The Karnataka Apartment Ownership Act, 1974 (“KAOA” or “Act”) was enacted to provide ownership to individual residential apartments in the State of Karnataka. The aim was to make these apartments heritable and transferable property. The apartment owners are required to submit their property to the provisions to this Act by signing a deed of declaration to that effect. Once the apartments are under the ambit of this Act, the owners, among other rights, will also obtain an undivided interest in the common areas and facilities of the apartment complex.
An apartment, under Section 3 of the Act is defined as a part of the property that is intended for independent and residential use. An apartment must have a direct exit to a public street, road or highway, or an exit to a common area that leads to such public places.
Every apartment owner has a heritable and transferable ownership of not just his apartment but also an undivided interest in the common areas and facilities. Thus, the apartment owner may transfer his apartment and his interest in the common areas and facilities in the form of sale, mortgage, lease, gift, exchange, or in any other manner as per the Transfer of Property Act, 1882.
Registration Under Competent Authority
The biggest advantage of registering an apartment complex under the Karnataka Apartment Ownership Act is the right to undivided interest that individual owners receive with regard to common areas and amenities, unlike when registered under the Karnataka Societies Registration Act, 1860. Thus, the building, common area and land are not vested with the Cooperative Society and therefore, the owners, if necessary, can easily mortgage their property.
Owners under KAOA also have a clear title to their property with a separate Khata. The deed of declaration (“DOD”) contains comprehensive data about the buildings and properties, and has a separate registration number making it perfectly traceable at any given point of time.
There is a general confusion regarding the authority under which the apartment is to be registered. Though the Act does not clearly specify that the registration is to be done under a specific authority, it states under Section 3(i) of the Act that “Competent Authority” shall mean the “Registrar of Co-operative Societies as defined under the Karnataka Co-operative Societies Act”. In addition with the Karnataka Apartment Ownership Rules, 1974, the term “Registrar” is defined under the model bylaws as the Registrar of Co-operative Societies. This shows that the registration is to be done with the Registrar of Karnataka Co-operative Societies.
Common Areas and Facilities
The common areas and facilities form an integral part of every apartment. They provide the right of way, right to use amenities like the elevators, parking areas, etc., and other shared facilities of the apartment.
The Act provides that each owner is entitled to a certain percentage of an undivided interest in the common areas and facilities as expressed in the DOD, which cannot be separated from the apartment that it belongs to. The percentage is to be calculated based on the value of the apartment with relation to the value of the property. Any change in this percentage can only be made with an amendment in the DOD, with the approval of all the apartment owners.
Once the apartments are submitted to the provisions of the Act, the common area and facilities cannot be divided or partitioned by the apartment owners or any other person by instituting legal proceedings for the same. Also, no encumbrance of any nature will arise or be effective on the property at large. Encumbrances may arise only on the apartment and the percentage of an undivided interest in the common area and facilities pertaining to such apartment.
As per Sections 14 and 22(d) of the Act, the owners may remove their apartment from the provisions of the Act by executing an instrument to that effect and by paying all outstanding charges pertaining to the apartment. Once the partition and sale of the common areas is completed, the net proceeds of sale and any net proceeds of the insurance of the property is to be divided among all the owners of the apartment in a percentage equal to the percentage of an undivided interest in the property. No apartment maybe partitioned if the same has encumbrances attached to itself.
This removal of the apartment from the provisions of the Act will not bar the apartment from being resubmitted to the Act once again.
The common areas and facilities are to be used in accordance with the purpose for which they are intended and their use must not hinder or infringe the lawful rights of the other apartment owners. All rights and obligations of the owners, including those related to the common areas and facilities will be stated in the bylaws along with other details such as maintenance and upkeep of the apartments.
The owners of the apartment cannot refuse to pay the charges pertaining to the use of common areas and facilities even by relinquishing their rights to use the same or by abandoning their apartment. In addition to the charges payable to the apartment association, the owners also have to pay taxes for the apartments and their appurtenant percentage in the common areas and facilities, as if they are a separate property.
Deed of Declaration
Sections 11, 12 and 13 elaborates on the DOD which is essential for the registration of the apartment under this Act.
The DOD must contain the following:
a) Description of the land on which the entire apartment complex is located, and whether the land is freehold or leasehold.
b) Description of the building including the number of storeys, basement, number of apartments and the details about the apartments, materials used, etc.
c) Description of normal and limited common areas and facilities.
d) Value of the property, percentage of an undivided interest in the property and a statement to the effect that the property or any apartment has no encumbrances attached to it.
e) Voting rights of the owners.
f) Rights and obligation of the owners.
g) Name and details of the person who is to receive service of process.
h) Method of amendment of the DOD.
i) Any other details in connection with the property.
A true copy of the DOD along with the apartment bylaws and a true copy of every deed of apartments are to be filed with the registrar of Cooperative society. The DOD, deeds of apartments and the floor plans of the building are to be recorded under the Registration Act, 1908.
The details of the apartment and a certificate of an architect stating that the details produced are accurate must be filed with the authorities,. along with the registered deeds and declaration.
The managing board of the apartment association must ensure that a certified copy of the of DOD, deeds of apartments and the memorandum containing the particulars of the property is submitted with the jurisdictional sub-registrar, or in the absence of the authority, with the registrar of the district.
Deed of Apartments
The deed of apartments which is to be submitted along with the DOD and the bylaws must contain the following particulars:
a) Description of the land on which the entire apartment complex is located, and whether the land is freehold or leasehold. Or if the DOD has been registered already, one may submit the details of the same with the post office address of the property.
b) The details of the particular apartment including the apartment number and any other identification
c) Statement of use of the apartment and any restriction on the apartment
d) Percentage of an undivided interest in the common area and facilities, pertaining to the apartment
e) Any other detail which is consistent with the Act
The bylaws form the cornerstone of every apartment. They are a set of detailed rules that will govern the apartment’s owners, inhabitants, and staff. Thus, it is necessary to compile a set of bylaws that ensure that the residents of the apartments are not unfairly or rigidly regulated, but also that the safety and quality of the apartment are maintained. The bylaws must also comply with the provisions of the Act as given below:
a) The bylaws must provide for the election and constitution of a board of managers, their term of office, powers and duties, method of removal from office and whether or not the board may engage the services of a Secretary, a Manager or Managing Agent.
b) Method of calling meetings of the apartment owners and the quorum of such meetings
c) Election, powers and duties of the president, secretary and treasurer as per the Act
d) Maintenance, repairs and replacement of the common areas and facilities and payments therefor;
e) Designation and removal of persons employed by the association
f) The method of adopting and amending administrative rules and regulations governing the details of the operation and use of the common areas and facilities;
g) Restriction and maintenance of the apartment premises and common areas and facilities, upon the owners and residents of the apartment;
h) The percentage of votes required to amend the bylaws;
i) Procedure for transfer or partition of apartments and undivided interest in the common areas and facilities, in accordance with the provisions of this Act.
j) Procedure to lease out certain portions of the property to non-residents, for commercial purposes, and the manner of use of proceeds from such transactions
k) Any other provisions including but not limited to, audit, accounts, administration of property, general meetings, annual reports, etc.
l) Any amendment to the bylaws must be duly recorded and a copy of it must be filed with the competent authority.
The KAOA, the DOD and the bylaws formed under the Act apply not only to apartment owners but also to all temporary and permanent residents of the apartments and the employees of the residents of the owners. Thus, every owner and any other persons having access to the apartments must strictly comply with the bylaws and subsequent rules and regulations that are implemented by the administrators of the bylaws. This is necessary for the maintenance, security and smooth coordination of the apartments. As the bylaws are enforceable by law, all owners must ensure that they are fully aware of the rules and restrictions applicable to them, mentioned in the bylaws, before agreeing to the same. Any agreements, decisions and determinations legitimately made by the Association of Apartment Owners in accordance with the voting percentages established under the Act, Declaration or bylaws, are also binding on all the apartment owners. The Act also specifies that the owners are not to undertake any work in their apartments that will threaten the structure or safety of the property or in any way lower the quality of life of the other apartment owners.
Apartment owners generally choose not to register under the Karnataka Apartment Ownership Act due to the tiresome process of assembling all the owners while executing the DOD. But this may be avoided by obtaining a power of attorney from owners in the favour of one individual. Though this is a relatively new legislation, KAOA is the right law for the registration and governing of apartments, ensuring the smooth functioning of apartments on democratic grounds.