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HT Estates Coverage on Cheating of Common Areas by Builders in Collusion with Authorities

Postby dheerajjain » Sat Jul 06, 2013 5:19 pm

Today, HT Estates came out with a front page article titled "Is NOIDA allowing builders to cheat you of your space?" and another article "A common problem in all of NCR" featuring common areas misuse by builders in collusion with Authorities. Please read these articles in HT Estates today. Online e-paper links are: ... 0000001001 ... 0000001001

Also contained below useful information about Apartment Acts all over India.
Apartment Ownership Acts India.jpg

A common problem in all of NCR
6 Jul 2013 | Hindustan Times (Delhi) | Jeevan Prakash Sharma

Many RWAS in Ghaziabad, Faridabad, Gurgaon and Noida are fighting developers for rights over common areas

The issue of ownership of common areas in housing societies continues to perplex apartment owners all over the NCR, be it Ghaziabad, Faridabad, Gurgaon or Noida.

Despite legal provisions for handing over common areas to the resident welfare association (RWA) in the apartment act of the states concerned, developers continue to insert clauses in sale-deeds for home buyers.

Take this case of Faridabad (see pic). Despite the Haryana Apartment Act and the Haryana Development and Regulation of Urban Areas Act, 1975, which states that RWAs will take over the common areas from developers, the developers own the space.

“The only difference between Noida and other areas is that while in Noida, the Authority is one of the parties to the sub-lease deed which has provisions which violate the public policy, in the other places development authorities are not signatories to such documents. They are just silent witnesses to a practice that is in all likelihood illegal,” says Dhanesh Relan, an advocate, who deals in consumer matters related to real estate.

Alok Kumar, vice-president, Ghaziabad RWA Federation, says that in Indirapuram even after handing over the maintenance to the RWA, developers continue to insert clauses in handover instruments claiming ownership over the common areas which allows them to add more floors to towers in residential societies in the future if floor area ratio (FAR) is increased.

“Once a developer hands over the group housing project to the RWA, he is out of the group housing project. He can’t claim ownership over anything. But buyers have no choice. They want ownership of their apartments for which they may have been waiting for several years. They are ready to sign on anything,” says Kumar.

He adds, “Even after handing over the group housing project, developers are making lakhs of rupees by renting out spaces of the society to the mobile towers and for other telecommunication services.”

The story is similar in Gurgaon too. “Common area by definition itself is an area ‘common to the residents.’ The builder has got nothing to do with this area. This is the law worldwide but not in Gurgaon,” says Amit Jain, director general, Federation of Apartment Owners Association.
He recounts an incident in which residents of a housing society had to literally force the builder out of their complex. “It was not a peaceful handover, The builder tried to enter the gates of the complex with the help 70 bouncers but people had to risk the lives of their children and wives to get what was rightfully theirs.

Says NK Sehgal former senior consultant (president) Ansal Properties, “In a group housing project, as per the legal position, if a developer takes occupancy of the whole project, he has to hand over the common area to the residents welfare association. The position is different as far as township is concerned. In a township, once the promoter takes the completion certificate from the director general, town and country planning, for the whole township, he has to hand it over to the municipal bodies. Once the handover formalities are complete, the promoter has no stake in the township.”

Many developers, however, don’t agree with Sehgal. They openly claim their rights over common area sand RWAs have no other means but to take the matter to the legal forums where decisions come after several years.

In Noida, some developers are building on common areas

Some developers are claiming ownership over common areas, contrary to the terms of the UP Apartment Act

Is the Noida Authority violating the Uttar Pradesh Apartment (Promotion of Construction, Ownership, and Maintenance) Act, 2010? The answer could be yes as the authority is the first party to the sublease deeds executed by developers in favour of partment owners in Noida. The deeds state that the common areas (lifts, parking space, clubs etc) in the apartments are owned by the developers. This goes contrary to the act, which states that such spaces belong to the RWAs (resident welfare associations) of the housing societies. The involvement of the authority in signing the deed is mandatory as it owns all the land in Noida, Uttar Pradesh.

Copy of a sublease deed executed by a developer claiming ownership over common areas in an apartment block
Land in Noida is leased out to real estate developers who after building apartments sulease them to home buyers. They (the developers) have to take the permission of the Noida Authority for sub-lease because the authority is the ultimate landowner. When developers execute a sublease deed in favour of the apartment owners, three parties are involved in the transaction - Noida Authority (the first party that owns the land), a real estate developer (who gets the land on lease from the Noida Authority) and the home owner (to whom the developer subleases the flat with the authority’s permission).

Many such deeds executed by developers deny the apartment owners any right over common areas and claim these are the developers’ property (see box).

Now the question is : How can the Noida Authority be party to a document which clearly violates the legal provision of the state?
“Noida being a statutory authority and an active stakeholder in the UP Apartment Act 2010 cannot be party to any document that expressly violates any of the provisions of the public policy. When a public policy is there to define and decide what ‘common areas and facilities’ are, there is no reason for Noida Authority to allow the same to be decided by the developer,” says SK Pal, a Supreme Court lawyer.

Pal adds, “The earlier 1975 and the 2010 Acts give a comprehensive list of ‘common areas and facilities’ which include park, community centre, pumps, sewer line, plumbing line, common passage, fire refuge area, columns, etc. Broadly, the legislators envisaged common assets as all those assets that are required for the existence of the owners/inhabitants in a condominium.”
Apartment owners are an angry lot. “We are losing both money as well as our rights. When we buy flats, we pay duty for its registration on the basis of super area which includes carpet area and the common area. So how can developers claim ownership on the common area?,” asks Prakash PVS, RWA official of a society in Noida.

“If homebuyers oppose this clause, the developers refuse to execute the sublease deed and without this document homebuyers don’t get ownership rights,” adds Prakash.

Another disputed issue between homebuyers and developers is the collection of money to maintain common areas. “If we go by the clause that gives common area ownership to the developer, the RWA will never have any say in its maintenance. The developer will collect the maintenance without being accountable to anyone. While the UP Apartment Act is clear that it is the joint responsibility of the promoter and homebuyers to from an association of all the residents and once the association comes into existence, the management of the affairs of the apartments regarding their common areas and facilities shall be deemed to be transferred from the promoter to the association. How is it possible when the sublease deed is just contrary to that?,” asks Ashish Kaul, an RTI activist.

Many RWA members allege that they have raised the issue with the Noida Authority several times by pointing out that the particular clause is violating of their legal rights but no officer is willing to pay any heed to them.

Though HT Estates made calls to senior Noida Authority officials, no one was willing to comment on the issue.
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