Co-op Housing Society is better than Apartment Owners Association in Maharashtra

Why Co-op Housing Society is better than Apartment Owners Association in Maharashtra

society-or-condominium

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. 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.

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I am a self‐learned digital executive, leader, strategist and trainer by profession and experience. I have rich experience as marketer, trainer, entrepreneurial evangelist and start up facilitator. I admire first generation of entrepreneurs and conducted more than 200 programs to establish startup ecosystem in Central India. I have worn many hats in my career, as a result, I have a unique ability to manage multi‐disciplinary projects and navigate complex challenges in the process. I have big ideas and I don't care who gets credit, I just like to facilitate. Drop me a line anytime, whether it's a collaboration, writing projects, skills training or just business - will love to hear from you - sachin@eq4c.com

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42 Comments

  1. Though our building of 11 flats is deemed as apartments no apartment owner association is formed.The day to day main is run by one member collecting money from all and managing it.The builder is nowhere in the picture and probable his business is dissolved.
    Can we now convert the building into an coop hsg society if all memebers are willing.
    krishnan

    Reply
      • I tried to form a cop society and we found that not only the builder has indeed filed a deed of declaration but alsa he has registered “apartment owners association”. Nobody was aware of it till now.The lawyer whom we approached suggested that that we hold a general body meeting and elect members which we did. The next step was to get conveyance deed from the builder and we found that out of 11 3 members don’t have sale deeds. All our efforts to get the members sale deeds made has failed as the builder agrees to but does not proceed further. What should we do now? The lawyer suggests we should file a complaint and then proceed with documents to registrar of societies. Any suggestions?

        Reply
        • Dear Krishnan

          1. You can still proceed with the registration process as only 60 % of the Promoters are must to form Co-op. Housing Society
          2. When the builder is not registering society due to some reasons or not support to registered society then flat purchasers can apply for registration of Co-operative Housing Society under Non Co-operation. In this case one of the flat owner should be elected as CP for Registration purpose. In this case some more time is taken to registered society as registrar is issue notice to builder for Non Co-operation. If no response then ex-party decision are taken for registration of the society. Now all the case of Non Co-operation Registration decisions is given by District Deputy Registrar [DDR] then society is registered

          You can anytime form a society. Now you can even go to consumer forum for the irregularities and ask for compensation. Last resort is to make police complaint and it may help you.

          Reply
  2. non occupancy charges, maximum 10% of monthly rent are applicable in case Housing society.
    Is this the same in case of Apartment Association?

    Reply
  3. Thanks to valuable comments. Hope you can guide how to form society residing more than 60 owner (member) of appartment

    Reply
  4. Our builder has formed an apartment with 15 members while purchasing the flats. All othe memebers are willing to form a CHS and 13 out of 15 have also given their consent to join the CHS. Application with more than 60 flat owners was in front of registrar and he gave result in favor or builder. There is still window for an appeal. Is it possible to still get it in our favor ? Someone told once apartment is formed we cannot convert to CHS.
    Thanks for your response.

    Reply
    • Our builder is giving his flats on rent without giving any maintenance charges how long he can do this business and what can a society do to get read of builder?

      Reply
      • If the Builder has reserved or not sold a flat in a Society formed by him or members then in that event whether he himself stays in such flat or allots it on leave and licence , it is mandatory for him to pay such maintenance charges to the society.
        Your society can first by a notice on the society’s letter call upon him to pay the maintenance charges within such period of time as mentioned in the notice. Incase the Builder fails to oblidge the notice then your society can file a written complaint with Registrar of Co-operative Society.

        The above steps can be followed only if the Society is formed.

        Reply
  5. Dear Sir,

    In Owners Association Plot on which Apartment is constructed was on the name of Builder or Flat Owners.

    Reply
  6. gaurav shirbhate

    Hi, Can you please confirm below questions, really it will be appreciate for quick response.

    1. Difference between association of apartment and society?
    2. Once after completion of “association of apartment deed” there will be still builders provision on area except salable area like club house, terrace, open space etc.? Provision like use area except salable area for future development.

    Reply
  7. The builder has mentioned (in agreement to sell) that he will form an apartment deed. After reading this article I am convinced society is much better. Can you a transfer an apartment deed into co-operative society?
    If not can we ask the builder to form a co-operative housing society instead of apartment deed even if it’s mentioned in our agreement.

    Reply
    • Dear Prasad, Your builder must have registered Deed of Declaration (Mandatory in Maharashtra), try and find it. If yes, you just need to call the first meeting and inform your builder about the names of elected board members and post bearers. This is known as apartments association as per Maharashtra Ownership Act 1970. Later on you can decide and form Co-operative Society, which involves some procedure and documents. But, you can first go ahead and call first meeting based on Registered DoD (Deed of Declaration).

      Reply
      • Dear sir,

        I have done Deed of apartment regestired of my office and also declaration deed which is registered apartment condominuim by the builder. Its a commecrcial complex with shops and offices. Now some members are having agreement to sale and haven’t done apartment deed earlier. Now the members have decided to form a coperative society instead of Apartment association and and approaced the registrar and got the orders to form a society.
        Many members were not aware of declaration deed which is registered. Now they are converting apartment condominium into coperative society I am confused so please advice.

        Reply
  8. Hi Sachin The article is fantastic went thru this Message of your’s “Your builder must have registered Deed of Declaration (Mandatory in Maharashtra), try and find it. If yes, you just need to call the first meeting and inform your builder about the names of elected board members and post bearers. This is known as apartments association as per Maharashtra Ownership Act 1970. Later on you can decide and form Co-operative Society, which involves some procedure and documents. But, you can first go ahead and call first meeting based on Registered DoD (Deed of Declaration).”

    Now after this is done can you help us with what is the procedure and documents for Forming Co-op Socy as we meet a Lawyer who say we will have to go to court for this our location is Pune or can you suggest some Person who can guide us.

    Reply
    • Hi Guru,
      Indeed its good step to go for society. But if Builder has already executed the declaration, we first have to deregister the Apartment Declaration. After that it is better to form society under MCS act,1960.

      Reply
  9. Hi sir i have taken 1BHK flat on rent in virar area in my flat i am facing tap leakage window damage main door & electricity points problem in my house when i ask all things from my owner he said you are staying in that house its your responsibility to repair everything i m not going to do anything what should i do.

    Reply
  10. Sir once DOD is formed can I registered co operative society in Nagpur. according to 2015 amendment after DOD n association is formed we can’t formed co operative society

    Reply
  11. We a group of friends planed to construct a building (Flats) after buying a land , at present just land is selected and we all agree on common terms and conditions to go further. for buying land do we need to form a Soc. or some thing like that .
    we all have very good understanding but to avoid further problems what is best way to start with.

    Reply
  12. How many Apt owners are required to convert from Condo to cooperative hsg society…

    We have 24 APTS and two Apt are with builder who stays on ground floor and has a land for himself
    and his apt there is a gate and he can keep his car and keeps almost 2000 sqft area in addition to
    2500 sqft of apt area in ground and first floor.

    Reply
    • You require minimum 10 members to form Co-op Hsg Soc. As far as builder occupying space is concerned,your DoD explains the common space norms, please read your DoD.

      Reply
  13. Hello Sir, Mine case is bit different and your inputs will be valuable here. Please suggest on below issue..

    We have a building constructed with 4 Row houses bought by 4 different families. Which deed will be done in this case? as far as I know 5 different members are required for Apartment Deed and 10 are required for Society Formation.

    Apart from this, I also need suggestion on ways to take complete ownership of Land as well as Construction. Few people told me that in case of Apartment deed, Land is not transferred on Apartment Owner’s name. Also Open space is help by builder. Is it true? as far as I understand, Open space gets allocated to all members In equal percentage.

    Reply
    • To verify you have to go through your sale deed which clearly specify the ownership of common land. If said is been mentioned in your sale deed, you own 1/4th portion of the land. Is there a Deed of Declaration from builder? just check and let me know. DoD is registered document giving all the details. You cannot form a society since the required numbers are not there but, you are protected by law and in case of any discrepancy you have the right to approach consumer court.

      Reply
  14. Lester Cunningham

    Dear Sir
    Can a building owner give his open terrace on lease, and for how long?
    Looking forward to hear from you.
    Thanking you.
    Lester S C

    Reply
  15. Hello Sir,

    We are having couple of buildings and 59 rowhouses in one plot.

    Builder already executed DOD with few members of rowhouse and want to register us under Apartment instead of society.

    Currently few members are awaiting for society and few are already signed DOD for Apartment. Already one court
    provided verdict cannot have 2 different registrations for one ( few for society and few for apartment) , what is the best way to deal with this situation as most likely society formation will be better for longer run.

    Thanks
    Nilesh

    Reply
  16. is there a separsate conveyance deed in case of a apartment when deed of declaration and apartment deed is done?the building is apaerment complex and 37 yrs old ,its almost for redevelopement, i am planning to buy a flat in the same building hoping that the redevelopement i will get more area, but i am worried that the builder who stays in same buiding might create problems at the time of redevelopement by virtue of claiming extra area if the conveyance is not done.
    pl advise

    Reply
  17. I have a query. Can a building with 7 flats form a society? Or is it mandatory for 7 flat building to form an apartment? My builder has a flat in the building and he has not formed society or apartment in 10 yrs. He has a letter head with name Sarang Apartment but he has not given us any proof that apartment is registered and he charges us any money without giving details of the expenditure.

    Reply
  18. Hello sir … I’m in a dilemma between flat and apartments. There is a re sale property (4years old) which i am currently looking into..which is under renowned developers in Pune.. Its an apartment… So looking into this Is it good to go for apartment rather than a Society???

    Thanks

    Rashmi

    Reply

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