Are you buying an apartment?
Then read this and know all that you always wanted to know The Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972 - KOFA deals with most of the problems apartment owners face with promoters of the buildings or neighbouring apartment owners.
Mysore Grahakara Parishat Mysore is fast becoming a city of apartment buildings. Impressed by the security of apartment living, thousands of people have invested in apartments. But many apartment owners may be facing problems with apartment builders (construction defects), neighbours (disputes concerning common areas) and City Corporation (disputes about property tax on the apartment). They may also face problems when they try to transfer the title of the apartment to others (through sale, gift or will) since they do not possess the required documents. The government has passed laws to make each apartment a heritable and transferable immovable property, but unfortunately, there is large scale violation of these laws.
To avoid such problems, apartment owners should obtain the following documents (notarised copies unless otherwise indicated) at the time of taking possession of the apartment:
1. Site allotment letter from CITB or MUDA
2. Site possession certificate from CITB or MUDA
3. Title deed for the site from CITB or MUDA
4. Khatha certificate from Mysore City Corporation to the original allottee
5. Latest property tax paid receipt from MCC
6. Encumbrance certificate from sub-registrar’s office
7. Completion report for the building issued by MCC
8. The plan for the building sanctioned by MCC
9. Letter from CHESCom providing electrical connection to the building
10. Deed of declaration from developer giving details of common area shares
11. Letter from developer handing over possession of apartment (Original).
The Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972 - KOFA deals with most of the problems apartment owners face with promoters of the buildings or neighbouring apartment owners.
KOFA defines the obligations of the promoter of an apartment building. Among these obligations are prompt and full disclosure of the nature of the promoter’s title to the land (as certified by a lawyer of seven years standing), any encumbrances on the land, nature of fixtures, fittings and amenities to be provided in the building, the design and materials to be used in the construction of the building, plans and specifications of the building having obtained approval of the local authorities for the same, details of all agreements with the architects and contractors, the date on which the possession of the flat will be handed over, details of all the outgoings including ground rent, income tax, property tax, water charges, electricity charges, revenue assessment, interest, etc.
According to KOFA, the promoter must also keep a list of the flat buyers along with the prices charged and the conditions under which the flats were sold. Further, the promoter must state in writing the precise nature of the organisation of apartment buyers to which title of the building is to be passed and the terms and conditions governing the organisation. If this organisation is a co - operative society, he has to submit an application to the Registrar of Co - operative Societies within four months from the date on which the minimum number of persons required to form the society have taken flats. If no period of conveying the title of the building to the co - operative society thus formed is previously agreed upon, the promoter has to convey the title to the society within four months of the date on which the society is registered.
KOFA forbids the promoter from allowing persons to enter into possession until completion certificate for the building is obtained from the competent local authority. Before accepting advance payment or deposit from any buyer, the promoter has to enter into an agreement with the buyer and the agreement has to be registered. The advance payment cannot exceed 20% of total sale value of the flat. Once the agreement is executed, the promoter cannot mortgage or create a charge on the flat or the land.
KOFA mandates that the promoter has to maintain a separate account of sums taken as advance or deposit and acting as a trustee for the money, disburse it for the purpose for which it is given, keeping full records of the money spent. The promoter has the responsibility for the payments of all outgoings including taxes, water and electricity charges, revenue assessment and interest until the title of the property is transferred to the cooperative society of flat owners.
The apartment buyers are advised to go through these records carefully and insist on details since some promoters have charged huge lump sum amounts for purposes such as registration of apartments and legal fees, etc., which required only small amounts of money. Some promoters are also found collecting money for various heads to meet the hidden costs which the buyers are not obliged to pay.
After the plans and specifications of the building as approved by the local authority are disclosed to the person agreeing to take a flat, the promoter is forbidden by KOFA to make
i) Any alteration within the flat without obtaining previous permission of that person, or
ii) Any alteration in the structure of the building or construct additional structures without the previous consent of all the persons who have agreed to take the flats.
If the promoter fails to give possession of a flat duly completed in accordance with the terms of the agreement by the date specified (or any further date agreed to by the parties), he shall be liable to repay (without prejudice to other remedies to which he may be liable) the amounts already received by him with respect to the flat with simple interest at 9 % per year. Any violation of the above conditions of KOFA by the promoter is punishable by a prison term or a fine or both.
To guarantee a smooth running of the co - operative society of apartment owners, it is advisable that all members of the society give a declaration to the Registrar of Co - operative Societies stating that they want to be covered by Karnataka Apartment Ownership Act 1972 (KAOA).
KAOA and the accompanying Rules prescribe the way the society has to be run, the duties of apartment owners, etc. They forbid actions of any owner which would jeopardize the soundness or safety of the building reduce the value of the building or hinder or encroach upon the lawful rights of other apartment owners. They also enjoin all owners to perform promptly maintenance and repair work within their own units and to reimburse the society for any damage to common area and facilities through their fault. KAOA mandates that the promoter should provide each apartment owner a deed of declaration in the format prescribed by Form A. The apartment owners should make sure that they receive the deed in the prescribed format.
A book containing both these Acts applicable to apartments in Karnataka and the accompanying Rules is available in law book stores.
A. M. Subba Rao & P. M. Bhat
Courtesy: Star of Mysore
Thanks to OurKarnataka.com for permitting us to publish this article.
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