Discussions on repairing the Apartment Ownership Law
in Kerala
Part I – General Discussion[i]
Index
1. Introduction
2. The inherent weakness of KAOA
3. The Menace of Copying the Maharashtra Law
4. The Maharashtra Experience with Apartment Ownership
5. The Missing Elements in KAOA
6. The Apartment Ownership is other States.
7. The Law Behind Apartment Ownership
8. Apartment with common areas and facilities to be transferable immovable property
9. The Scheme of KAOA and its intended application
10. Conclusion
1. Introduction
Act 5 of 1984 is reigning the field of condominium
management in the state, for the last 40 years. The Act with its full title ‘The Kerala
Apartment Ownership Act 1983 and with the abbreviation ‘KAOA’ for the present discussion
here, is a living example of an ineffective law.
The articles are inspired by the baby steps taken by
the government to review the KAOA, following the directions of the Kerala High
Court[ii]. A high-level committee was constituted to
suggest recommendations to the Act and the petitioners before the High Court
were permitted to submit their suggestions to the committee. This article explores the reason why the law
became ineffective in the first place, and attempts to make a comparison with jurisdictions
where similar laws were implemented effectively.
2. The inherent weakness of KAOA.
The law has a Western origin and its counterparts have
several success tales to tell. Then how,
did KAOA fail? One single reason pointed out by all concerned is Section 2[iii],
the provision regarding the application of the Act. It gives the Act, an optional character rather
than being mandatory, and having universal application. The inconsistency is evident by reading the
preamble[iv].
It is rather strange to find that the law provides for some vested rights to the apartment owners, however, those could be enjoyed, subject to the performance of near-impossible
things to be done by third parties, who have conflicting interests, most of the time. These
third parties can be identified as the promoter or the other apartment owners
in the same building.
A few promoters are
not professional in their approach and others are ignorant about the need for the application of the Act. The former do not wish the application of the Act, for they nurtured a clandestine design to convert the common areas into private, at some later point in time. Those
ignorant promoters may be excused, but sad is the case of the opposing apartment owners, for the fight is against their own interest.
3. The Menace of Copying of Copying the Maharashtra Law
But the real culprit is neither the promoter nor the unwilling
apartment owner, but the State which allowed to law to continue, unenforced
for the last four decades. It appears
that the officers of the State refused to heed the age-old advice, 'NOT TO COPY WITHOUT APPLICATION OF MIND'. No serious research is needed to conclude
that KAOA is a blind, or rather a bad copy of the Maharashtra Apartment Ownership
Act 1970 (MAOA for short).
We may not need a 'made in Kerala' apartment
ownership law, as we have several international and national experiences on this topic The Federal Housing Authority’s model law for
the US states, Guidelines, for condominium management for countries in
transition, and the Apartment Ownership laws applied in the other states can
necessarily be good inspirations.
However, such adaption should be made, with the proper application of
mind, after a contextual understanding of its provisions. An understating of the Maharashtra Experience
could substantially solve the puzzle of provisions relating to the application of
KAOA[v].
4. The Maharashtra Experience with Apartment Ownership
Flat living in the state started in the early sixties
and a need for regulations on construction and management. There were primarily
two types of properties, flats owned by the co-operative societies and the
condominium type, where the apartment owners were the owners of private apartments
and held proportionate undivided title in the land including common properties.
The Maharashtra Ownership Flats (Regulation of the
Promotion of Construction, Sale Management and Transfer) Act, 1963, (MOFA for
short) Maharashtra Co-operative Societies Act, 1961, and Maharashtra Apartment Ownership
Act, 1973 (MAOA for short) reigns the filed. Decades before the Real Estate (Regulation
and Development Act, 2016 (RERA for
short, came into effect, MOFA effectively regulated flat construction,
management, and sale. RERA, of course, has
a wider scope and application, as it deals with all types of real estate
properties including flats, buildings, and plots.
MOFA was
enacted to regulate sundry abuses, malpractices, and difficulties relating to
the promotion of the construction, sale, management, and transfer of
flats taken on an ownership basis. It regulated both co-operative type and
condominium types of properties. It also provided drastic powers for the
competent authority, and there was an umbilical connection between MOFA and
MAOA. A very strong competent authority
was contemplated and he was given sweeping powers. Even a jail sentence was prescribed for the failure
of the Promoter to
execute and register the Declaration, for submitting the property to MAOA. While making a blind copy of MAOA, the counterparts
in Kerala missed some of these crucial elements contained in MOFA.
5. The Missing Elements in KAOA
An enumeration would be ideal for an easy understanding
of the missing elements, contained in MAOA and omitted to be incorporated in
KAOA.
·
Definition
of the term competent authority
·
Appointment
of the Competent Authority
·
Functions
and Powers of the Competent Authority
· Obligation of the promoter to execute and register the Declaration, where the building is intended to be constructed, and punishment for failure.
6. Apartment Ownership in other states
Most of the Indian states, including Delhi, Gujarat,
Haryana, Uther Pradesh, Odisha etc.. have their laws. Some of them had separate regulatory statutes
and ownership laws, and few others made unified provisions, integrating MOFA
and MAOA. A few others were also blind
copiers of MAOA, like Haryana, Uttar Pradesh, etc. However, these states realized their mistakes
and took immediate steps to rectify the defects. However, Kerala is trailing behind, until the
recent initiative from the Kerala High Court.
There are several paths to follow, and many more models to adopt, however, another copy is not what the state needs.
Hence, understanding the law behind apartment ownership is an
important starting point.
7. The Law Behind Apartment Ownership.
The condominium management laws are an exception to the
general law of co-ownership. The nature
of the right of an apartment owner is, exclusive right over the private
apartment and right in common with other apartment owners. Therefore, the concept of proportionate
undivided title in the apartment building arises. However, with the most perfectly scripted conveyance, one cannot claim exclusive title over the apartment and proportionate undivided title over the common areas and facilities. The consequence is that the other apartment
owners would share similar rights, and it is scary to realize that a neighbor has
some manner of right over the private areas and common areas, when the general
law is applied[vi].
8. Apartment with common areas and facilities to be transferable immovable property
By the application of KAOA, an apartment together with
its undivided interest in the common areas and facilities appurtenant to such
apartment, will be treated as immovable property[vii]. It is therefore that the identification of
the private apartment and the common areas and facilities become
necessary. The scheme of KAOA addresses the peculiar needs of the condominiums.
9. The Scheme of KAOA and its intended application
In an ideal situation, the promoter of an apartment building, who intends to sell the apartments in the building to apartment buyers, is expected to file a Declaration in Form A of KAO Rules, before the sale of any of the apartments. Being the sole owner, the said act of the Promoter is sufficient to submit the property to the provisions of the KAOA, without any further Act. The declaration is nothing but a documented representation of the plan approved by the local authority, describing the private areas, common areas facilities etc.. The promoter shall enable the formation of the Association of Apartment Owners, by approving bylaws and filing them before the Competent Authority, along with the certified copy of the registered Declaration Floor Plans and title documents.
The object of the Act is achieved when the Apartment owners execute and register the Deed of Apartment in Form B, where he acknowledges the Declaration already registered. The promoter shall also enable the Apartment Owners to execute and register the Deed of the Apartment in Form B while registering title deeds conveying the apartment along with the undivided interest in common areas. Given the scheme and purport of KAOA, what was lacking was just Regulation, compelling the promoters to execute and register, declaration in Form A, submit the property to the provisions of the Act, and allow the law to reign the field.
10. Conclusion
RERA is designed to regulate the construction of real
estate projects including apartment buildings and therefore is capable of
satisfying the need for a MOFA-like statute in Kerala. The RERA Authority could very well promulgate
a regulation, ensuring the compliance of KAOA, by the promoters, who propose to
construct condominiums type of real estate properties. However, the case of the projects, not
covered by RERA may have to wait till such time, the state makes a legislative
correction, by making the Act mandatory, retrospective, and imposing stringent
punishment for violations.
[i] This article is the first in the
series which would portray the different aspects of the subject matter.
[ii] Judgement dated 6th
February 2024 in WP© No. 34824 of 2014 passed by the Hon’ble High Court of
Kerala.
[iii] Section 2 Application of the Act –
This Act applies only to property, the sole owner or all of the owners of which
submit the same to the provisions of this Act by duly executing and registering
a declaration as hereinafter provided: Provided that no property shall be
submitted to the provisions of this Act, unless it is mainly used, or proposed
to be used, for residential purposes.
[iv] Preamble – 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 the
matters connected with the purposes aforesaid.
[v] Section 2 of the KAOA.
[vi] Section 44 of the KAOA.
[vii] Ref Section 29 of the KAOA.
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