In the first part of this series, we explored the legal and practical challenges faced by apartment owners and associations and the need for clarity about the legislations that govern apartment ownership in Karnataka. Part 2 focuses on frequently asked questions about the registration of apartment associations and takes a closer look at the regulatory landscape in the State.
There is a general confusion in Karnataka about the legislation under which apartment owners’ associations must be registered. Although the Karnataka Ownership Act, 1972 (KAOA, 1972) provides for registration of owners’ associations, it does not mandate such registrations or prescribe any timelines for the registration of such associations. Moreover, the Karnataka Ownership Flats Act, 1972 (KOFA, 1972) envisages the registration of an association as a cooperative society or a company after the completion of construction, under Section 10.
The apartment owners would benefit if there were legislative clarity on the registration of apartment associations. Against this backdrop, it is important to discuss the positive and negative aspects of registering the association under the KAOA or as a cooperative society under the Karnataka Cooperative Societies Act, 1959 (KCSA,1959).
What the legislations entail
| Advantages of registering an apartment association under KAOA | Advantages of registering an apartment association as a cooperative Society |
| In the case of Proposed Starnest Apartment Owners Cooperative Society Ltd (unregistered) vs State of Karnataka (WA No. 564 of 2024), the Karnataka High Court held that in the case of an apartment consisting of only residential units, the law applicable is KAOA and not KOFA. RERA in section 11(4)(e) also mandates the formation of an association under the applicable laws. The applicable law here would be KAOA. | As per Section 10 of KOFA, the promoter has to take steps for the formation of a cooperative society or a company as soon as a minimum number of persons required to form a cooperative society or a company have taken flats. A cooperative society is a corporate body which has the legal rights to hold the title of the land and possess the legal rights to execute contracts. Thus, unless KOFA is suitably amended to omit registrations of apartment associations as cooperative societies or companies, this provision shall be in force. |
| Further, in the case of Praveen Prakash v. State of Karnataka, it was held that KAOA is a special law governing apartments and that it shall override any general law on the same. The Court reiterated that it is well-settled in law that a specific provision of law will always override the general provisions of law. | The Cooperative Societies Act, 1959, has a separate chapter dedicated to the settlement of disputes related to the constitution, management or business of cooperative societies under Chapter IX of the KCSA Act. No such equivalent provision is mentioned under KAOA. If any dispute arises, the association will have to approach civil courts. |
| Why not the KCSA? The Karnataka Cooperative Societies Act, 1959, was enacted with a clear objective to promote the cooperative movement under the Second Five-Year Plan. – In this regard, there are many provisions to ensure adequate governmental control and public participation in these cooperative societies. – Specifically, the Act was intended for property management and not to govern apartment complexes like the KAOA. – Moreover, there are governmental restrictions in constituting the board if the provisions of the KCSA are followed. – The term of the board is fixed for five years and the government can appoint its nominees to be the members of the board. – This would lead to a lot of governmental interference and control. | The Karnataka Cooperative Societies Act, 1959, has a designated competent authority, the Registrar of Cooperative Societies, unlike the KAOA. The existence of a Designated Competent Authority is useful in some ways, such as: – The election of board members is overseen and guided by the registrar in KCSA. – However, elections are largely managed independently under the KAOA, which may lead to disagreements regarding the election process. – Annual audit reports are mandated to be submitted to the registrar and are conducted by the Director of Cooperative Audit. – This provides a mechanism through which audits are mandated, unlike the provisions of KAOA. |
Table: This table contains positives as well as negatives of registering an apartment association as a co-operative society vis-a-vis an apartment association under the KAOA.
Read more: Navigating apartment property legalities: A comprehensive checklist
Frequently asked questions on legal misregistration under apartment laws
Q: What does the Karnataka Apartment Ownership Act (KAOA), 1972, provide for?
A: The Karnataka Apartment Ownership Act (KAOA), 1972, provides a legal framework for the ownership of individual apartments:
- Ensuring that apartment owners have a transferable and heritable title to their unit (Section 4),
- Along with an undivided interest in common areas (Section 3(b)).
- It allows for the formation of associations of apartment owners (Section 3(d))
- But it does not prescribe a mandatory registration process, leading to variations in how associations are registered in practice.
Q: What is the process for registering an apartment association under KAOA, 1972?
A: KAOA, 1972 allows apartment owners to form an association by executing a Declaration and Deed of Apartment. This document must be registered with the sub-registrar’s office.
- Section 13 of the KAOA, 1972 mandates the registration of the Declaration and the Deed of Apartment under the Registration Act, 1908.
- However, the Act does not specify a mandatory timeframe or procedural requirements for the formation of the association.
Q: What is the difference between registering an apartment association under KAOA, 1972 and KSRA, 1960?
A: Registration under the Karnataka Apartment Ownership Act, 1972 (KAOA) grants an apartment association legal status to manage common areas, enforce byelaws and represent residents in legal matters. In contrast, the Karnataka Societies Registration Act, 1960 (KSRA) is intended for literary, scientific and charitable societies, offering no corporate status or authority to own property, enter contracts or take legal action.
Q: What happens if an apartment association is registered under KSRA, 1960 instead of KAOA, 1972?
A: Registering under KSRA, 1960, can lead to governance and legal challenges, as such associations cannot hold common property, enforce maintenance charges or represent members in disputes. KAOA, 1972, along with the Karnataka Ownership Flats Act, 1972 (KOFA), mandates proper registration of apartment declarations, deeds and floor plans, ensuring legal recognition and enforceability.
Q: What are the key differences between the terms “apartment” in KAOA, 1972 and “flat” in KOFA, 1972?
A: The terms “apartment” and “flat” are often used interchangeably, but they hold different legal meanings under KAOA, 1972 and KOFA, 1972, leading to regulatory confusion.
- KAOA,1972 defines an “apartment” under Section 3(a) as a residential unit strictly meant for dwelling purposes. This narrower definition restricts the application of KAOA, 1972 to purely residential properties.
- In contrast, the definition of a “flat” under KOFA, 1972 encompasses a wider range of uses, including residential, commercial and office spaces. This broader definition under KOFA, 1972 implies that mixed-use developments, like buildings with both office spaces and residences, fall outside the regulatory reach of KAOA, 1972, creating complications for associations managing these properties.
- For example, Section 10 of KOFA, 1972, requires promoters to form an association as a cooperative society or company, including both residential and commercial units.
- However, KAOA, 1972 does not extend its governance to commercial units, which may be excluded from association decisions under its purview. This can lead to conflicts in mixed-use buildings regarding maintenance responsibilities, voting rights and governance structures.
Challenges arising from the misregistration of apartment ownership
One of the major issues arising from the misregistration or lack of registration of apartment owners’ associations is that in most cases, the actual transfer of land from the promoter/landowner to the apartment owners/associations has never taken place as per the KAOA, 1972. This is even though it is mentioned under section 11 of the KOFA, 1972, that the promoter shall take all steps necessary to complete their title and convey to the association their right, title and interest in the land and building.
Moreover, the onus of registering an association falls on the apartment owners rather than the builder as it is not mandatory under the KAOA, 1972. Due to this, most apartment owners have either not formed associations or have misregistered under the KSRA, 1960. This inhibits the ability of the builder to convey the land to the association as the registration process under the KAOA, 1972 is not complete.
To find an amicable solution to this, Maharashtra has implemented the concept of a deemed conveyance deed, which means that in instances where the builder refuses to hand over the conveyance deed to the association, the competent authority may sign on behalf of the landowner under the provisions of the Maharashtra Ownership Flats Act, 1963.
Major reforms that can be implemented
There may be practical challenges in the absence of a transitional model that protects the rights, obligations and functions of apartment associations as they transition from the incorrect legislation for registration, that is, from the KSRA, 1960, to the KAOA, 1972.
For example, in the case of Mr. Sunil Babu J.B vs State Of Karnataka WP No. 11833 of 2022, the High Court established that if the associations are registered under KSRA, 1960, they would lose the right to collect maintenance fees or other functions conducted by apartment associations. For this purpose, they would have to be registered under the KAOA, 1972. This poses a challenge for associations to function without rights/functions or obligations in this transitional period, leading to the non-maintenance of the apartments and other potential issues.
There are no intermittent or temporary provisions that govern apartment associations or provide rights to the members of these associations during this interim period. Rights and obligations need to be made clear by the government in this interim transition period, to ensure a smooth transition and to incentivise societies to change their registration to KAOA, 1972.
If problems arise with the management of an apartment association, there should be temporary rules in place to handle the transition smoothly. For example, Tamil Nadu’s Apartment Ownership Act, 2022, has a specific rule (Section 25) that allows the government to step in if an apartment association’s management is not acting in the best interest of residents. In such cases, the government can temporarily remove the management team and appoint someone else to take over for up to six months. This helps ensure that the association continues to function properly, even in difficult situations like mismanagement or the need for dissolution.
Thus, owing to the aforementioned problems and complexities, it is therefore the need of the hour for legislative clarity in the apartment regulatory framework in Karnataka.
(Based on findings presented at the Oorvani Foundation Policy Jam on ‘Apartment Association Laws’, conducted on November 23, 2024, in collaboration with Bangalore Apartment Federation and Vidhi Legal)
Madam
nice and informative educative article Pl advise me how to reach you as I am having certain specific questions related to my apartment having 4 units Thanking you in advance
The registrar office is saying that there is no authority to register the 1972 act. How to deal with this?