In Karnataka, there are three types of apartment communities that can be formed. A promoter can float a company or cooperative society under KOFA. These are two options. Alternatively, the third option envisaged in KOFA is for the builder/promoter to form an association of owners under the KAOA.
What is the Apartment Owners Association?
Apartment Owners Association is a voluntary organization that is formed by the owners of the apartment. The association is responsible for providing services such as maintenance of amenities and enforcing regulations. It also works for the welfare of the residents by initiating events. The association may or may not be registered.
Apartment Owners Association is formed under the respective city government association act. At the time of registration, all owners of the apartment should gather in one place. The owners can give a power of attorney to the builder to register the association. The registered association enjoys legal benefits and protects its members.
What are the things required to form the Apartment Owners Association?
Key things to remember while forming the association:
- To form the association, a minimum of seven members are required. This association includes an apartment owner, a general body, associate member, and a management committee that includes a president, vice president, secretary, and treasurer.
- Create a memorandum which states the name of the society, its objectives, name, and occupation of the residents
- By-laws which is used to govern the society
- The by-laws and memorandum should be printed and duly signed by the members. It is filed with the register of the society and should pay a nominal registration fee.
What are the documents required for registration?
The following documents are required for registration:
- Society name and address
- Duly signed proposal letter by the executive committee that is addressed to the Registrar of Societies
- Associations memorandum
- Proceedings of the first general body meeting
- A standard fee
What are the benefits of registering the association?
A registered association enjoys all legal benefits. Some of the advantages of a registered association are:
- Rules violation – If the association is registered, action can be taken against residents who violate the apartment rules such as delay in payment of maintenance fee, late-night partying, residential space used for commercial purpose, etc.
- Addressing grievance – Grievances such as security, maintenance, new requirements, etc. can be addressed. The registered association can also promote and start cultural activities, community activities, and charitable drives.
- Safety of residents – The association is responsible for ensuring residents security by implementing laws. Which in turn, results in maintaining harmony and discipline within the society. E.g. – Limiting the number of visitors entering the apartments due to the pandemic
- Legal action against builder – The association can settle disputes with the builder regarding poor construction, for violating building codes, etc. The case can be filed at the National Consumer Disputes Redressal Commission (NCDRC).
- Record maintenance – It is important to maintain the details of common facilities and ownership schemes to ensure transparency and smooth functioning. The information is carried in the Deed of Declaration for future legal purposes.
- Taxation – Paying taxes which includes property taxes, applicable GST, and other taxes becomes easy for a registered association.
- Banking – It is easy for a registered association to open a bank account and carry out banking procedures.
What are the contents of by-law?
The by-law includes the following:
- The objectives and aims of the society
- The rules and regulations that have to be followed by the residents of the society
- Details of income and expense account
- Details about maintenance fees, penalties, transfer charges, common area expenses, etc.
- Minutes of the apartment general meeting which is held once in six months
- Details about selecting an association member and office-bearers. It also includes a list of office bearers who can take care of monetary transactions and issue cheques.
- Details on how the association aims to help and maintain harmony among residents
- Any other FAQ’S
Who has the right to cancel the AOA?
The Registrar has the right to cancel the AOA when the association fails to meet statutory obligations and in case of huge disputes among the members of the association.
What is the timeline to get the association registered?
The association should be registered under the respective state’s Society Registration Act within 3 months and is exempted only in some serious situations.
How are the members of the association elected?
The members of the association are elected unanimously by the members of the apartment. The elected members of the association hold office for one year and re-elections are conducted once a year or mid-year if all the members give mutual consent.
For the local governments such as BBMP, there are additional hidden gems. The KAOA says that each apartment owner is liable to pay local taxes for his or her apartment and proportional undivided share. So that resolves the question of who pays property tax on the common areas. That is not to say the KAOA is perfect. It is a 40 year old law to which many improvements can be made. However, the key point is that a very logical framework already exists.
Reality
Unfortunately, the ground reality today is that very few builders do things the right way. Most apartments have associations registered under the societies act. Banks continue to give mortgages despite the fact that clear title is not passed on to the buyers due to the manner in which transactions are conducted. The registrars and sub-registrars continue to register any document that purports to be an apartment sale deed without paying heed to the requirements placed on them by the KAOA.
Advice for contact :
VidyaSunil & Associates
Web : http://www.vidyasunilassociates.com
Cell No. 9739834819 / 9480633382
VidyaSunil & Associates 