Guide to Apartment Owners Association: Formation and Functioning

Today apartment owners association is a vital part of a community livingApartment owners association is an association where all owners of the apartment are members and the association maintains the facilities or amenities available in the apartment. Apartment owners association works for the welfare of residents in the apartment, conducts events or awareness programs and protects the rights of apartment owners. Apartment owners association may or may not be registered; but a registered association has the rights to sue or defend any legal action as well as enjoy legal benefits. An apartment owners association not only has the right to maintain facilities available in the apartment but also has the legal powers to protect its members and defend legal action raised against the association.

Apartment Flat Owners Legal powers of Home Owners Association

An apartment owners association not only has the right to maintain the facilities available in the apartment, but also has legal powers to protect its members and defend legal action raised against the association.

Apartment Owners Association as Arbitrator

Arbitration is a technique for resolution of disputes among members of the association or residents in the apartment. There may be internal matters in the apartment that need to be resolved or the apartment owners association may have disputes which may require legal intervention. In such cases, the apartment owners association can act as an arbitrator between members or residents in the apartment and help to resolve disputes outside court. Approaching the court is not always recommended as it may take months or even years for resolution of the dispute. The association can either hire a legal advisor or appoint an advocate to look into legal issues pertaining to the association.

Power to Recover the Maintenance Fee

Provisions are made in the by-laws of the association for collecting the maintenance charges. Builders usually allow the apartment owners to form their own association and fix the maintenance charges applicable. The cost of maintaining the amenities needs to be shared by the apartment owners and residents in the apartment. There is a misconception among many residents that the price they pay for the apartment is inclusive of the facilities in the apartment that they enjoy. Maintenance is a fee charged for services provided and maintenance of equipment facilitated by the apartment.

In most association meetings, the issue of maintenance charges is often debated extensively. Maintenance charges are calculated either on the basis of provisions made in the bye-laws of the association or based on a  method agreed by a majority of the members of the apartment owners association. Acceptance of maintenance charges can atleast help maintain peace and harmony within the association. In the event of default by any member, the association has the right to charge interest and penalty from the defaulter, and the power to recover this amount. The apartment owners association has the right to sue defaulting members but it cannot terminate any facility enjoyed by the owner. The apartment owners association can only initiate legal proceedings for recovery of any outstanding payments besides seeking relief, as may be permissible under the law.

Legal action against members guilty of offense

Apartment owners association has a general body consisting of all the members of the association who are owners of the apartment complex. The general body elects members belonging to the general body to form a  Management committee. The management committee represents the apartment owners association and will look into all matters concerning the apartment as well as the rights and interests of members. Any member in the apartment owners association who steals, forges or causes any loss to the association shall be liable to be punished. The association also has the right to take legal action against members guilty of any offence.

File case against the Builder

Today, demand for residential property is increasing with the number of builders coming up with attractive prices also increasing. There are a number of property buyers who often complain that their builder has cheated them by offering low quality construction, besides not responding to their queries and failing to keep their promised. The apartment owners association can file a case against such builders for obtaining compensation for losses. They can also lodge a police case and even file a criminal case against the builder.

  • Notice to builder: It is always recommended to issue a notice to the builder before approaching the court or taking any legal action. Apartment owners association can issue a notice to the builder for delay in the project as well as to obtain compensation for losses and in case of poor quality of construction. The notice can be send by registered post or Under Postal certificate. Retain the proof of sending.
  • Lodge Police case: If the builder fails to respond to the notice, the apartment owners association can lodge a police complaint against the builder. The police authorities, to begin with, call upon the parties to remain physically present at the police station. The Police authorities invoke Section 107 (Security for keeping the peace in other cases) of the Code of Criminal Procedure, 1973. Proceedings under this section may be taken before any executive magistrate.
  • Consumer Case: It has been observed in many cases that  builders do not comply with their statutory obligations. In such circumstances, the options available to the flat purchasers / society include filing a complaint in the Consumer Court. Apartment owners association can file a single case against the builder on behalf of all its members, as consumers having the same problem. A complaint can be written preferably with date-wise facts. Refer to the page numbers of the attached documents wherever required (like bill, agreement, service report, etc). Mention what relief you are looking for against your complaint. You can either file your case directly or send it by registered post.
  • Criminal case: A builder can be sued for cheating, breach of contract, not responding to the grievance and delivery of poor quality construction. While drafting the criminal complaint, the society should highlight specifically the violation of the various provisions. The society should also emphasize that violation of the provisions is criminal in nature. Attention of the criminal court should be drawn to offenses of various sections of the Indian Penal Code – Sections 406, 407 read with sections 415 and 420.
  • Section 406 Punishment for criminal breach of trust
  • Section 407 Criminal breach of trust by carrier, etc
  • Section 415 Cheating
  • Section 420 Cheating and dishonestly inducing delivery of property

The complainant should also bring out irregularities committed by the builders while executing the construction of the building. Once a complaint is lodged, the matter is kept for verification wherein the statement of the complainant is taken. On the basis of the evidences provided by both the parties, the Honorable Metropolitan Magistrate’s Court office passes its order. The builder has the right to appeal in the Sessions Court. In the event of the accused being aggrieved by the order passed by the Sessions Court, then he can appeal in the High Court.

The apartment owners association can be sued by members or parties, if the association fails to meet its statutory obligation. A well-drafted bye-law should enable any apartment owner to raise issues in which case it is mandatory for the managing (or executive) committee to address these issues adequately. There could also be common issues faced by many apartment owners with regards to the association being unresponsive to their concerns. There may be instances where the members find that the association is actively working against their interests. In such instances, the members of the apartment owners association has the right to raise any  issue which they feel is detrimental to their interests and demand a meeting of the association for the same. If the association fails to take action on such a complaint, then  members can, as a last resort, approach the court to seek relief to their grievances. If an association persistently commits default in fulfilling its statutory obligations or if there are huge disputes over the management of the association, the member can then consider complaining to the concerned Registrar of Societies in this regard. The Registrar has the right to cancel the registration of the apartment owners association which fails to meet statutory obligations and in cases where there are huge disputes over the management of the association.

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