DISCLAIMER TO BE NOTED :- This Information Is Provided By Us, On Our Personal Experience, Issues Till Date, & It Shall Not, In Any Manner, Whatsoever, Deemed As Our Opinion. As This BLOG Is Meant To Be Used As A Guide For Only Informative Purpose, Not As A Replacement For Any Legal Opinion.
BENEFITS OF A SOCIETY :-
- REDEVELOPMENT ASPECT.
- F.S.I. [FLOOR SPACE INDEX].
- CONVEYANCE DEED.
- OWNERSHIP OF LAND & BUILDING.
- OWNERSHIP OF THE OPEN SPACES & COMMON AREAS.
- REGISTERED BYE – LAWS.
- SHARE CERTIFICATE.
- PROPER MANAGEMENT.
- ELECTION OF COMMITTEE.
- TRANSFER FEES.
- DEFAULTER TO PAY MONEY.
- PERMISSION TO SUB-LET.
- PROPER RULES & REGULATIONS.
- LEGAL ACTION ON DEFAULTERS.
- VOTING RIGHTS OF MEMBERS.
- DISPUTES BETWEEN COMMITTEE AND MEMBER.
- EXPULSION OF MEMBER.
- NOMINATION OF MEMBER.
WHY HOUSING SOCIETY HAS BETTER OPERATION THAN
APARTMENT OWNERS IN MAHARASHTRA.
A significant question here is that why the builders always tend to go for ‘Apartment Owners Association’ formation and always try to avoid ‘Society’? The reason is that the builders have lot of vested interests in doing so which are listed below:
HOUSING SOCIETY :- To form a society, generally 10 persons, each from a different family who reside in the area of operation of the society (within the same city) and who have taken premises in the building, would be required. The Maharashtra Ownership Flat Act, 1963 there should be at least 10 members for forming Co-operative Housing Society
APARTMENT CONDOMINIUM :- To form a Apartment Condominium, The Maharashtra Ownership Apartment Act, 1970 Provides That there should be 5 Apartments in one or more building.
HOUSING SOCIETY :- The title of the land and the building is conveyed to the society, which becomes the owner thereof. Persons who have purchased Flat are made members of the society and are allotted the particular Flat and also share certificate are issued.
APARTMENT CONDOMINIUM :- In the case of a condominium, the title of each apartment rests with the apartment owner, who also has a proportionate undivided interest in the land on which the building stands, the common areas and facilities of the building.
BYE – LAWS:
HOUSING SOCIETY :- A society adopts the model bye laws in which little can be changed.
APARTMENT CONDOMINIUM :- While adopting the bylaws in a condominium, suitable changes can be made, so long as the provisions of the Act are not contravened.
HOUSING SOCIETY :- A society issues shares to its members, as per the bylaws and the share certificate becomes an important title deed, since the allotment of the premises are related thereto.
APARTMENT CONDOMINIUM :- This is not so in a condominium.
HOUSING SOCIETY :- The affairs of the society are managed by the managing committee, which is elected by the members of the society. The managing committee elects a chairman, secretary and a treasurer.
APARTMENT CONDOMINIUM :- the affairs of a condominium are managed by the board of managers, who are elected by the members of the apartment owners association. The board also elects a president, vice-president, secretary and a treasurer.
HOUSING SOCIETY :- Under the model bylaws, a society can charge only Rs 500 as transfer fees and a maximum of Rs 25,000 as a premium.
APARTMENT CONDOMINIUM :- In case of a condominium, the bylaws can be more flexible and the amount of transfer fees can be provided therein.
PERMISSION TO SUB-LET:
HOUSING SOCIETY :- In a while in a society, permission is required, When the member has to give his flat on lease or leave and license basis,
APARTMENT CONDOMINIUM :- In a condominium, the owner can give his apartment on lease or leave and license basis without the approval of the board of managers,.
F.S.I. [FLOOR SPACE INDEX]
HOUSING SOCIETY :- The builder is interested in using the increased FSI which will be awarded by the govt. for that area at any time in future. If the ‘Society’ is formed, then upon the transfer and conveyance of land in favour of the Society, the increased FSI will be owned by the Society and the builder shall not have any right over it.
APARTMENT CONDOMINIUM :- But if it is an Apartment, then the builder owns that increased FSI and can use it anywhere. Thus, the builder will keep taking advantage of every increase in FSI throughout in the future.
OWNERSHIP OF THE OPEN SPACES
HOUSING SOCIETY :- the builder Cannot retains the ownership of the open spaces like Terrace or any open parking/stairs space in case of Society, the builder cannot retain any right on any of these areas and has to hand over everything to the Society
APARTMENT CONDOMINIUM :- In an Apartment, the builder retains the ownership of the open spaces which are not included in the saleable area. Example – Terrace or any open parking/stairs space which is not included in the saleable area. The Maharashtra Apartment Ownership Act also provides for the ownership of an individual Apartment in a building and to make such Apartment heritable and transferable property.
BYE-LAWS AND RULES
HOUSING SOCIETY :- Bye-laws and Rules of ‘Society’ are binding on all the residents and nobody can act as per his/her whims. Hence, if the Society decides to ban any objectionable commercial activities in the flats such as noise-making music classes or using the flat for catering or courier activities etc or not to rent out to bachelors etc, then all the residents have to abide by it.
APARTMENT CONDOMINIUM :- if it is an Apartment, then owners violates the Apartment Rules and the Apartment Body can just file a case in the Civil Court.
HOUSING SOCIETY :- while the Society disputes are resolved in a separate Court i.e. Co-operative Court dealing with Society matters and hence they are fast resolved.
APARTMENT CONDOMINIUM :- whereas, the Apartment matters have to be taken to the normal Civil Court and hence they typically take years and decades to resolve.
HOUSING SOCIETY :- When the building contemplates redevelopment after 25-30 years, the Society’s decision will be final and hence the Society members will have negotiation power with the builder at that time. Thus, while the decisions are taken on a ‘majority’ basis in Society,
APARTMENT CONDOMINIUM :- But if in case of an Apartment, the consent of every Apartment-owner is required and hence it goes into an endless delay due to lack of a common decision acceptable to everybody. There are many instances wherein finally the dilapidated buildings had to be forcefully vacated by an eviction order from Court since they became unlivable. the Apartment goes with rule of ‘Acceptable by Everybody’. So if the builder has retained even one flat in an Apartment, he will play a veto card in his favour at the time of redevelopment.
ASSESSMENT OF THE PROPERTY.
HOUSING SOCIETY :- In case of Ownership Flat Act or Co-operative Societies Act the assessment of the flats will be in the name of owner of the land or builder or the Society
APARTMENT CONDOMINIUM :- in case of Apartment Ownership Act there will be separate assessment in respect of each Apartment and its percentage of undivided interest in common areas and facilities.
REGISTRATION OF ENTITY
HOUSING SOCIETY :- there will be registration of Co-Op Society or Pvt. Ltd Company as contemplated under Section 10 of Maharashtra Ownership Flat
APARTMENT CONDOMINIUM :- in case of Apartment Ownership Act, a declaration is required to be made in prescribed form before the Magistrate as required under the Act.
HOUSING SOCIETY :- In a society, every member has one vote, irrespective of the area of his premises.
APARTMENT CONDOMINIUM :- In a condominium, every apartment owner has a voting right in proportion to the value of his premises, which is generally as per the area of the apartment owned by him and which is defined while forming the condominium.
HOUSING SOCIETY :- In a society, disputes are generally referred to the registrar appointed under the Act or to a cooperative court, depending on the nature of the dispute.
APARTMENT CONDOMINIUM :- In the case of a condominium, the court having jurisdiction over the area in which the condominium is located, hears the disputes.
HOUSING SOCIETY :-A society can expel its member under certain extreme circumstances.
APARTMENT CONDOMINIUM :- In case of a condominium, there is no such provision. However, if an apartment owner fails to comply with the bylaws or the rules and regulations, either damages or injunctive relief or both can be claimed against him.
HOUSING SOCIETY :-In a society, a member can nominate a person in whose favour shares of the society should be transferred upon the member’s death.
APARTMENT CONDOMINIUM :- No such facility is available in a condominium. An apartment can be transferred to a person to whom the apartment owner bequeaths the same by his will or to the legal representative of the apartment owner’s estate.
Even Though the cooperative society model which has been the most popular so far. However, in recent times, the concept of a condominium is slowly gaining momentum. Buyers who purchase premises on an ‘ownership’ basis require to come together to manage the building and for that purpose, one of the ways is to form a cooperative society, which is governed by the Maharashtra Cooperative Societies Act, 1960.
An alternative to a cooperative society was introduced by the Maharashtra Apartment Ownership Act, 1970, which provides for the formation of a condominium. The buyers of premises in a condominium are called apartment owners who form an association known as an ‘association of apartment owners’, in case of both, residential as well as non-residential premises.
Although the basic purpose of both the models is similar, there are many differences between a society and condominium:
In A Housing Complex, A Co-Operative Society Is Formed, With All The Flat Owners As Members, To Maintain And Manage The Affairs Of The Entire Complex. Formation And Functioning Of Such Societies Is Governed By Maharashtra Cooperative Societies Act,1960.
Condominium, Is A Group Of Housing Units Where Owner Of Each Home Owns Individual Unit Space And Ownership Of Common Areas Is Shared By All. Every Unit Is Called “Apartment” And Owners The Apartment Owner(S). A Condominium Is Formed Under Maharashtra Apartment Ownership Act, 1970.
1. Management:- Members Of A Society Elect A “Managing Committee” Which In Turn Elects It’s Chairman, Secretary, Treasurer And Other Office Bearers To Manage The Day To Day Affairs. In Condominium, Members Of The Apartment Owners Association Elect A “Board Of Managers” Which In Turn Elects President, Vice-President , Secretary And Treasurer To Manage Day To Day Affairs.
2. Letting Out:- In Society Flat Owner Has To Obtain Permission From The “Managing Committee” To Let Out His Flat, But In A Condominium Apartment Owners Can Give Their Apartment On Lease, Leave And License Without Approval From The “Board Of Managers”
3. Voting Rights:- In Society Every Member Has One Vote, Irrespective Of The Area Of His Premises, While In A Condominium Every Apartment Owner Has Voting Right In Proportion To The Value Of His Premises, Which Is Generally As Per The Area Of The Apartment And Is Defined While Forming The Condominium.
4. Disputes:- In Society Disputes Are Referred To The Registrar Appointed Under The Act Or To A Co-Operative Court Depending On The Nature Of Dispute. In Condominium The Court Having Jurisdiction Over The Area In Which The Condominium Is Located Hears The Disputes.
5. Expulsion:- A Society Can Expel Its Member Under Certain Extreme Circumstances. In Case Of Condominium There Is No Such Provision. If An Apartment Owner Fails To Comply With The Byelaws, Rules And Regulations, Either Damages Or Injunctive Relief Or Both Can Be Claimed Against Him.
6. Nomination:- In A Society A Members Can Nominate A Person To Whom Shares Of The Society Could Be Transferred Upon His Death. No Such Facility Is Available In A Condominium And An Apartment Can Be Transferred To A Person Whom The Apartment Owner Bequeaths Or To His Legal Heir(S).
WHY CO-OP HOUSING SOCIETY IS BETTER THAN APARTMENT OWNERS ASSOCIATION IN MAHARASHTRA
A Significant Question Here Is That Why The Builders Always Tend To Go For ‘Apartment Owners Association’ Formation And Always Try To Avoid ‘Society’? The Reason Is That The Builders Have Lot Of Vested Interests In Doing So Which Are Listed Below:
- The Builder Is Interested In Using The Increased Fsi Which Will Be Awarded By The Govt. For That Area At Any Time In Future. If The ‘Society’ Is Formed, Then Upon The Transfer And Conveyance Of Land In Favour Of The Society, The Increased Fsi Will Be Owned By The Society And The Builder Shall Not Have Any Right Over It. But If It Is An Apartment, Then The Builder Owns That Increased Fsi And Can Use It Anywhere. Thus, The Builder Will Keep Taking Advantage Of Every Increase In Fsi Throughout In The Future.
- In An Apartment, The Builder Retains The Ownership Of The Open Spaces Which Are Not Included In The Saleable Area. Example – Terrace Or Any Open Parking/Stairs Space Which Is Not Included In The Saleable Area. But In Case Of Society, The Builder Cannot Retain Any Right On Any Of These Areas And Has To Hand Over Everything To The Society. The Maharashtra Apartment Ownership Act Also Provides For The Ownership Of An Individual Apartment In A Building And To Make Such Apartment Heritable And Transferable Property.
- Bye-Laws And Rules Of ‘Society’ Are Binding On All The Residents And Nobody Can Act As Per His/Her Whims. Hence, If The Society Decides To Ban Any Objectionable Commercial Activities In The Flats Such As Noise-Making Music Classes Or Using The Flat For Catering Or Courier Activities Etc Or Not To Rent Out To Bachelors Etc, Then All The Residents Have To Abide By It. But If It Is An Apartment, Then Owners Can Violate The Apartment Rules And The Apartment Body Can Just File A Case In The Civil Court. However, While The Society Disputes Are Resolved In A Separate Court I.E. Co-Operative Court Dealing With Society Matters And Hence They Are Fast Resolved Whereas, The Apartment Matters Have To Be Taken To The Normal Civil Court And Hence They Typically Take Years And Decades To Resolve.
- When The Building Contemplates Redevelopment After 25-30 Years, The Society’s Decision Will Be Final And Hence The Society Members Will Have Negotiation Power With The Builder At That Time. But If In Case Of An Apartment, The Consent Of Every Apartment-Owner Is Required And Hence It Goes Into An Endless Delay Due To Lack Of A Common Decision Acceptable To Everybody. There Are Many Instances In Mumbai Wherein Finally The Dilapidated Buildings Had To Be Forcefully Vacated By An Eviction Order From Court Since They Became Unlivable. Thus, While The Decisions Are Taken On A ‘Majority’ Basis In Society, The Apartment Goes With Rule Of ‘Acceptable By Everybody’. So If The Builder Has Retained Even One Flat In An Apartment, He Will Play A Veto Card In His Favour At The Time Of Redevelopment.
DIFFERENCES BETWEEN A SOCIETY AND CONDOMINIUM (APARTMENT OWNER’S ASSOCIATION)
Although The Basic Purpose Of Both The Formation Is Similar, There Are Many Differences Between A Society And Condominium. Some Of The Differentiation’s Are As Under:
- Generally To Form A Society, 10 Persons Would Be Required And Each Of Them Is To Be From A Different Family Who Reside In The Area Of Operation Of The Society (Within The Same City) And Who Have Purchased Premises In The Building. However, In Case Of Condominium, Even One Person Who Owns The Entire Building Can Form A Condominium Provided There Are At Least Five Apartments In The Building.
- In The Case Of A Society, The Title Of The Land And The Building Is Transferred And Conveyed To The Society, Which Becomes The Owner Thereof. Buyers, Upon Purchase Of Flats, Become Members Of The Society. In The Case Of A Condominium, The Title Of Each Apartment Rests With The Apartment Owner, Who Also Has A Proportionate Undivided Interest In The Land On Which The Building Stands The Common Areas And Facilities Of The Building.
- A Society Adopts The Model Bylaws Periodically With Changes If Required But With Subsequent Approval From Dy. Registrar Of Respective Ward. Similarly, While Adopting The Bylaws In A Condominium, Suitable Changes Can Be Made So Long As The Provisions Of The Act Are Not Contravened.
- A Society Issues Certain Shares To Its Members As Per The Bylaws And The Share Certificate Becomes An Important Title Deed, Since The Allotment Of The Premises Are Related Thereto. This Is Not So In A Condominium Of Apartments/Buildings.
- The Affairs Of The Society Are Managed By The Managing Committee Which Is Elected By The Members Of The Society. The Managing Committee Elects A Chairman, Secretary And A Treasurer. Similarly, The Affairs Of A Condominium Are Managed By The Board Of Managers Who Is Elected By The Members Of The Apartment Owners Association. The Board Also Elects A President, Vice-President, Secretary And A Treasurer.
- Under The Model Bylaws, A Society Can Charge Only Rs. 500/- As Transfer Fee With A Maximum Of Rs 25,000/- As A Premium. In Case Of A Condominium, The Bylaws Can Be More Flexible And The Amount Of Transfer Fee Can Be Provided Therein.
- In A Condominium, The Owner Can Give His Apartment On Lease Or Leave And License Basis Without The Approval Of The Board Of Managers. While In A Society, Permission Of Managing Committee Including ‘Police Verification’ Is Required.
- In A Society, Every Member Has One Vote, Irrespective Of The Area Of His Premises. In A Condominium, Every Apartment Owner Has A Voting Right In Proportion To The Value Of His Premises Which Is Generally As Per The Area Of The Apartment Owned By Him And Which Is Defined While Forming The Condominium.
- In A Society, Disputes Are Generally Referred To The Registrar Appointed Under The Act Or To A Co-Operative Court, Depending On The Nature Of The Dispute. In The Case Of A Condominium, The Court Having Jurisdiction Over The Area In Which The Condominium Is Located, Hears The Disputes.
- A Society Can Expel Its Member Under Certain Extreme Circumstances. In Case Of A Condominium, There Is No Such Provision. However, If An Apartment Owner Fails To Comply With The Bylaws Or The Rules And Regulations, Either Damages Or Injunctive Relief Or Both Can Be Claimed Against Him.
- In A Society, A Member Can Nominate A Person In Whose Favour Shares Of The Society Should Be Transferred Upon The Member’s Death. No Such Facility Is Available In A Condominium. An Apartment Can Be Transferred To A Person To Whom The Apartment Owner Bequeaths The Same By His Will Or To The Legal Representative Of The Apartment Owner’s Estate.
- The Difference Between Maharashtra Ownership Flat Act, 1963 And Maharashtra Ownership Apartment Act, 1970 Is That In Case Of Maharashtra Ownership Flat Act There Should Be Atleast 10 Members For Forming Co-Operative Housing Society And In Apartment Ownership There Should Be 5 Apartments In One Or More Building. In Case Of Ownership Flat Act Or Co-Operative Societies Act The Assessment Of The Flats Will Be In The Name Of Owner Of The Land Or Builder Or The Society And In Case Of Apartment Ownership Act There Will Be Separate Assessment In Respect Of Each Apartment And Its Percentage Of Undivided Interest In Common Areas And Facilities. In Case Of Ownership Flat Act, There Will Be Registration Of Co-Op Society Or Pvt. Ltd Company As Contemplated Under Section 10 Of Maharashtra Ownership Flat And In Case Of Apartment Ownership Act, A Declaration Is Required To Be Made In Prescribed Form Before The Magistrate As Required Under The Act. (See Rule 2)
HENCE, IT IS RECOMMENDED TO IMPRESS UPON THE DEVELOPERS & OWNERS TO FORM A CO-OPERATIVE HOUSING SOCIETY ONLY UNDER THE PROVISIONS OF MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960.