Six mistakes to avoid while devising apartment association byelaws

Avoid these mistakes if you are running around in order to form the owners' association for your apartment complex in Bengaluru.

One of the important tasks for the residents of a new apartment complex is preparation of comprehensive byelaws for the society, Apartment Owners Association (AOA) or an RWA. The initial ground work is generally done by a few volunteers who may or may not be conversant with the actual import of every word and expression.

In many cases the byelaws of another society are copied without much deliberation since the main concern at that point of time is to get the Society registered as quickly as possible. It is quite natural and possible that some content if included may become a headache at a later stage because amending the byelaws is more difficult than drafting the original document. In order to avoid such inadvertence, it may be of use to look out for the points explained here in brief.

1. One size doesn’t fit all

Notwithstanding the legal stipulations, the AOAs are being registered under different statutes in Karnataka, especially Bengaluru. The common ones are, the Karnataka Co-Operative Societies Act (KCSA)-1959, Karnataka Societies Registration Act (KSRA)-1960, Karnataka Flat Owners (Regulation etc) Act–KOFA-1972 with Karnataka Apartment Ownership Act (KAOA)-1972 and even Companies Act.

What one must realise is that the byelaws for each of these and other statutes are different in content and their effect. Without going into the details as which law is correct for the purpose, my advice is to be careful so that the byelaws you have drafted are actually meant for that particular act under which you intend to register your society.

2. Power in the hands of Management Committee (MC)

In the initial euphoria of acquiring a new house, owners tend to overlook the amount of power that is concentrated in the hands of the MC or the Board of Governors. Common areas requiring specific attention are the financial powers and power to hire and fire the association employees like the Estate Manager, exercisable without the consent of a GBM/ AGM/ SGBM/ EGBM which essentially means the collective wisdom of all owners.

3. Quorum in Meetings

Generally speaking, there are two places where the extent of quorum can play a decisive role both good and adverse.

(a) Quorum in Meetings of all owners: Here you must ensure that the participation of maximum number of owners is effected in order to ensure that major decisions, which put extra financial burden on every owner are not taken by a handful of people. Common practice is that the quorum is the “majority of owners present”. This summarily excludes the members who do not live in the same city and have rented out their apartment. So the power in such cases is exercised by a handful of resident owners.

(b) Quorum in MC meetings: In most apartment complexes, the size of MC is generally limited, say 10-12 owners. Now in such a scenario if the quorum is kept as 1/3rd of the total strength then it will be 3-4 and the coterie of President, Vice President, Secretary and the Treasurer can take all decisions without bothering about the opinion of other members. Therefore, it is always advisable to keep it to 50% so that more members can participate in the decision-making process.

4. Voting

Normally the wording regarding the voting in the GBMs etc is kept as “majority of those present”. Now this again excludes the owners who do not reside in the same city and vests disproportionate power in the hands of a few. Therefore, it is a wise thing to list out the matters in which votes of non-resident owners is made mandatory through proxy or postal ballot etc.

5. Accounts Ratification

Normally the agenda points are so arranged that the ratification of Accounts is either kept just before the lunch break or towards the fag end of the meeting when people have the lowest interest threshold for details. As a result, the accounts are passed in a hurry without any questions or adequate deliberation. Ideally, the Ratification of Accounts should be the first item after the opening address by the Chairman.

6. Utilisation of Common Areas

The control over common areas is a lucrative aspect of Society management. The share in the common areas and facilities is fairly defined in the KAOA-1972 which has the concept of Un-divided Share in Land (UDSL). In other enactments, however the aspect allows enough deviation through the drafting of Bye Laws. Firstly, it is the builder who will try to keep control over the common areas in his hand through vague provisions in the sale deeds and handing over of common areas to the AOA. Next, the MC itself may try to have a firm control over these assets. Suitable clauses should be inserted in the byelaws to pre-empt misuse of this at least by the Management.

It’s not only a good builder, management or a lawyer who can safeguard your interest, but it is an alert owner / member of the AOA who can prevent misuse of and frauds into the Society funds and other assets. So, the keyword is an alert owner of the property.

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