In order to regularize the promotion,
construction, sale, management and transfer of ownership of flats, the
Karnataka Ownership flat (Regulation of the promotion of construction,Sale,management and Transfer)Act 1972,was enacted by the Government of Karnataka.The
Act popularly known as Karnataka Act 16 of 1973 was first published in Gazettee
Extraordinary on 23.07.1973, received
the assent of the president on 29.06.1974, and came into force on 01.04.1975,
as per notification No.FD/KHB/75 dated 06.03.1975. The Act details the rights
and responsibilities of promoter and purchaser of flats.
A flat is defined in the Act as “a
separate and self contained set of premises used or intended to be used for
residence, or office, or shop, or godown, and includes a garage the premises
forming a part of a building”.
Promoter is a person who constructs or
causes to be constructed a block of building of flats or apartments for the purpose of selling some or all of them to other persons or to a company,co-operative
society or others.Thus a promoter need not construct a flat.He may get them
constructed through another builder.
Such construction is for selling some or all of the flats. Since he receives advance amounts from
proposed purchasers and will be in possession of the land not owned by him, the
Act prescribes certain obligation on promoter.
General liabilities
General liabilities
Section 3 deals with the general
liabilities of promoter. The promoter has
to disclose the nature of his title to the land on which the flats are
constructed. Such title has to be duly
certified by an advocate who has standing practice of not less than seven
years.He shall produce the original
documents of his title to the property.Advocates certificate of his title,encumbrance certificates, documents relating to the title, the plan and
specifications of building proposed, before the intending proposer.Some of the
promoters refuse to give copies of the title documents to the proposed
purchaser which is against the law and not ethical.He has to allow inspection of plans and
specifications of the property of the building approved by local authority,
disclose the nature of fixtures, fittings, amenities including provisions for
lift.If the promoter himself is the
builder shall disclose the prescribed particulars of design and materials used
for building. If the promoter is not the
builder,he shall make available for inspection all agreements entered by him
with architects and contractors related to design and materials used for
construction.
Promoter has to prepare and maintain list of flats with their specific numbers and names and complete address of
persons who have agreed to purchase flats with consideration amount charged and
terms and conditions on which flats are sold and shall inform the proposed
purchaser in writing the date by which the possession of the flat will be
given.He has the responsibility of informing in writing the nature and
constitution of organisation to which title being passed with terms and
conditions.
He should not allow persons to enter
and take possession of flats until completion certificate wherever required is
obtained from the competent authority.He is duty bound to disclose the full
outgoings including ground rent, municipal taxes, tax on income, water and
power charges and any subsisting mortgage.If the purchaser demands, he has to furnish the true copies of all documents of title, advocates certificate,
encumbrance certificates/documents, approved plan and specifications, list of
furniture, fixtures, amenities, list of flats with numbers with the name and
address of proposed purchasers, the price at which the flats are sold and also
terms and conditions of such sale, provided the purchaser pays the charges for
such copies.
Agreement
Agreement
The promoter may receive the advance
amount not exceeding 20% of sale price, but before accepting such advance, he
has to enter into an written agreement with the purchaser and such agreement
shall be registered.The sale agreement should contain the complete details of
the building to be constructed, and promoter obligation to comply with the
approved plans and specifications, the date by which the possession will be
handed over, the agreed consideration and mode of payment of the consideration,
nature of owners’ organisation proposed, details of common areas, facilities
including limited common areas and amenities, and percentage of undivided
interest.But most of the agreements are
one sided in favour of promoters/builders.The copies of advocates certificate
and plan and specification of the flat to be sold has to be enclosed to the
agreement.
Promoter as trustee
Promoter as trustee
The promoter receives various amounts
from flat purchasers like advance, deposits, towards share capital to form the
society, or company, ground rent, water and power charges, taxes. He shall
maintain a separate account of such advances and deposits in any bank.He shall
hold such money as a trustee and disburse the moneys towards the intended
purposes.
The promoter who is in possession of
flats shall pay all outgoings on flats until he transfers flats to persons who
have purchased or to an organisation of such persons.
Changes in plans and specifications
Changes in plans and specifications
After the approved
plans and specifications are disclosed/furnished to the proposed purchaser,
any alterations in the structure of any particular flat shall be done only with
the prior consent of the proposed purchaser.
If any alterations have to be made in
the structure of the building the consent of all proposed purchasers is
required.The building shall be
constructed in strict conformity with the approved plans and specifications.
Any defect in the construction of the
building,materials used in the construction or unauthorized change in
construction has to be brought to the notice of the promoter within a year of
taking possession,and the promoter shall wherever possible rectify such
defects free of cost.If rectification
is not possible the aggrieved person is entitled to receive reasonable
compensation. State government will designate an officer not below the rank of
Superintending engineer to settle the disputes in connection with defects,
reasonable compensation and rectification.The aforesaid person may approach
such designated person within two years of taking possession on payment of
specified fee (Rs.100). The decision of
such officer shall be final.
Delay in handing over possession
Delay in handing over possession
The promoter has to handover the
possession of the flat on to the agreed date.
Such date may be extended on agreement.The promoter may also not in a
position to handover the possession of the flat for reasons beyond his control.
If the promoter fails to deliver the
possession of flat on the agreed or extended date and by another three months
thereafter of such agreed extended time the proposed purchaser may claim refund
of the amounts paid.Similarly in case of non delivery of flats on account of
reasons beyond the control of the promoter, and if such reasons exists after
three months from the agreed date of handing over possession, the proposed
purchaser may claim refund of the amounts paid.
In both the cases the promoter shall
refund the amounts received with simple interest at 9% p.a. from the date of
receipt till the date of payment.Such amounts and interest shall continue to be
a charge on land and flat but any earlier encumbrances have priority.
Mortgage
Mortgage
The promoter shall not create any
mortgage or charge on the flat or land after the execution of the agreements
without previous written consent of proposed purchaser.Any mortgage/charge
created without previous written consent of proposed purchaser shall not affect
the right and interest of proposed purchaser.
Formation of society or company
Formation of society or company
The promoter has to take steps to form
society or company consisting of owners.The promoter shall submit an application to the registrar for
registration of organisation. Such application shall be submitted within four
months from the date on which minimum number of persons required to form such
society or company have taken flats.The promoter shall represent the flats
which are unsold.
If the owners opt to submit to the
provisions of Karnataka Apartment Ownership Act 1972, by submitting a deed of
declaration, the promoter shall inform the registrar of co-operative society as
soon as possible after the date of which at least five owners have filed the
deed of declaration.
Conveyance of title etc.
The promoter shall take steps to
complete his title and convey to the organisation, which is registered either
as co-operative society, or company or association of flat owners, his right,
title and interest in the land and building as per the agreement.If the agreement provides no definite date for
conveying the title to the organisation/society,he shall convey his title
within four months from the date of which the organisation was registered and
association of owners is duly constituted.
The promoter will be very co-operative
and extend red carpet treatment to the prospective purchasers at the time of
entering into an agreement and receiving advance money, thereafter it would be
very difficult to meet any important person at promoters office and the
purchasers will be at the mercy of receptionist.
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