Owners of an apartment complex in Sarjapur woke up one morning to find that their builder had claim to a large portion of the premises inside the complex which he was planning to turn into a commercial enterprise. Even worse, the builder was telling the court that they were not qualified to even contest the claim, as the owners’ association had been registered wrongly.

Instances such as these are not altogether too rare in Bengaluru, as highlighted in an earlier article in Citizen Matters. Prevailing ignorance about existing laws and the deliberate flouting of rules by builders and developers have led many owners to register their associations under the Karnataka Societies Act instead of KAOA, leading to serious ownership issues and governance challenges.

But what is the KAOA and how apt is it to address issues arising in the wake of the apartment boom in Bangalore? Which is the authority that ensures that provisions of this law are actually adhered to? After decades of waiting, some definite answers may actually emerge.

The Urban Development Department (UDD) of the Government of Karnataka is contemplating some long-pending changes in the Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act (or KOFA) and the Karnataka Apartment Ownership Act (or KAOA) – both of which collectively govern ownership, maintenance and transferability issues over the entire life-cycle of an apartment.

KOFA covers the process where a builder/developer constructs and sells the apartment, while its sister act, the KAOA defines a framework for establishing the title, heritability and transferability of apartments.

Both laws date back to the early 1970s and have not been amended or developed since, even though feedback based on practical experience evidently points to the need for revisiting these. The KOFA and KAOA were both almost entirely crafted on the lines of the relevant Maharashtra laws, but while the latter have gone through various clarification processes and amendments over time, the Karnataka laws have not been touched since enactment.

Background

Apart from registration under inappropriate laws leading to faulty titles as referred to earlier, there are several other problems that arise from ambiguities in the KOFA and KAOA. For example, there is no uniform definition to be found that clearly distinguishes between a flat and an apartment. The KAOA is clearly for apartments, whereas KOFA refers to ‘flats’ and there is a common misconception that the two are different. In reality, KOFA as it exists now, applies to sales of apartments as well.

Instances of deliberate cheating are also not entirely uncommon. There have been enough cases where buyers have found the sum of the undivided share of land in all the individual sale deeds exceeding the available area of the parcel of land on which the apartment complex is built, or where it is found that some part of the land has been ceded to government authorities, keeping buyers completely in the dark. Whom do owners turn to in such cases?

The greatest problem has arisen from non-implementation of existing provisions and the absence of effective regulatory authorities to impose rules. The registrar of co-operative societies, who is identified in the existing act as the ‘Competent Authority,’ but lacks clearly defined powers and functions, has failed to ensure compliance or resolve disputes arising in cases under these Acts.

In March 2010, in response to a RTI application filed by RTI activist C N Kumar, the UDD responded saying that the matter was under the administrative control of the Department and they would take action to frame the rules for implementation of the Act. It also pointed out that the Ministry of Housing and Urban Development Affairs at the Centre had written to the State Government in January 2010 about a Model Apartment Ownership Bill that was drafted and had sought the suggestion and comments to make it more effective in the light of housing schemes across the country. Therefore the UDD felt that it would be appropriate to examine the Model Apartments Bill of the Government of India before framing amendments or rules for implementation of the Karnataka Act.

In an order passed on this, the Karnataka Information Commission directed the UDD to “ensure that the proposed amendments in the model bill are examined by the Government and after incorporation of the suggested amendments in the bill, if any, to the existing Act, the rules are framed with the assistance of Department of Parliamentary Affairs and Legislation at the earliest for effective implementation of the Act.”

Current Moves

Almost three years from the date of the KIC order, there finally seems to be some action on the front.

In January this year, in view of several applications by RTI activists over the years and representations filed by apartment owners to ensure proper implementation and desired amendments in KOFA/KAOA, the Urban Development Department (UDD) decided to form a Committee to look into the contradictions and loopholes in the two Acts and form a new comprehensive legislation that would address all issues.

According to circulars published on the UDD website in late January, the Committee would be comprised of senior officials from the Department of Town Planning, BBMP, BDA, Department of Parliamentary Affairs, and Department of Co-operative Societies. Apart from weighing the recommendation of these departments and other civil society representatives, the Committee would also look into the central Model Apartment Ownership Bill sent to the state for consideration.

Based on all recommendations, opinions and suggestions received, the UDD would frame a single new Act. The circular also specified that the task of drafting the new Act would be entrusted to one Panduranga M Naik, a lawyer, and he would be asked to submit the draft within a month. No further details on Mr. Naik, or the reason behind choosing him for the exercise, were shared.

Muralidhar Rao, member of civic advocacy group Praja RAAG and a key crusader in this cause, shares that at a subsequent meeting convened by the Directorate of Town and Country Planning (DTCP), it was mentioned that the lawyer would be preparing his draft as an independent exercise and that would not be shared or discussed with the Directorate or any other groups.

Since formation, the Committee has held several rounds of meeting, inviting representatives from civil society who have in the past highlighted the real problems arising from the lacunae in existing rules and non-compliance. The chief of the Bangalore chapter of the Confederation of Real Estate Developers’ Associations of India (CREDAI) has also been a part of these consultations.

Ajit N Naik, a retired bank officer who lives in a Mantri apartment on Bannerghata Road and has long been pushing for amendments in apartment laws, was one of the individuals to have attended the first of these meetings in end-January on invitation from the UDD; he says that the Committee circulated a copy of the Model Apartment Act of Central Government received by them at the meeting. They also circulated a letter received by the government from the Housing Department of Central Government seeking information on the status of implementation of Apartment Act in the state and further suggestions if any for improving the central Model Apartment Act.

Recommendations

On the 7th of March, Sanjay Vijayaraghavan, a citizen who has worked extensively on researching apartment laws and come up with a detailed report on ‘Laws governing Apartment ownership in Karnataka’ and related issues under the aegis of civic advocacy group Praja RAAG, made his recommendations to the Director of Town and Country Planning in a detailed letter. Vijayaraghavan is an engineer by profession and is the author of the Citizen Matters article referred to earlier.

Some of the key suggestions he made to the Department were as follows:

1. Ensure that specifications of details about the apartment, limited common areas and common areas including all facilities such as gym, pool, STP, WTP, pumps, fire protection systems etc. are provided before the sale deed is signed and registered, and any advance is paid by the buyer.
2. Appoint a competent regulatory authority to ensure compliance and resolve disputes under the legislation.
3. Make KAOA the only law under which apartment societies may be registered in Karnataka and remove ambiguities in KOFA (Section 10) that refer to possibilities of forming apartments as co-operatives and companies.
4. Make it mandatory for builders/promoters of apartments under construction to submit the property under KAOA by filing a Deed of Declaration; the registrar’s office should strictly enforce this requirement.
5. Determine percentage ownership of undivided share of land and common areas based on the ratio of area of the apartment to the total area of all apartments.
6. For apartments sold but not registered correctly under KAOA – either due to ignorance or blatant miscommunication by builders and developers – provide measures by which these may be converted to ‘compliant properties’ within a reasonable time frame after amendments are passed.
7. Ensure strict penalties for non-compliance with any of the provisions.

Several other points were raised in the letter that also contained a comparison with the Central Model Law, highlighting its suitability to Karnataka and the relative merits/de-merits of certain provisions in it.

Latest developments

On 11th March 2013, the Department of Town Planning convened a meeting which, apart from officials of the said Committee, was attended by Muralidhar Rao, Ajit Naik, and Anil Naik, CEO of CREDAI, Bangalore. The meeting discussed many of the loopholes and recommendations outlined in Vijayaraghavan’s letter, particularly the need for a new empowered regulatory authority in view of the profusion of multi-storied apartment complexes.

At a subsequent meeting between the CEO of CREDAI and Praja representatives Sanjay Vijayaraghavan and Ajit Naik on the 26th of March, these points were re-iterated. The civic group members suggested that CREDAI should take the onus of informing all its members about the correct procedures stipulated by law and instruct them to follow these. However, several attempts by Citizen Matters to contact the CREDAI chief to know if any steps have been initiated in this regard went unanswered.

Meanwhile, Citizen Matters has obtained a copy of an email in which the Director of Town and Country Planning has convened another meeting on 4th April, asking all parties present in the earlier meetings to attend with ‘a consolidated report’ based on interactions so far and documents and recommendations made by the parties. On calls to the Directorate, however, the magazine was told that the Director, Mr. S.S. Topagi is on leave till April 4, which throws some cloud over the proposed meet.

Bengaluru’s gated communities: Whose baby?

Curiously, in all the discussions so far, no mention has been made of gated communities. Bengaluru has several of these, and many more coming up; these are huge residential complexes mostly offering villas and in some cases a mix of villas and multi-storeyed apartments. As pointed out in an earlier article, any residential development exceeding 20,000 square metres in area, is bound by the Comprehensive Development Plan 2015 to relinquish a proportion of its area to public use.

Currently, such real estate development takes place with individual sanctions from the BMRDA or BDA, but the developer is mandated to hand over all open areas such as roads and park to the government authorities, whereas in practice, the owner associations continue to devote time and resources for the operations and upkeep of common facilities in these areas.

Moreover, owners of the homes in these communities typically pay the builder the cost of the roads and parks and common amenities in the complex as part of their sale agreements for the individual homes purchased by them. There is very little clarity on ownership of these and a pressing need to specify what governs the title, maintenance and transferability of these areas.

Chaithanya Samarpan, for instance, is a gated community of 200+ villas on 32 acres off the Whitefield Hoskote Road near Kadugodi. The management committee members found out to their surprise that the law required the builder to relinquish all common parks and roads to the BDA, even though homeowners had paid for the construction costs. To add to the confusion, the association was registered under the societies act, even though KAOA would have been more suitable to address such issues, had this law included gated communities within its ambit.

Further, this raises the question are gated communities really so different from mammoth apartment complexes which are almost fashioned as townships and have thousands of apartments developed in successive stages? Consider Prestige Shantiniketan, developed over 105 acres and with over 3000 apartments, proposed restaurants, coffee shops and such amenities. If the new Act framed can extend to such developments, can it not bring gated communities within its ambit?

Alternatively, as Vijayaraghavan suggests in his letter to the town planning authorities, “It may be better to specify that the development (for huge apartment complexes) follow a layout model, consisting of common roads, and separate apartments, each within their own undivided share of land.” Facilities like pool, gym, clubhouse, where they exist, could come under an umbrella organization, but that, too, has to be clearly provided for by legislation and with defined roles, functions and regulations.

Such provision, if incorporated in the new Act, could perhaps then also govern gated communities, though there is no evidence as yet of any deliberation on that front.⊕