APARTMENT LIVING - UDS Transfers to Associations: Dispelling Myths, Embracing Legal Realities.

 

Setting the Stage

The stipulation governing the transfer of undivided proportionate title to the owner's association [i] under the real estate law has consistently been a subject of intense debate. The recent Government Order[ii] sanctioning the payment of property tax in the individual names of owners has further intensified the ongoing discourse.  This post aims to discuss the myth and reality behind contentious debates. To understand the nuances, real-world examples may often help highlight complexities than theoretical explanations.  Hence, a case study method is attempted here.  Read the case under the following subheading.

A real estate scheme

This residential apartment complex, comprising several residential blocks, is developed on 552.59 cents of land. The individual blocks are named for illustrative purposes as (1) Block A, (2) Block B, (3) Block C, (4) Block D, and (5) Block E.  Each block is situated in approximately 20 cents.  The internal roads and common land areas, as depicted in the project plan, will be collectively enjoyed by all the future apartment owners across all the blocks. Centralized facilities such as water collection, treatment, and distribution, solid waste/sewage treatment, fire safety systems, and power backup will serve all residential towers under the scheme as common amenities.

The land encompassing common facilities, common areas, and internal roads, specifically excluding the outer superstructure of the individual residential blocks, will be transferred to a designated Owners' Association. This Association will comprise all the apartment owners within the project. A specific deposit will be collected from each apartment owner to cover the associated registration charges for this transfer.  The Owners' Association will include representatives from all residential blocks and will operate under a set of bylaws approved by all or a majority of the owners.

The various stakeholders in this housing scheme—the builder, the individual owners, and the owners' association—hold divergent views concerning the future management of the common properties. The builder maintains that common property management is solely the association's responsibility, not theirs. They are not very particular about the transfer of Undivided Share (UDS). Meanwhile, a section of owners believes they are entitled to the Undivided Share (UDS) of the entire project, while others support the transfer of UDS to the association as originally envisioned by the scheme. Consequently, the association finds itself in a state of confusion.  This is the puzzle that we attempt to resolve here

 Real Estate Law: Prescribed Regulations      

It is the legal obligation of the Builder, upon completion of the project and obtaining the occupancy certificate, to enable the formation of an association of owners[iii].  The structure of the association may be of a society, a cooperative society, or a federation of such societies or cooperative societies.  Such a formation may not be necessary if there is a local law for the management of the common properties.  The application of the local law is being discussed separately, below.

The Builder has a further obligation to execute a registered conveyance deed of the apartment, plot, or building to the owner, along with the undivided proportionate title in the common areas to the association, following Section 17[iv].  Closer examination reveals that the transfer of undivided proportionate title in common areas to the association might not be necessary if local law does not mandate it.

The local law

The Real Estate Law deliberately preserves the application of local laws in various contexts. This preservation stems from the Act's nature: it primarily regulates and promotes existing rights rather than creating entirely new ones.[v].   However, the applicable local laws are not enumerated in the Act or the Rules.

In the statutory standard form agreement for sale, annexed to the Rules[vi], we find a requirement to enumerate the list of local laws.  Moreover, there is a specific obligation cast on to promoter to assure the allottees that the project is compliant with the provisions of the Kerala Apartment Ownership Act 1983.  A necessary corollary of this legal understanding is that the promoter's obligation to convey undivided proportionate title in common areas to the association may not exist where the 1983 Act applies.

What does the 1983 Act mean to an owner?

This local law is intended to preserve apartment ownership and to provide heritable and transferable rights to the apartment owners over their apartments.  Understanding the term "apartment ownership" is crucial for comprehending the broader concept.

Each apartment, along with its undivided interest in the common areas and facilities appurtenant to it, shall for all purposes constitute heritable and transferable immovable property under any law currently in force in the state[vii]. The apartment owner shall be entitled to an undivided interest in the common areas and facilities.  This percentage shall be computed by taking as the basis the value of the apartment compared to the value of the property.  It shall have a permanent character and shall not be altered without the consent of the apartment owner.  It shall not be separated from the apartment to which it appertains[viii].  Ultimately, these rights entitle each apartment owner to exclusive ownership and possession of their apartment[ix].

The percentage of undivided interest in the common properties also decides how the common profits of the property shall be distributed among, and the common expenses shall be charged to the apartment owners[x].

What does the 1983 Act mean to an Owners' Association?

The Owners' Association, acting through its Secretary or Managing Committee, is vested with the irrevocable right to effectuate the maintenance, repair, and replacement of all common areas and facilities. This entitlement encompasses the right to execute emergency repairs and to gain access to the apartment at reasonable times as required[xi]. They also have a statutory method for easy recovery of common expenses from the owners[xii].

Common areas and facilities are explicitly defined in a declaration executed and registered by the sole owner or all owners. The Association's right is strictly to manage these common areas and facilities, as outlined, with the specific exception of accessing private apartments only during emergencies. This management right is, furthermore, governed by the bylaws approved by the apartment owners.[xiii]

Managing Undivided Proportionate Title in Real Estate Projects.

The term Undivided Proportionate Title has two search results in soft copies of RERA, but it does not have a particular definition.[xiv] This title is commonly understood as the undivided share in the land pertaining to a real estate project, whether it involves plots, villas, or apartments.  Apartments are inherently structured around the concept of undivided interest in common areas and shared facilities. However, our discussion here will pivot to explore how the undivided share in land applies to plots and villas, where the nuances of shared ownership differ significantly.

The promoter has two critical obligations: first, to facilitate the formation of the Association of Allottees within three months of the majority of project bookings; and second, to execute and register the conveyance of common areas to this Association within three months of receiving the occupancy certificate[xv].  This mandate, upon initial consideration, may elicit significant apprehension among allottees due to its perceived interference with their property and fundamental rights. Nevertheless, a more profound analysis may yield alternative rationales.

The Alternate Rationale for Undivided Share (UDS) Transfer.

If individual owners each held a separate, physically un-demarcated Undivided Share of Land (UDS) in the common areas, managing these spaces would devolve into a chaotic nightmare. The Owners' Association would then be forced to secure written permission from every owner before addressing common properties. This situation would be further complicated as such permissions might need to come from the allottees' legal heirs, who are often unaware and have no direct involvement in the common properties.  Complicating matters, there could be instances where succession disputes must first be settled before these permissions can be secured.

The Owners' Association might be able to make common properties productive, depending on the real estate development's size, the extent of these common areas, and their location.  Owners' associations can be constituted under the law as either commercial or non-commercial bodies, offering a choice in their legal structure.  For a commercial constitution, cooperative societies or their federations are typically favored. Conversely, if the structure is non-commercial, a charitable entity may suffice.

Legal Framework for Project Scheme - Under Scrutiny.

The subject real estate scheme encompasses five blocks and 533 units. The undivided interest in the common areas for each apartment owner is determinable by reference to their respective block. Significantly, the preservation of this undivided interest in the common properties is facilitated by the application of the 1983 Act. This directly enables the community to secure almost full recovery of common expenses.

A similar exercise will be necessary to determine each apartment owner's undivided proportionate title in the common areas, exclusive of the five blocks' superstructures.  This percentage would determine the entitlement to the common profits out of the said property, in cases of distribution.  This percentage may also be relevant in determining the voting weight of each apartment owner.  The organizational structure of the owners' association should be chosen with a view to suitably accommodating each owner's percentage of undivided proportionate title.  The proportionate tile of all the apartment owners may then be transferred to the Owners Association.

A federation of owners' associations will be ideal for the effective management of the common properties under the scheme.  The five apartment blocks will have associations functioning under the 1983 Act and the Cooperative Society, consisting of representatives from each of such associations.   

Final Thoughts

The overall quality and value of a real estate property depend more significantly on the consistent maintenance of its common areas than on the individual upkeep of private units.  The association's financial liquidity directly impacts the upkeep of common properties.   Thus, the prevailing law, which necessitates the transfer of undivided proportionate title to the association, is validated by its practical benefits and its forward-looking vision.

The associations are expected to operate strictly within the confines of their legal mandate. To further safeguard collective interests, a robust bye-law provision should require a special majority for decisions concerning the ownership and possession of common properties. Furthermore, officeholders must be sensitized to the fiduciary relationship they hold with owners regarding the management of these common assets. 

Finally, the recent government order allowing individual apartment owners to pay property tax is likely not applicable to common properties situated outside the superstructure of the apartment building blocks.  Achieving a more effective management of common properties in real estate projects will require the government to enact regulatory measures that harmonize the provisions of central and local laws.

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[i] Section 17 (1) of the Real Estate (Regulation and Development) Act 2016.

[ii] GO No. 107/2025/RD dated, THIRUVANATHAPURAM, 22.04.2025

[iii] Section 11(4) (e) of the Real Estate (Regulation and Development) Act 2016

[iv] Real Estate (Regulation and Development) Act 2016

[v] Proviso to Section 11(4)(e) and Section 17(1) of the Real Estate (Regulation and Development) Act 2016.

[vi] Clause 20 of Annexure A – Agreement for Sale – Annexed to the Kerala Real Estate (Regulation and Development) Rules 201

[vii] Section 4 of the Kerala Apartment Ownership Act 1983

[viii] Section 6 of the Kerala Apartment Ownership Act 1983.

[ix] Section 5(1) of the Kerala Apartment Ownership Act 1983.

[x] Section 10 of the Kerala Apartment Ownership Act 1983.

[xi] Section 6 (8) of the Kerala Apartment Ownership Act 1983.

[xii] Section 19 and 20 of the Kerala Apartment Ownership Act 1983.

[xiii] Section 16 of the Kerala Apartment Ownership Act 1983 deals with the byelaws of the Association.

[xiv] Section 11(4) (f) and Section 17 Real Estate (Regulation and Development) Act 2016

[xv] Section 11 (4) (e) and (f) of the Real Estate (Regulation and Development) Act 2016