The Unfolding Crisis in Kerala Apartment Ownership: A Plea for Judicial Intervention and Legislative Rectification
A Client's Struggle: The Genesis of the Legal Challenge
Our firm was recently engaged to protect a client's apartment ownership in a multi-tower complex, a task made particularly intricate by the project's layered structure. Our client's specific ownership comprises a 1.175% undivided interest in 18.984 cents of property, a 1463 sq ft apartment, and a dedicated car space.
This complex, permitted in 2006 and developed across 449.39 cents, features a scheme with distinct zones, one dedicated solely to residential towers. A core aspect of this project is the shared enjoyment of internal roads and common areas by all residents. Centralized facilities such as water treatment, waste management, fire safety, and power backup serve the entire complex, alongside a vast basement spanning 552.59 cents that houses both individual parking and common facility areas. A key part of the project's design involves transferring land for common facilities, areas, and roads to an Owners Association, funded by apartment owners' deposits. This association is intended to manage common areas under approved bye-laws, eventually assuming maintenance responsibilities from the builders. The complex also boasts a clubhouse with extensive amenities, including a swimming pool, fitness center, and multi-purpose hall, as well as additional common area amenities like indoor sports courts and a sewage treatment plant. Usage of these facilities is governed by monthly charges and an admission fee, which the builder collects for the Owners Association. Our role as professionals is to navigate this intricate setup to safeguard our client's apartment ownership and ensure their rights and interests within this complex scheme are fully protected.
The developer, a company with a long-standing reputation in the real estate sector, meticulously transferred ownership of individual apartments and their corresponding interests to purchasers. Furthermore, they facilitated the creation of a resident association, duly registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955, which has subsequently taken charge of the complex's management.
Crucially, however, the intended transfer of common property and facilities to this association, a fundamental element of the original project scheme, has not been completed. Despite this unfulfilled obligation, the developer now asserts their responsibilities are entirely concluded and declares their permanent departure from the project. This situation presents a significant challenge, as the apartment owners are left without the complete legal infrastructure for collective ownership and governance of the vital common areas and amenities.
Our client's primary grievance centers on the imperative to have the property formally subjected to the Kerala Apartment Ownership Act, 1983. This action is crucial to safeguard and uphold his apartment ownership, ultimately ensuring his apartment attains the status of a heritable and transferable property, as envisioned by the Act's preamble. A further concern arises from the fact that, due to the builder's failure as the sole owner to execute and register the necessary declaration, the Act has not been applied. Consequently, the property is now automatically deemed co-owned by all apartment owners, with each owner's share in this collective ownership being proportional to the undivided interest they would have held in the common areas and facilities. The consequences of such a situation were unimaginable for our client, and therefore, he urgently sought the protection and preservation of his apartment ownership.
Our pre-litigation research revealed that the Real Estate (Regulation and Development) Act, 2016 (RERA), is inapplicable to this project. This is because the Occupancy Certificate for the complex was issued before May 1, 2017, the date from which RERA typically came into force for such projects, thereby exempting it from registration as a continuing project. Consequently, the rights and obligations stipulated under RERA do not extend to this development, meaning the promoter cannot be compelled by the central statute's regulators to ensure the application of the Kerala Apartment Ownership Act, 1983. In light of this, our strategic decision was to file a writ petition before the Kerala High Court, seeking a public law remedy to enforce our client's apartment ownership rights.
The Writ Petition has been admitted, and notices have been duly issued to all respondents. It appears the respondents, including the builder, are attempting to exploit a legal lacuna concerning the application of the Kerala Apartment Ownership Act, 1983. As previously highlighted, for this Act to govern a property, two fundamental requirements are indispensable. First, the sole owner, or all co-owners collectively, must explicitly and formally elect to subject the property to the Act's provisions by executing and registering a specific "declaration." Second, the property's primary use must be residential. The absence of this voluntary declaration by the owner(s) and the lack of a predominantly residential designation means the Act's protective framework, which ensures clear apartment ownership rights and defines common area interests, does not automatically apply. This legal technicality is precisely the basis upon which the respondents seem to be taking shelter.
The Enigma of Optionality: Section 2 of the Kerala Apartment Ownership Act and its Legal Lacuna
The core of the issue lies in Section 2 of KAOA, which dictates that the Act applies only if the sole owner or all co-owners of a property explicitly choose to submit it to the Act's provisions by executing and registering a declaration. While a literal reading of Section 2 suggests this submission is optional, the overarching preamble and statement of objects and reasons of the Act imply a broader intent to protect apartment ownership. Crucially, the KAOA lacks any regulatory mechanism or prescribed punishment to compel promoters to execute and register this essential declaration. This absence of a legal duty on the promoter creates a significant loophole, as the promoter is the sole owner of the property before individual apartments are sold. Consequently, countless apartment buildings in Kerala operate outside the protective framework of KAOA, leaving apartment owners without the comprehensive rights and safeguards the Act intends to provide. This leads to an "unimaginable" situation for clients, necessitating the protection and preservation of their apartment ownership.
A Legislative Oversight: Lessons from Maharashtra's Mandatory Framework
A comparison with the Maharashtra Apartment Ownership Act, 1970 (MAOA), from which KAOA is largely copied, highlights where Kerala's legislation falls short. The MAOA, in conjunction with the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA), establishes clear mandatory obligations for builders. Sections 10, 11, and 13 of MOFA collectively mandate that a builder (promoter) must convey the land and building's title to the flat buyers' organization and execute a declaration to submit the property to the MAOA. Failure to comply is met with stringent penalties, including imprisonment and fines, making these obligations mandatory. However, when the Kerala Apartment Ownership Act, 1983, was enacted, the crucial regulatory and enforcement provisions found in MOFA were conspicuously omitted. This oversight means that while Section 2 of KAOA is identical to its Maharashtra counterpart, the essential mechanisms to enforce its application are absent. This strongly suggests a discrepancy in legislative intent or execution, leading to the current legal lacuna in Section 2 of KAOA that urgently requires rectification.
RERA's Mandate: Clarifying Promoter Obligations Amidst State Law Ambiguity
The Real Estate (Regulation and Development) Act, 2016 (RERA), a central enactment, clarifies and strengthens the landscape of apartment ownership. Far from creating a direct conflict with state laws like the Kerala Apartment Ownership Act, 1983 (KAOA), RERA's framework, including its acknowledgment of local laws and explicit mention of KAOA in the Kerala RERA Rules, affirms the existing obligations on promoters. This indicates a clear expectation for promoters to ensure the application of relevant Apartment Ownership Acts to the properties they develop. RERA's prescribed Agreement for Sale form, which paradoxically requires promoters to assure compliance with KAOA, highlights the intertwining of these statutes, emphasizing the promoter's duty. While acknowledging these points of alignment and areas for future legislative enhancement, the notion that apartment owners must endure an "unending wait" for new legislation is untenable. The provisions of RERA, in conjunction with the inherent rights of apartment owners, provide a basis for immediate action to protect apartment ownership, ensuring that promoters fulfill their obligations without undue delay.
Towards a Solution: Interpreting Section 2 as a Compulsory Duty for Promoters
The state government has taken a stand in similar writ petitions in the following manner. It is expected that there may not be any change in the stand. The stand of the state government is briefed and extracted below: "The Writ Petition challenges Section 2 of the Kerala Apartment Ownership Act, 1983 (KAOA) as unconstitutional, advocating its modification to automatically apply to all RERA-covered apartment projects without requiring a specific 'declaration' by the owner. KAOA, a State Act enacted in 1984 under State and Concurrent List powers, aims to establish heritable and transferable apartment ownership. However, its Section 2 mandates voluntary declaration by promoters for its applicability, a process currently lacking any regulatory enforcement mechanism.
A subsequent Central Act, the Real Estate (Regulation and Development) Act, 2016 (RERA), generally overrides inconsistent State laws as per Article 254(1) of the Constitution and Section 89 of RERA. A government-constituted committee identified major discrepancies between KAOA and RERA. Key conflicts include RERA's requirement for promoters to convey common areas to associations (which, under RERA, includes the entire project land), contrasting with KAOA's definition of common areas tied to the declaration. Furthermore, RERA mandates association formation within three months of majority unit bookings, while KAOA permits it only after apartment handover.
Another discrepancy arises from RERA's prescribed Agreement for Sale form, which paradoxically requires promoters to assure compliance with KAOA, despite the noted inconsistencies. Recognizing these issues, the committee recommended repealing KAOA and enacting a new, comprehensive law, the draft Kerala Apartment Ownership Act, 2024, to conform with RERA. While this legislative process is underway, it is acknowledged as time-consuming. The government is now aware of these discrepancies and is taking steps to rectify the existing lacunae in the Acts."
It is unsurprising that the state government consistently maintains its intention to enact a new, more comprehensive law. This stance has been reiterated across various litigations dating back to 2011. What remains unclear, however, is the impediment preventing the swift introduction of this new legislation, if the government is truly committed to its implementation. Given this unending wait for new legislation, the rights of apartment owners in the state cannot remain in limbo; therefore, we must consider the available legal solutions here.
The genuine concern for any legal mind is whether an unintended error in a 40-year-old piece of legislation is being allowed to persist in the statute books, perhaps because the collective voice of apartment owners in the state is perceived as less influential compared to other stakeholders in the real estate sector. This ongoing legislative inertia, despite its profound impact on countless homeowners, underscores the urgent need for a re-evaluation of priorities. However, there remains a strong hope that the ongoing judicial scrutiny, particularly through mechanisms like the writ petition before the High Court, will compel a resolution, ensuring that the foundational rights of apartment owners are not perpetually held hostage to legislative delays, but rather are protected and enforced through judicial mandate.
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