall make all suitable rules to carry out the provisions of this section. Neither the building, the property nor any of the common areas and facilities shall be deemed to be separate property for the purposes of the levy of such tax.

self-explanatory - property tax not leviable on common property (as the levy on SBA for each flat, collectively covers the tax on common areas too)

Cl 26: Removal of doubt.- For the removal of doubt, it is hereby declared that the provisions of the Transfer of Property Act, 1882, shall in so far as they are not inconsistent with the provisions of this Act, apply to every apartment together with its undivided interest in the common areas and facilities appurtenant to such apartment as those provisions apply in relation to any immovable property, and the provisions of this Act shall take effect, notwithstanding anything to the contrary contained in any contract.

self-explanatory.

PS: As seen from the above, KAOA provides a fairly good structure for carrying on the activities of the association, while also taking care of saleability, inheritability, transferability of a flat, alongwith the UDS (undivided share of land) appurtenant to it, like any other immovable property. Over the last 15+ years that we have been in existence, we have managed our affairs fairly well, guided by the provisions in the Act, as also the set of rules & regulations, and by-laws, some of which have been amended, as required, from time to time.

Though the very first sentence in KOFA (Act 16 of 1973) states "Separate law is being made to declare that flats or apartments in multistoreyed building may, for all purposes, be heritable and transferable immovable property". The "separate law" talked about obviously means KAOA (Act 17 of 1973), though the link between the two Acts is not mentioned spectfically, leading to a lot of confusion prevailing. This is an anomally that needs correction.

To satisfy the requirement under KAOA, we filed Form A (Deed of Declaration, etc) with the Registrar of Co-operative Societies (the "Competent Authority, named in KAOA), by registered post, since the office was otherwise refusing to receive the copy, stating that they have not been empowered to do so. After that, we have had nothing to do with them.

Actually, the only purpose they would serve is if there is a dispute. Without them, the recourse would be to take the matter to the judiciary, in case of a dispute.

Now, Bangalore Club has been in existence from 1868, just as an AOP (Association of Persons), unregistered under any Act. They have filed enough cases, and enough cases have been filed against them, and as such their standing as a "body corporate" (or as “juristic body”) has never been in question.

Given all of the above, I don't see the need for the "Competent Authority" to carry out any regulatory function for us (like the Registrar of Societies is 'supposed' to be doing, and charging a bomb for it). It would have helped if they just maintained a record of our filing, given us a certificate with a serial number, charged a nominal fee for it, and then left us to manage our affairs ourselves.

Muralidhar Rao

Comments

Response to points raised in a debate

murali772 - 9 Sep 2020 - 1:33pm

I had circulated my note in the opening post in a g-mail group of citizens, quite studied in matters pertaining to KOFA, KAOA, RERA, KSRA, vis-a-vis high-rise apartment complexes, elaborating on how I see the process of submitting the apartment complex where I own a flat and currently reside in, to KAOA, as fairly complete. It generated a lot of debate, the main points raised being as below (in italics), to which I had responded as in regular print.

Point no 1): An important step is to discard and discredit the theory that undivided interest or share (as builders conveniently morph the word to) is a CONVEYANCE of property. This word isn’t even defined in the statutes as far as I know. Conveyance of immovable property must conform to Sec 21 of Regn Act. It’s as I have been stating only a metric for share payable by each apt owner for the common area upkeep and maintenance and nothing else.

My response: Extracts from Section 21 (4) in The Registration Act, 1908: "Where a document comprises several properties and the description is sufficient as to some, but insufficient as to others, the registering officer must not refuse to accept the document for registration in its entirety; Kesava v. Kannusamy, (1904) 15 Mad LJ 30."

I'd think the above answers the point being made.

Point no 2): All Apartment Associations in Karnataka must be registered under Cooperative Act or Cooperative Act after implementation of RERA (11-07-2017). It is as per section 11(4)(e) and 17 of RERA Act.

Section 11(4)(e) refers to existing laws local laws in Karnataka for forming Association of Apartment Purchasers. The existing local laws are – KOFA and KAOA. Under KOFA, associations can be formed under the Cooperative Act or under Companies Act. Thus, as on today, after RERA, Associations could have been formed under KAOA Act or Company Act or Cooperative Act. These three acts are existing laws under the Statue in Karnataka.

My response: I have reproduced as below extracts from RERA and KOFA, from which it is evident that there is a provision even under RERA for an “association of allottees” as per KAOA (apart from as per Companies Act, or Co-op Societies Act), which I believe is best suited for the purpose.

Sec 2 of RERA - Definitions:

(n) “common areas” mean— (i) the entire land for the real estate project or where the project is developed in phases and registration under this Act is sought for a phase, the entire land for that phase;

Sec 11 of RERA - Functions and duties of the promoter:

(e) enable the formation of an association or society or co-operative society, as the case may be, of the allottees, or a federation of the same, under the laws applicable: Provided that in the absence of local laws, the association of allottees, by whatever name called, shall be formed within a period of three months of the majority of allottees having booked their plot or apartment or building, as the case may be, in the project;

(f) execute a registered conveyance deed of the apartment, plot or building, as the case may be, in favour of the allottee along with the undivided proportionate title in the common areas to the association of allottees or competent authority, as the case may be, as provided under section 17 of this Act;

Sec 17 of RERA - Transfer of title:

(1) The promoter shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority, as the case may be, and hand over the physical possession of the plot, apartment of building, as the case may be, to the allottees and the common areas to the association of the allottees or the competent authority, as the case may be, in a real estate project, and the other title documents pertaining thereto within specified period as per sanctioned plans as provided under the local laws

(2) After obtaining the occupancy certificate and handing over physical possession to the allottees in terms of sub-section (1), it shall be the responsibility of the promoter to handover the necessary documents and plans, including common areas, to the association of the allottees or the competent authority, as the case may be, as per the local laws.

Point no 3): But as per section 17 of RERA, though the apartment purchasers pays for the proportionate Undivided Share of Project land, all such Proportionate UDS of all apartment purchasers must be transferred by the Promoter to the Association of Apartment purchasers formed as per the existing local law mentioned above, by registering the conveyance Deed

But under KAOA, the title of the Proportionate UDS of the Apartment allocated to it in the Registered Declaration is to be registered in the name of the Apartment Purchaser. This basic principle of KAOA contradicts the RERA requirements (Section 17) which is referred above.

My response:

Extracts from Cl 4 of KAOA: Status of apartments - "Each apartment, together with its undivided interest in the common areas and facilities appurtenant to such apartment, shall for all purposes constitute heritable and transferable immovable property within the meaning of any law for the time being in force in the State"

So, very clearly, an apartment and the undivided interest appurtenant to it form a single unit and cannot have different ownership. If the wordings in RERA convey a different meaning, perhaps they need to be corrected.

Extracts from Cl 18 of KAOA: Separate assessment - "Notwithstanding anything to the contrary contained in any law relating to local authorities, each apartment and its percentage of undivided interest in the common areas and facilities appurtenant to such apartment (being an apartment submitted to the provisions of this Act) shall be deemed to be separate property for the purpose of assessment to tax on lands and buildings leviable under such law and shall be assessed and taxed, accordingly; and for this purpose, a local authority shall make all suitable rules to carry out the provisions of this section. Neither the building, the property nor any of the common areas and facilities shall be deemed to be separate property for the purposes of the levy of such tax.”

self-explanatory - property tax not leviable on common property as the levy on SBA (Super Built-up Area) for each flat, collectively covers the tax on common areas too.

Under RERA, however, since individual ownership is supposed to be only for "carpet area", as also the undivided 'interest' on the land is supposed to be vested only with the Co-op Society (as argued by some), property tax on the land as a whole and built-up area like gym, club-house, etc, will become leviable on the Co-op Society, leading to total confusion, and thereby a fertile ground for rent-seeking pursuits of "inspectors". This again, I see as an anomaly, and perhaps needs to be corrected.

Point no 4): Facilitating forming the Association of Allottees under Cooperative Sector is a compulsion to RERA Authorities is a compulsion for all RERA Registered Apartment Projects.

My Response: Disagree, based on all of the above.

Point no 5): An association under KAOA cannot become a "body Corporate" (or juristic person), since it was not formed by members voluntarily, but by the developer.

My Response: Not sure if that court ruling will apply here. Whatever, what if the members subsequently vote unanimously for recognition as "body Corporate"?

Muralidhar Rao

KAOA best suited, after correction of RERA anomalies

murali772 - 9 Sep 2020 - 2:04pm

At a webinar on the 29th Aug, a noted Mumbai based expert seemed to suggest that the "association of allottees" have the option of submitting a new development (conforming to RERA), to the provisions under KAOA, and not necessarily to those under Co-Op Societies Act, or Companies Act.

He had added that the only short-coming in KAOA is the lack of a regulatory body. But, very much as the panelist from Gujarat stated, the nominated 'regulators' ('competent authority' or whatever you may want to call them) are not doing much of a job there either, with every case anyway landing up in courts.

All of the above seemed to corroborate my views as detailed in my opening post (scroll above).

Subsequent to the seminar, I bothered to study RERA deeper, and came up with the note titled "response to points raised in a debate" (scroll above). In the process, I came up on what I see as serious anomalies as detailed below (more fully detailed in the "response to points raised in a debate" post):

A) Apartment and it's undivided share as separate properties: As per section 17 of RERA, though the apartment purchasers pay for the proportionate Undivided Share of Project land, all such Proportionate UDS of all apartment purchasers must be transferred by the Promoter to the Association of Apartment purchasers formed as per the existing local law, by registering the conveyance Deed.

(In contrast, as per Cl 4 of KAOA: Status of apartments - "Each apartment, together with its undivided interest in the common areas and facilities appurtenant to such apartment, shall for all purposes constitute heritable and transferable immovable property within the meaning of any law for the time being in force in the State". So, very clearly, an apartment and the undivided interest appurtenant to it form a single unit and cannot have different ownership).

The above (provision under Sec 17 of RERA) conveys the meaning that the "apartment" and it's proportionate "Undivided share of Project land" can be sold, transferred, inherited, etc independent of each other

This is plainly anomalous, and needs to be corrected.

B) Separate assessment: Under RERA, since individual ownership is supposed to be only of the "carpet area", and the ownership of the appurtenant "undivided interest on the land" is supposed to be vested with the Co-op Society, it will lead to a situation where the individual pays property tax on the apartment alone, and the property tax on the land as a whole and built-up areas like gym, club-house, etc, will become leviable on the Co-op Society.

(In contrast, as per Cl 18 of KAOA, extracts from which read as "Notwithstanding anything to the contrary contained in any law relating to local authorities, each apartment and its percentage of undivided interest in the common areas and facilities appurtenant to such apartment (being an apartment submitted to the provisions of this Act) shall be deemed to be separate property for the purpose of assessment to tax on lands and buildings leviable under such law and shall be assessed and taxed, accordingly; and for this purpose, a local authority shall make all suitable rules to carry out the provisions of this section. Neither the building, the property nor any of the common areas and facilities shall be deemed to be separate property for the purposes of the levy of such tax.” Essentially, property tax levy on SBA (Super Built-up Area) for each flat, collectively covers the tax on common areas too).

Very clearly, the RERA "carpet area" based assessment will lead to total confusion, and therewith provide a fertile ground for rent-seeking pursuits of "inspectors".

This again, I see as an anomaly, and needs to be corrected.

All of these have caused to reiterate my view that KAOA, with it's condominium concept enabling self-governance, is the most suited to managing high-rise apartment complexes, compared to any other route where you land up being led by the nose by some "in-competent authority" (and being charged for it heavily too).

Also, all of the 'regulatory' function is needed mostly at the development stage, which is being taken care of by the now duly empowered RERA. Beyond that, there is not much to do, and whatever little is to be done can be left to the General Body of the owners to carry out, and thereafter to manage their affairs by themselves, guided by the rules and bye-laws.

Perhaps the government can nominate an official in RERA itself, as the "Competent Authority", to carry out the following functions:

a) scrutinising the documents submitted as per Form A (Deed of Declaration, etc) for conformity with the requirements under the Act;
b) issue a certificate with a serial number, and notify the Municipal and Revenue authorities of the change in property ownership;
c) scrutinise Form B's as and when they are submitted, and notify the Municipal and Revenue authorities of the change in property ownership;
d) maintain a record of all of the above.

Since the functions are very few and limited, only a nominal one-time fee may be charged for the service.

Besides, quite like a very senior lawyer in the city (who also was the Charter President of the association in one of the earliest multi-storied housing complexes, where he resides even today) opined, "no administration can be more transparent than that by a democratically elected 'Managing Committee' functioning according to the guidelines prescribed by a vigilant General Body of members".

Muralidhar Rao

PIL filed seeking review of entire matter by GoK

murali772 - 12 Sep 2020 - 2:28pm

All of these have now gained an added significance in view of Col Mathew (a veteran of many court battles) having filed a fresh PIL in Karnataka High Court (No 10669-2019 admitted in Nov 2019, and notices sent to respondents - Chief Sec, GoK; and Registrar of Co-op Societies),

the "prayer" seeking to declare that:

A. The Karnataka Apartment Ownership Act, 1972, is unconstitutional;

B. Karnataka Apartment Ownership Rules, 1974, is unconstitutional;

C. Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972 is unconstitutional;

D. Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Rules, 1975 is unconstitutional;

E. Quash the Circular dated 30.11.2018 passed by the 2nd Respondent at Annexure F;

F. Provide such and other suitable directions/reliefs which on account of all the grounds raised herein deem fit in the interest of justice and equity.

And, "interim prayer" seeking as below:

In the aforesaid circumstances the Petitioner humbly prays that, pending consideration of the present writ petition, this Hon’ble Court may be pleased to stay the operation of the Circular dated 30.11.2018 passed by the 2nd Respondent at Annexure F pending disposal of this petition.

To a query from me Col Mathew has responded as below:

It's not my view that KSRA society is the only one for apartment owners associations. They may choose to form a cooperative society or a company. Both cooperative societies and companies are unsuitable due their complexity and costs of administering. The Karnataka government has said that cooperative societies are clogged due to government interference! RBI has suggested excluding housing cooperatives from KSS, 1997 for the reason that they will be vulnerable to misappropriation, mismanagement and manipulation. KAOA even if one tries to empower the association since, these are not cooperative societies, the registrar has no law to guide him in ensuring statutory compliance.

Above is self-explanatory. In view of this development, I have recommended to the BAF (as a federation representing over 800 apartment complexes) to deliberate over the matter, take a stand, and perhaps implead in the case as it deems fit. Actually, the PIL can be viewed as an opportunity to sort out the vexatious issue for the benefit of all the stake-holders involved.

Muralidhar Rao

A view by another veteran studied in the matter

murali772 - 12 Sep 2020 - 2:59pm

This note by Mr Muralidhar Rao which is a forward of a draft by Col Mathew Thomas seeks to take us all back to square one. I am sure some of us remember his presentation to all of us as at Adigas in jan 19. The views have been debated earlier and rejected. They are like I say what we call we call ‘situating the appreciation’.

The views of Col Mathews are one sided and ignores many realities and laws. They suffer from a lot of biases from an era gone by.

Government interference with coop societies is what has led to the constitutional amdts and even the KSS Act 97. Structures for tackling corruption are solid and if implemented and enforced this malaise should not be a given. Corruption in any system needs tackling and is a sad reality of our land. It has to be sorted out if we are to evolve as a nation.

The reason why legislators excluded housing assns from KSS act needs research and examination. There would be a reason. Possibly something to do with stamp duty and regn of Immovables that Karnataka was trying to deal with in respect of coop hsg societies till law was amended in 2010-12. But that’s a hunch.

The KSS Act predates the 97th Amdt and is a forebearer of what’s been done by constitutional amdt for whole country. That is, it is primarily legislated and seeks to reduce govts interference and regulatory role of registrar and pass that role onto a federation that would get created to oversee coop hsg societies. ROCS saddled as they have been with ROS functions passed in by IGR seeks to avoid addl responsibilities as MR Prassana Kumar argues in the KRERA meeting.

“ In the post Independence period, crores of rupees were spent on popularizing the Cooperative Movement and make it a successful venture. The Central Planning Commission realized that the cooperative sector failed with much less drastic change that was expected. The effort and the funds invested went in vain and as this was realized, the Ardhanareshwaran Committee was formed, The Committee in its report in 1987 after studying declared that the Cooperative Movement has failed in the Country because of the heightened Intervention of the Government in the affairs of the Cooperatives.

Realizing the need for the growth of the sector that promotes the economic development of the people requiring the voluntary participation in the affairs the planning commission formed another Commission under the able leadership of Sri Choudhary Brahmaprakash, This Commission presented a model Cooperatives Act in 1991. The Central Government circulated this model Act to all states with an advice to incorporate the same as it ensures more power to the members, more member participation and less government intervention in the affairs of the Cooperatives. Karnataka came out with The Karnataka Souharda Sahakara Act, 1997 framed on the lines of the Model Act given by Sri Choudhary Brahamaprakash committee.”

How KSRA 60 can be vested with land is clarified in the act and even the law has been settled by the Supreme Court Illaichi Devi judgement. Societies under SRA have many lacunae and cannot manage large society management. Given various reasons including large developments, ksra framework cannot seek to handle management of large structures as it doesn’t have the necessary regulatory and redressal framework that is a necessity of today.

BAF than take us all back to square one must invest it’s efforts in RERA realities than drag Bangalore and Karnataka back to the days of no enforcement and Implementation of laws. They must IMO lead not to support Col Mathews contention in WP admitted but must use its resources to challenge and get the law clarified in the light of rera and need for proper conveyance of immovables to their many associations. Than go by Col Mathews theories we must go with what Maha activists state and what causes that state in Bombay, Pune, Thane etc to be 90 percent cooperative societies. They are even using deemed conveyance provisions of MOFA abandons the condominium framework and migrating to coop hsg societies. Some 50000 applications are under process for this.

This move to reintroduce issues that have been debated and rejected is a retrograde step out of sync with times when Apartment complexes of very large sizes are skyrocketing.

It ignores new realities. We need to look ahead not back basking in the inertia that has plagued housing sector in Karnataka.

Whoever had said anything else in the past, I had always maintained that KAOA itself was best suited to the matters of ownership and management of housing societies, after effecting necessary correctives to the few existing lacunae. The matter of anomalies in RERA, raised by me (refer post titled "KAOA best suited - - - ", has not been commented upon.

Muralidhar Rao

responses by an activist, quite studied in the matter

murali772 - 12 Sep 2020 - 4:20pm

I have read your comments in the blog. There are following 10 Points on which there is a necessity of the Hon'ble High Court Decision. A good Writ Petition/PIL is necessary.

(1) After RERA, none of the provisions of any Local Acts/Central Acts, relating to Real Estate Activities/business can continue if such provisions contradict RERA Act provisions.

(2) KAOA was enacted for the specific purpose of giving legal title ownership of Apartment by making provision for UDS. It means that there was no provision to own an apartment in a building as per Transfer of Property Act, 1882 and Registration Act, 1908 (Basic Acts for owning a plot of land or independent House/Bungalow) until 1970. Hence legislation of KAOA was necessary. This was removed by legislating MAOA/KAOA in Maharashtra/Karnataka. These two acts also have the inbuilt provisions of forming Association of Apartment Purchasers.in addition to owning the Apartment by the purchaser like owning a plot or independent building. The purpose of such Association to deal with connected matters of living in the Apartment along with other apartment purchasers like maintenance of common area and facilities. There is also provision for living of tenants in the Act.

(3) Is it possible to own the Apartment in a building by not following all the 27 provisions of KAOA/MAOA, the acts specifically enacted for the basic purpose of owning the Apartment in a multi-storied building. The High Court can only decide on it. The High Court can only give verdict whether following all 27 sections of KAOA/MAOA is necessary to become absolute owner of an Apartment in a Building or is it possible to become owner of the Apartment by following few sections of KAOA or is it possible to become owner of an apartment without registering the basic document, Deed of Declaration.

(4) In Maharashtra Bombay High Court has given the judgment that following the provisions of MAOA is necessary to become owner of the Apartment with legal title and forming Association of Apartment Purchasers.

(5) If the provisions of MAOA are not followed as per the Acts/Rules on it, the purchaser of Apartment will not become the legal owner of the Apartment. In such a situation the Apartment purchasers can form Cooperative Housing Society of Apartment Purchasers. There are many judgments of Bombay High Court in this regard.

(6) In Karnataka, the High Court has clearly given judgment, that there is no provision in the Karnataka Societies Registration Act, 1960 for registration of ASSOCIATION OF APARTMENT PURCHASERS. What will be the fate of all existing Apartment Owners Associations registered under KSRA, 1960?

(7) Is there any link between KOFA and KAOA? If the answer is YES, is it necessary to link the missing provisions between KOFA and KAOA?

(8) Can KAOA be implemented without Competent Authority? If Competent Authority is necessary, what is his role in implementing KAOA?

(9) Can 18 sections of KOFA be implemented without Authority/Officer? Is it necessary to have a Competent Authority for administering KOFA?

(10) How to remove the total mess created (in Sale/Purchase/construction/Registration of Deed of Apartment/Forming Association) in the last 44.5 years by improper implementation of KOFA and KAOA.

Only, the Honourable High Court of Karnataka can give its verdict after hearing the appropriate writ Petition or PIL.

My comments: Quite a few valid points. But, nuanced stances pertaining to most have already been brought out in my opening and 2nd posts (scroll above to check). Also, I doubt submitting/ switching to Co-op Societies Act can solve any of the basic problems. Like I have stated earlier too, KAOA itself is best suited to the matters of ownership and management of housing societies, after effecting necessary correctives to the few existing lacunae. The anomalies in RERA, pertaing to "carpet area" basis of allocation of "undivided share" (refer post titled "KAOA best suited - - - ", scrolling above), perhaps need correction too.

PS: Since the blog-site is currently under upgradation, PRAJA is currently not in a position to allow fresh member registrations. The inconvenience is regretted.

Muralidhar Rao

Not a PIL, but a Writ Petition

murali772 - 13 Sep 2020 - 5:36pm

Col Mathew has subsequently clarified that the first petition was withdrawn on the suggestion from the bench to file as a Writ instead of a PIL. The writ is admitted and notices issued to both respondents. Neither respondent has filed counter. From reports available it appears that the government is frantically trying to come up a new law.

He adds "My writ does NOT seek to promote KSRA. It questions the constitutionality of KAOA and KOFA. Secondly, it seeks to ensure that the fundamental right of home buyers to form associations of their choice is not abridged."

Muralidhar Rao

Perhaps choose between KAOA & Co-op Society

murali772 - 19 Sep 2020 - 12:53pm

The veteran I had referred to in my post of 12th Sept, commented as below, in a WhatsApp group where I too am a member, though relatively inactive:

Maharashtra (and Gujarat) has, after Rera, made cooperative society or a company mandatory. Thus common areas are ‘conveyed’ through a regd deed in the name of the society. If builder doesn’t do so, for whatever reasons, then they have legislated deemed conveyance of land title.

Individual apartment ownership would be through the procedure as appears to be getting notified above.

With the Supreme Court judgement (not sure which judgment is being referred to here) the saleability and heritability gets reinforced. This also virtually renders KAOA as meaningless, and one gets act with proper regulation and enforceable.

In Karnataka we are dumped in an unregulated and unenforced act KAOA. The only beneficiary are the builder and probably few of their proxies.

Govt of Karnataka is ceased of issues and is taking steps to handle post RERA constitutional necessities. Builders and some with vested interests work hard to prevent RERA too remaining unenforceable. They want to let the old thrive.

In response, I had reiterated that neither PRAJA, nor BAF, is asking for repeal of RERA. A properly empowered regulatory body (particularly for the development stage) has been long overdue, and hopefully, RERA is evolving into that, even if it's not happening as speedily as one would have liked it.

And, as to the question of "KAOA becoming meaningless"", in my post of 9th Sept titled "KAOA best suited - - " (scroll above to read), I had pointed out that "a noted Mumbai based expert seemed to suggest that the "association of allottees" have the option of submitting a new development (conforming to RERA), to the provisions under KAOA, and not necessarily to those under Co-Op Societies Act, or Companies Act."

Further, going by what is stated in the veteran's note, if housing associations have necessarily to be registered as Co-op Societies or as Companies, the following questions arise:

a) If the number of shares allotted to the buyer of (say) flat no A-102 in a complex is (say) 123 (jointly for the flat and undivided share of land), I expect it will have to be clearly tagged together, since sale/ tranfer of shares identified just as 123 numbers, will not specify a particular flat.

b) Also, I expect the arrangement will call for the municipality levying it's tax (based on the local structure) for the property as a whole on the Co-op Society, and the same being collected by the Society from the share-holders on the basis of individual shares held.

c) Further, in the case of row houses/ villa's within in a complex, additional shares will have to be allocated for the payments made for the exclusive enjoyment of the land. Likewise in the case of pent-houses, as also car parking slots. Norms for these will have to be enunciated.

I expect the logic of the above is clear, and the "activists" will pursue them. Also, Co-op Housing Societies have been in existence in cities like Mumbai from long, and I expect they have figured out the way to address the issue. Would help if someone can enlighten us on how it's done.

All said and done, I do appreciate that in the case of very large complexes, the Co-op Society/ Company route could perhaps provide the way forward. But, in the case of smaller complexes, I should think the KAOA is good enough for day to day management (post development - check my post titled "KAOA best suited - -" of 9th Sept, scrolling above), since it will also avoid their being burdened with filing returns, and paying huge fees for hardly any work involved.

Muralidhar Rao

Route for very large & very small complexes

murali772 - 19 Oct 2020 - 5:16pm

All said and done, I do appreciate that in the case of very large complexes, the Co-op Society/ Company route could perhaps provide the way forward. But, in the case of smaller complexes, I should think the KAOA is good enough for day to day management

I had mentioned as above in my post of 19th Sept (scroll above to check). Now, in the case of complexes over 5 acres in spread, the law requires that roads/ passages, CA sites, parks etc (open to public), be incorporated in them. This has apparently been enforced in the case of a Brigade cluster in J P Nagar, and L & T South City too (I am not too sure of the details). That being the case, wouldn't it be better, if the developer, in the case of large developments, allocates a separate common C A site incorporating all utilities (costs apportioned on SBA basis), club-house, gym, school, etc, with membership/ fees at concessional rates to buyers of property in the complex? The C A site can also include commercial spaces like offices, hotel etc, the other regular sites being exclusively for multi-storied residential apartments. This way, each apartment block can have its own association, registered under KAOA, and the C A site complex can perhaps be owned by a company, with each of the associations owning shares in the company in proportion to their total SBA.

Whatever, the idea of a Co-op society doesn't appeal to me.

Further, RERA applies only to complexes with 8 or more apartments, and on land 500 sqM or more in extent. For development of smaller ownership apartment complexes, KOFA supposedly remains valid even as of now.

Whatever, quite as an eminent lawyer observed during a recent webinar, all of these are still evolving, more so with the recent adoption of RERA, buyers becoming more aware and demanding, etc, and improvements can perhaps be incorporated in the laws as we go along. This blog is compiled in that spirit.

Muralidhar Rao

Further averments from Col Mathew

murali772 - 19 Oct 2020 - 5:33pm

After going through my blog, Col Mathew mailed me as below (in italics):

Perhaps, you may like to rethink your understanding of both RER Act and KAOA.

DoD registration does not convey title since it is not a conveyance deed as per the Transfer of Property Act.

Under KAOA, there is NO transfer of title, although the Act claims to be providing marketable title.

Both DoD and DoA are self-declarations. So, is Form B. The promoter is owner of unsold apartments. The Act states, “sole owner or all owners”.

There is no seller and buyer described as parties to the sale transaction.

DoD does NOT mention sale consideration paid by each and every buyer.

Under Section 17 of RER Act, two conveyances are to be done by the promoter, one to individual apartment buyer and the other to the association of buyers. The first conveys title to the apartment together with its UDS. The second conveys title to common areas together with UDS of buyers therein.

UDS is a notional concept to indicate joint ownership of area of the land and construction on the property.

UDS does NOT convey title.

Surely, you would not purchase a property if there were no sale deed.

Where is sale deed mentioned in KAOA?

So, there is no anomaly. KAOA is inconsistent with RER Act and the central Act prevails.

Most people have misunderstood these laws. The confusion affects all of us.

Perhaps, Col Mathew understands law better than me. But, I do not agree with many of the points he has raised - also, most of them have already been addressed by me in my earlier posts. However, I am incorporating his views here, so that when and if the matter goes before the court, a ready reference point is available for parties concerened.

Muralidhar Rao

my argument against registration under Co-op Societies Act

murali772 - 23 Oct 2020 - 4:14pm

An activist proponent of registration of Apartment Housing Complexes under Co-op Societies Act, sent me a PPT presentation on guidelines for "management of Co-op Housing Societies", supposedly prepared by a certain Mr Vijay Samant (CANDID ADVISORS, Mobile No: 9819977750; Office No: 2675112; Email: housingsociety@ymail.com), very likely based in Mumbai.

He suggested that I post it on PRAJA to make it accessible to the stake-holders concerned. But, since PRAJA doesn't have provision currently for uploading PPT's, I am just posting just a few excerpts from the same, essentially to point out the highly bureucratic nature of the processes involved, even in today's world of ERP's, and it's consequent incompatibility with modern management practices (Those wanting a copy of the PPT may mail Mr Samant, directly).

Secretary functions ….Bye law no. 140 - - To issue Share Certificate within stipulated period……6 months from allotment - Incase for issue of Duplicate Share Certificate…….Member to lodge police complaint
Bye law no. 148 (b)(ii) ....To pay honorarium to office bearers of the society not exceeding 15% of the net surplus to reward them for the sacrifice of their valuable time for the working of the society or as decided by the General Body Meeting
Bye law no. 152 ….Secretary to produce all records & documents for internal & Statutory Audit and initiate the process for accomplishing all requirements to call the AGBM. Secretary to prepare draft audit rectification report in ‘O’ Form and place it before M C. Failure on part of M C to submit audit rectification report to Registrar & AGBM, the M C is deemed to have committed an offense u/s 146 of the Act and is liable for penalty u/s 147 of the Act
Maintenance of statutory records: “I” Form, “J” Form, Nomination Register, Sinking Fund Register, Property Register, Investment Register, Share Register, Share Cert Folio, Insurance File……Etc
Conduct of AGM: Last date for A G M – 30th September; If unable to conduct A G B within time inform Dy Registrar - Official from Registrar office to conduct the A G B M for Regularization; Keep all required records and accounts related paper work handy.

From all of the above (as also what is stated at the end of the post titled "KAOA best suited - -" of 9th Sept - scroll above to check), it has become even more clear to me, whatever anybody else may want to say, that KAOA is best suited for management of high-rise apartment complexes (and certainly not Co-op Society).

Now, the complex where I own a flat (and reside in) has fortunately been registered under KAOA, and so have many more in the city (particularly the ones developed by 'reputed' builders). All we now need to do is to pursue with the revenue authorities the matter of their updating of the property records. As for complexes registered under different Acts, as also new complexes, I expect we will have to seek directions from the court.

Muralidhar Rao

submission made to KARC

murali772 - 25 May 2022 - 2:21pm

With the prolonged debates involving various stake-holders over webinars, social media, as also elsewhere, not making much headway, and the government agencies involved being too busy with their day-to-day issues, I chose to meet Sri Vijay Bhaskar, IAS (retd), former Chief Secretary, Govt of Karnataka, and currently the Chairman of the State Administrative Reforms Commission (2), around August last year, and submitted a note as below (in italics).

He readily appreciated the approach, and stated that he will soon be making his formal recommendations, along the lines, to the departments concerned, these being very much within the purview of the state itself. He also suggested to me to go ahead and approach each of the departments, directly too, instead of waiting for his recommendation to reach them via the official route (I have done some bit of that).

Apartment Ownership Issues and Solutions Thereof - recommendations to the Government of Karnataka

KOFA (Karnataka Ownership Flats Act, 1972) - Enacted for compliance by builder/ developer to convey ownership of flats, which, laws existing till then, did not provide for

KAOA (Karnataka Apartments Ownership Act, 1972) - Enacted to provide a template for management of ownership flats

These are adopted from the Condominium concept pioneered by Western Countries. Though both were enacted simultaneously, a few lacunae in the Acts have caused to raise questions about their validity

Issues:

Sec 10 of KOFA unfortunately provides for registration only as a Co-op Society, or as a Company

Because of this, many lawyers are of the opinion that an association registered under KAOA, is not eligible to be submitted to provisions under KOFA.

However,

Sec 11 of KOFA includes mention of “association of flat takers”/ “organisation of persons who take flats”, alongside Co-op Society/ Company;

Also, Cl 3 and Cl 6 of KAOA clearly mention “association of apartment owners”, and all through the rest of the text of the Act too, the mention is mainly of "association of apartment owners”, with there being only one mention of a "Co-operative Society", and no mention at all of a "Company";

both of which give the impression that omission of KAOA under Sec 10 (of KOFA) was an unintented lapse

Further issues:

Though Cl 11 of KAOA requires filing of Form A (“Deed of declaration”, along-with all relevant documents filed with the Sub-Registrar) with the “competent authority”, and Cl 3 of KAOA nominates the “competent authority” as the Registrar of Co-op Society, his functions have not been defined, and consequently, he refuses to carry out the job. This leaves the Association without a "Certificate".

Because of these lacunae, many lawyers advise registering associations under KSRA, or Co-op Societies Act.

KSRA (Karnataka Societies Registration Act, 1960)

Any seven persons can form a Society

The word 'welfare' is a must in the objectives

Doesn't convey title deeds

Annual returns to be filed, alongwith filing fees of 0.1% of total value of transactions

And from 30-11-2018 onwards, Registrar of Societies is not making any more fresh registrations of apartment complexes under KSRA.

So, out of the reckoning as far as apartment complexes are concerned.

Going by Karnataka Co-operative Societies Act, 1959, apparently an "apartment" will be owned by the buyer, and it's proportionate "Undivided share of project land" will be vested with the Co-Op Society. Many questions arise therefrom:

1) Can the transfer/ sale of the apartment and it's proportionate "Undivided share of project land" be made independent of each other?

2) Perhaps the apartment owner will pay the municipal (property) tax on the apartment alone, and the Co-op Society will collectively pay the municipal taxes on the Common areas, gym, club-house, etc, after collecting proportionate amounts from individual owners.

3)The regulations are too many, essentially providing a fertile ground for rent-seeking pursuits of "inspectors".

So, largely impractical.

RERA (Real Estate Regulation & Development Act, 2016)

allows (under Sec11, Ch3) for “association of allottees” alongside Co-op Society and Company, though there is no specific mention of KAOA.

This Act is quite in line with KOFA. Can be made applicable for all future developments, after incorporating KAOA for the management of the flats (Check note @ 4 below)

Recommendations:

Amend following in KOFA (Karnataka Ownership Flats Act, 1972):

1) Under 2(d), insert the words in bold as below:

‘Registrar’ means the Secretary, RERA-2016, Registrar as defined in the Karnataka Co-operative Societies Act. 1959 or, as the case may be, in the Companies Act, 1956;

2) Under Sec 10, insert the words in bold as below:

10. Promoter to take steps for formation of an association under KAOA, a co-operative society or company.-

(1) As soon as a minimum number of persons required to form a cooperative society or a company have taken flats, the promoter shall within the prescribed period submit an application to the Registrar for registration of the organisation of persons who take the flats as an association under KAOA (Karnataka Apartment Ownership Act, 1972), a co-operative society, or as the case may be, as a company; and the promoter shall join, in respect of the flats which have not been taken, in such application for membership of the association under KAOA, a co-operative society or as the case may be, of a company.

3) Under Sec 11, insert the words in bold as below:

"A promoter shall take all necessary steps to complete his title and convey to the organisation of persons, who take flats, which is registered either as an association of flat-takers under KAOA (Karnataka Apartment Ownership Act, 1972), as a co-operative society or as a company as aforesaid, his right, title and interest in the land and building and execute all relevant documents therefor in accordance with the agreement executed under section 4 - -"

4) Under Sec 16 2 c, insert the words in bold as below:

"the period within which the promoter shall submit an application for registration of an association under KAOA, a co-operative society or a company;

And, amend Cl 3 (i) of KAOA, adding the words in bold as below:

“competent authority” means, in relation to building constructed or to be constructed by the Housing Board, the Secretary of the Housing Board and in any other case, the Registrar of Co-operative Societies as defined in the Karnataka Co- operative Societies Act, 1959, or the Secretary, RERA, and he be empowered to carry out the following functions:

a) scrutinising the documents submitted as per Form A (Deed of Declaration, etc) for conformity with the requirements under the Act;

b) issue a certificate with a serial number, and notify the Municipal and Revenue authorities of the change in property ownership;

c) scrutinise Form B's as and when they are submitted, and notify the Municipal and Revenue authorities of the change in property ownership;

d) maintain a record of all of the above.

Notes:

1) The 'regulatory' function is needed mostly at the development stage, which will in future be taken care of by the now duly empowered RERA. Beyond that, there is not much to do, and whatever little is to be done can be left to the General Body of the owners to carry out, and thereafter to manage their affairs by themselves, guided by the rules and bye-laws. As such, only a nominal one-time fee may be charged by the Competent Authority, for the service rendered.

2) Quite like a very senior lawyer in the city (who also was the Charter President of the association in one of the earliest multi-storied housing complexes, where he resided till he passed away last year) opined, "no administration can be more transparent than that by a democratically elected 'Managing Committee' functioning according to the guidelines prescribed by a vigilant General Body of members".

3) In the case of complexes over 5 acres in spread, the law requires that roads/ passages, CA sites, parks etc (open to public), be incorporated in them. This has apparently been enforced in the case of a Brigade cluster in J P Nagar, and L & T South City too (I am not too sure of the details). That being the case, perhaps it would be better if the developer, in the case of large developments, allocates a separate common C A site incorporating all utilities (costs apportioned on 'Super Built-up Area' basis), club- house, gym, school, etc, with membership/ fees at concessional rates to buyers of property in the complex. The C A site can also include commercial spaces like offices, hotel etc, the other regular sites being exclusively for multi-storied residential apartments. This way, each apartment block can have its own association, registered under KAOA, and the C A site complex can perhaps be owned by a company, with each of the associations owning shares in the company in proportion to their total SBA.

4) RERA applies only to complexes with 8 or more apartments, and on land 500 sqM or more in extent. For development of smaller ownership apartment complexes, KOFA supposedly remains valid.

PS:

1) All of the above are within the purview of the Government of Karnataka. The state government may in addition recommend to the Central government to amend Sec 11 (Ch 3) of RERA to include KAOA specifically (apart from mention of "association of allottees")

2) All of the above has evolved out of extensive debates on the subject (accessible @ http://praja.in/en/blog/murali772/2020/09/09/typical-case-kofa-compliance#comment-38694) involving major stakeholders, some across the country too.

Muralidhar Rao

Muralidhar Rao

mail sent to Sri H S Puri, H'ble Minister, MOHUA, GoI

murali772 - 25 May 2022 - 4:21pm

Text of the mail sent (on 17th May) to Sri Hardeep Singh Puri, Honurable Minister for Housing & Urban Development, Govt of India, New Delhi

Note: The reasonings at A & B below have been revised, as per post of 6th Oct '22 (scroll below, to check), for better clarity, but without changing the essence of the overall approach.

Respected Sir,

Sub: anomalies in RERA

I am writing to you with reference to the news report titled "Housing Minister to assess extent of dilutions of Central Real Estate Law" which appeared in the Times of India dt 15th May, and may be accessed @ https://timesofindia.indiatimes.com/india/housing-min-to-assess-extent-of-dilutions-in-rules-by-states-of-central-real-estate-law/articleshow/91567632.cms).

Sir, I have been seized of the matter, ever since I bought my flat in 2005, firstly in an attempt to set right the lacunae in the related Karnataka Ownership Flats Act (KOFA - Act 16 of 1973) as also in the Karnataka Apartment Ownership Act (KAOA - Act 17 0f 1973), by engaging with the Government of Karnataka, alongwith other stakeholders. The state government remained undecided waiting for RERA. But, finally when the RERA came, and the basis of measure by it turned out to be "carpet area", as different from "super built-up area" as per KAOA, more confusion got added, and things remained at a stand-still.

Now, Sir, "carpet area" basis militates totally against the original "condominium concept" according to which flats in multi-storied apartment complexes were accorded ownership. The switch to "carpet area" is causing the anomalous situation as brought out at A & B below:

A) Apartment and it's undivided share as separate properties: As per section 17 of RERA, though the apartment purchasers pay for the proportionate Undivided Share (UDS) of Project land, all such Proportionate UDS of all apartment purchasers must be transferred by the Promoter to the Association of Apartment purchasers formed as per the existing local law, by registering the conveyance Deed.

(In contrast, as per Cl 4 of KAOA: Status of apartments - "Each apartment, together with its undivided interest in the common areas and facilities appurtenant to such apartment, shall for all purposes constitute heritable and transferable immovable property within the meaning of any law for the time being in force in the State". So, very clearly, an apartment and the undivided interest appurtenant to it form a single unit and cannot have different ownership).

The above (provision under Sec 17 of RERA) conveys the meaning that the "apartment" and it's proportionate "Undivided share of Project land" can be sold, transferred, inherited, etc independent of each other

This is plainly anomalous, and needs to be corrected.

B) Separate assessment: Under RERA, since individual ownership is supposed to be only of the "carpet area", and the ownership of the appurtenant "undivided interest on the land" is supposed to be vested with the Co-op Society, it will lead to a situation whereby the individual pays property tax on the apartment alone, and the property tax on the land as a whole and built-up areas like gym, club-house, etc, will become leviable on the Co-op Society.

(In contrast, as per Cl 18 of KAOA, extracts from which read as "Notwithstanding anything to the contrary contained in any law relating to local authorities, each apartment and its percentage of undivided interest in the common areas and facilities appurtenant to such apartment (being an apartment submitted to the provisions of this Act) shall be deemed to be separate property for the purpose of assessment to tax on lands and buildings leviable under such law and shall be assessed and taxed, accordingly; and for this purpose, a local authority shall make all suitable rules to carry out the provisions of this section. Neither the building, the property nor any of the common areas and facilities shall be deemed to be separate property for the purposes of the levy of such tax.” Essentially, property tax levy on SBA (Super Built-up Area) for each flat, collectively covers the tax on common areas too).

Very clearly, the RERA "carpet area" based assessment is leading to total confusion, and therewith providing a fertile ground for rent-seeking pursuits of "inspectors".

This again, I see as an anomaly, and needs to be corrected.

And Sir, while RERA pertains largely to the development stage, KAOA and similar Acts in other states, enabling self-governance, are easily the best suited to managing the complexes. In this regard, I had met Sri Vijay Bhaskar, IAS (retd), former Cheif Secretary, Govt of Karnataka, and currently the Chairman of the State Administrative Reforms Commission (2), last year, and submitted the attached note (check post immediately above). He readily appreciated the approach, and stated that he will soon be making his formal recommendations, along the lines, to the departments concerned, these being largely within the purview of the state. He also suggested to me to go ahead and approach each of the departments, directly too, instead of waiting for his recommendation to reach them via the official route.

Sir, all of the above has evolved out of extensive debates on the subject (accessible @ http://praja.in/en/blog/murali772/2020/09/09/typical-case-kofa-compliance#comment-38694) involving all major stakeholders, some across the country too.

I trust you will give the above your due consideration. I look forward to hearing from you.

Regards, Muralidhar Rao

CC:

1) Sri S R Bommai, Honorable Chief Minister, Govt of Karnataka, Bengaluru

2) Sri V Somanna, Honorable Minister for Housing & Urban Development, Govt of Karnataka, Bengaluru

3) Sri Rakesh Singh, IAS, Addl Chief Secretary, UDD, Govt of Karnataka.

4) Sri Vijay Bhaskar, IAS (retd), Chairman of the State Administrative Reforms Commission (2), Govt of Karnataka.

Muralidhar Rao

the unending debate

murali772 - 18 Jul 2022 - 6:58pm

The questions that keep getting raised again and again on Social media platforms are:

1) Under Cl 3 (i) of KAOA, “competent authority” means in relation to building constructed or to be constructed by the Housing Board, the Secretary of the Housing Board and in any other case, the Registrar of Co-operative Societies as defined in the Karnataka Co-operative Societies Act, 1959. Why has the ROCS not been empowered as required by the Act KAOA?

My response: Essentially, this comes from the belief that there are no lacunae in the enacted Acts. That's where a major difference in perception lies.

2) Can ROCS be empowered to oversee anything other than Cooperative societies? If yes, then is the assn so created proscribed as a Body Corporate? - No. This is unlike KCSA59 or Companies Act.

Is it essential for assn under KAOA to be made into a body corporate? - Yes, else it has no legal sanctity to receive conveyance of common areas under its own name as essential under KOFA Sec 10 and RERA Sec 17.

My response: Now, KOFA and KAOA read together seem to convey the meaning that the ownerships get coneyed to the buyers as UDS, and as such, the Association does not own the property. Yes, this is another area where there's a major difference in perception.

3) The Bangalore Club functioning without registration should also get questioned. It’s status as AOP is under IT act and nowhere else. If Bangalore Club is an unregd entity question arises in which ‘persons’ name is the lands of Club vested?

My response: The land is vested in the name of the club. It has a BBMP 'khata' too. The matter has been questioned umpteen times (I am a member), and the SC itself has corroborated the club's stance.

4) Unregistered or deemed registered KAOA associations are also exactly likewise. There's no accountability to spending. Audit reports by CAs do not help. If we care for our money, we better bring in accountability on the volunteers.

My response: Yes, the registration process in the case of the KOFA/ KAOA route is incomplete, and consequently, problems can arise at the time of re-development (more specifically). And, that's where the present effort is on to correct the anomalies through the offices of the KARC and UDD, as also UDD, GoI, as far as the anomalies in RERA are concerned.

Apart from all of that, I would again like to reiterate what a very senior lawyer in the city (who also was the Charter President of the association in one of the earliest multi-storied housing complexes, where he resided until he passed away about a year back) opined, "no administration can be more transparent than that by a democratically elected 'Managing Committee' functioning according to the guidelines prescribed by a vigilant General Body of members". This is what decentralised governance is all about, compared to what you can have in a Co-op Society. Further, whether it's a Co-op Society, a Company, or whatever, the members can't lie back and relax, and expect some outsiders to carry out the job diligently for you. Members will necessarily have to take ownership.

PS: There are also the instances where builder/ developers retain substantial ownership of the property, and carry on undemocratic governance through cronies. Now, if I understand correctly, there is a court ruling that builder/ developers' can have only one vote in the General Body proceedings, irrespective of the number of flats they retain. If the same is true, then the home owners need to assert themselves through proper democratic processes to ensure equitable governance. If there is a dispute, the resolution route could perhaps be through mediation at LokAdalat, or if that too fails, may be the courts.

Government officials are generally ill-equipped to handle disputes, and asking them to intervene will only complicate matters further. I am talking from personal experience having held executive positions in various organisations.

Muralidhar Rao

awareness catching on

murali772 - 29 Aug 2022 - 11:16am

Two articles that appeared on Money Control seems to indicate that Home buyers have finally become aware of the problem..

1st article:

After saving for several years, and often with the help of a house loan on top of that, you have landed your dream apartment in, say, Mangaluru. But do you and others who have bought into the project actually own the land on which the apartment has been built? Several activists in Bengaluru who have much time on the subject say homebuyers in Karnataka do not.

Mamatha BR, the current inspector general of registration and commissioner of stamps declined to comment on the matter.

- - - "Though the sale deeds mention the names of the homebuyers, the land records mention the previous landowners. This becomes a major hurdle when the apartment complex needs to go for redevelopment or reconstruction. Who will be responsible for the land then, the homebuyers or the landowners? So a conflicting claim arises and will definitely open up further legal battles," Padmanabhachar noted.

For the full text, check @ https://www.moneycontrol.com/news/business/mc-explains-do-karnataka-homebuyers-actually-own-the-land-their-apartment-is-built-on-8886221.html

2nd article:

In the complaint accepted on August 1, 48 homebuyers of the Mantri Serenity project claimed the promoters/landowners declared an undivided share of interest in the plinth area of the building alone, whereas they had paid for the super built-up area.

The plinth area, also called the built-up area, refers to the space occupied by the building, including the internal and external walls. The super built-up area consists of the total built-up area and includes common areas such as the corridors, the lift lobbies, and the elevators.

- - - “The cost of an apartment usually has two major components – the cost of the structure and the cost of the land. When an apartment building is demolished or redeveloped, the property owners get compensated based on the undivided share of land (UDS) in their name.

“The developers are declaring undivided share of interest only in the plinth area of the apartment building and thereby taking away the title rights of homebuyers in the rest of the common areas in the project,” said Dhananjaya Padmanabhachar, director of the Karnataka Home Buyers Forum. “However, the homebuyers are paying for the entire super built-up area.”

For the full text, check @ https://www.moneycontrol.com/news/business/mantri-serenity-homebuyers-file-complaint-on-land-share-discrepancies-8953651.html

More than the state authorites, the ball lies in MOHUA, GoI, Delhi's court - check my mail to the minister, of 25th May, scrolling above.

Muralidhar Rao

a different picture

murali772 - 29 Sep 2022 - 4:16pm

Excerpts of the submission by Mauriksha Park Apartment Owners Association President, Mr Dayanand Rai, published the "Mangalorean" dt 26-10-18 (below, in italics) - for the full text, check @ https://www.mangalorean.com/tit-for-tat-apt-owners-assn-clarifies-true-facts-on-false-issues-alleged-by-a-apt-owner-couple/

As the builder has not transferred the initial corpus fund of Rs 3.60 crores collected from members towards the maintenance of the complex, legal proceedings are initiated against the builder for recovery of the same in addition to other relief in the national Consumer Forum New Delhi.

Out of 360 members of the Association, 348 members have already paid maintenance charges with an exception of 11 owners who are not in contact with the Association and some of them are yet to register their sale deed and they are also not residing in the local area. It is unfortunate that out of 360 flats owners, only one flat owner namely Shantharam Prabhu and his wife Mrs. Veena Santharam Prabhu have refused to pay the maintenance charges which are legally due and payable by them to the Association. It is very pertinent to note that this member (Veena) from the beginning itself was making a series of attempts to sabotage/not to cooperate in the process of formation of the Association.

This conveys a totally different picture from what has been projected on the WhatsApp groups.

Well, while the Mescom power disconnection may be a contentious issue, as for the rest, I can't see how the association can be faulted.

And, while the legality of registration of multi-storied apartment complexes under KAOA is undoubtedly in question, because of the few lacunae in the Acts (and has remained so right from the beginning), there is no gainsaying the fact that it largely provides the best template to manage the running of such complexes, compared to anything else available (check the post captioned "submission made to KARC" dt 25th May'22 - scrolling above). As such, the effort needs to be to rectify the lacunae, rather than working to throw the baby out with the bath-water. Meanwhile, carry on operating under KAOA, rather than living in the limbo.

Muralidhar Rao

revised reasonings for better clarity

murali772 - 6 Oct 2022 - 3:20pm

The reasonings at A & B in the post of 25th May (under the caption "mail sent to Sri H S Puri"-scroll above to check), are revised as below, for better clarity but without changing the essence of the overall approach, ie to revert to 'Super Built-up Area'(SBA) basis (from 'carpet area' basis) for all measurements/ assessments, and to treat an apartment and its 'undivided proportionate title' of the entire common property, as one single unit.

A) Apartment and it's undivided share in common areas as separate properties:

RERA Sec 17 Transfer of title.—(1) reads as below:

"The promoter shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority, as the case may be, and hand over the physical possession of the plot, apartment of building, as the case may be, to the allottees and the common areas to the association of the allottees or the competent authority - -"

(In contrast, as per Cl 4 of KAOA, Status of apartments, reads - "Each apartment, together with its undivided interest in the common areas and facilities appurtenant to such apartment, shall for all purposes constitute heritable and transferable immovable property within the meaning of any law for the time being in force in the State". So, very clearly, an apartment and the undivided interest appurtenant to it form a single unit and cannot have different ownership.)

The above (provision under Sec 17 of RERA) conveys the meaning that the 'apartment' alone becomes the property of the allottee, and the aggregated sum of the common areas become the property of the Association. This will require two transactions whenever a re-sale takes place - one of the apartment, and another of the proportionate title in the common areas.

Besides, how khata's and encumbrance certificates for individual apartments, or the property as a whole, can be issued becomes a question mark.

This is unnecessary complication, caused by deviating from the original intent in the KOFA/KAOA of treating the apartment and its undivided proportionate title as a single unit.

B) Separate assessment:

Under RERA, since individual ownership is supposed to be only of the 'carpet area' of the apartment, the owner will be paying property tax only for the same. And the ownership of the common areas supposedly being vested with the Association, the property tax on the same alongwith tax on built-up areas like gym, club-house, etc, will become leviable by the Association.

(In contrast, as per Cl 18 of KAOA, extracts from which read as "Notwithstanding anything to the contrary contained in any law relating to local authorities, each apartment and its percentage of undivided interest in the common areas and facilities appurtenant to such apartment (being an apartment submitted to the provisions of this Act) shall be deemed to be separate property for the purpose of assessment to tax on lands and buildings leviable under such law and shall be assessed and taxed, accordingly; and for this purpose, a local authority shall make all suitable rules to carry out the provisions of this section. Neither the building, the property nor any of the common areas and facilities shall be deemed to be separate property for the purposes of the levy of such tax.” Essentially, property tax levy on SBA for each apartment, collectively covers the tax on common areas too).

Very clearly, the 'carpet area' based assessment as per RERA is leading to unnecessary confusion, providing therewith a fertile ground for rent-seeking pursuits of 'inspectors'.

Adopting SBA basis, in contrast, avoids all of these complications.

Apparently, the demand of home buyers to base a sale on 'carpet area', came about because of the same being readily measurable, as compared to SBA, which is a bit abstract. But, in today's world, any sales representative will readily give you any measure you want on the computer screen. And since SBA is in the same proprtion as 'carpet area' for all apartments in a complex, it is most equitable too.

Muralidhar Rao

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Relevance of KAOA under RERA

Comments

Response to points raised in a debate

KAOA best suited, after correction of RERA anomalies

PIL filed seeking review of entire matter by GoK

A view by another veteran studied in the matter

responses by an activist, quite studied in the matter

Not a PIL, but a Writ Petition

Perhaps choose between KAOA & Co-op Society

Route for very large & very small complexes

Further averments from Col Mathew

my argument against registration under Co-op Societies Act

submission made to KARC

Apartment Ownership Issues and Solutions Thereof - recommendations to the Government of Karnataka

Recommendations:

mail sent to Sri H S Puri, H'ble Minister, MOHUA, GoI

the unending debate

awareness catching on

a different picture

revised reasonings for better clarity

Praja.in comment guidelines

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