Thursday, 9 July 2015


Co-operative Societies Acts of many states provide for formation of Housing Co- operative housing societies.

Karnataka Co-operative Societies Act also permit the formation of Co-operative housing societies. These societies acquire the land; construct the flats, which are allotted to its members. The society allots shares to its members. Such societies need to be registered with registrar of Co-operative societies.

Members are of different category, the member, associate member, and nominal member. Individuals, Partnership firm, registered company, registered society local authority, State government, central government, public trust, any other corporate body registered under the relevant act, may become member of the co-operative housing society, subject to the rules governing the admission.
A minor can also become a member of Housing Society through his guardian; Certain states have put restriction of membership of family trust, Hindu undivided family.

There are different types of Co-operative housing societies.
1.A society purchases the land or takes on lease divide into several plots and allots to its members. The members construct houses, on such allotted lands. In such cases, the land is owned by the societies and the houses on plots to members. Such societies are caller Tenant ownership type housing societies.

2. Societies acquire land by sale or on lease and construct the buildings; flats are allotted to the members. In such cases, both the land and building are owned by the societies. These are called tenant Co-Partnership Co- operative housing societies.

3. Societies are also formed by the persons who purchase the flats from the builders, under agreement as per flats ownership acts of the respective states. In this case also, both the land and building belong to the society after the execution of conveyance by the builder in favor of the society. Such societies are called flat owners Co-operative housing society.

Flat owners co-operative societies issues shares to its members by which the members gets the right to live, reside and enjoy the flat. Flat owners Co-operative society societies are of more common. These societies are very popular in Maharastra, Gujarat, and West Bengal and not so common in Karnataka.

Flat owners Co-operative societies issues shares to its members by which the members gets to right to live, reside and enjoy the flat. It is to be remembered that the rights and interest of the member in the flat is limited only to reside and enjoy. Member can transfer only such right. He is not the absolute owner of the flat. On sale of the flat, society transfers the shares to the names of the purchaser, on purchaser complying with the formalities. After the purchaser is admitted, the purchaser becomes a member of the society and acquires right to reside and enjoy, the flat.

4. In case of death of a member the society transfers the shares to the name of the nominee;
In the absence of any nomination, the society may transfer the shares to anyone of legal heirs on consent given by other legal heirs. In case of any dispute, the legal heirs may have to obtain letter of administration from a competent court.

The flats are to be required to be occupied by the owners. In case the flats are let out, the members have to pay non- occupancy charges to the society.

In case of transfer of share to the others, the member has to give a notice to the society along with the consent of the proposed purchaser. The member may also obtain no-objective certificate from the society for transfer of share. The managing committee on considering the notice of transfer will call for the following documents:

Application of the transfer of shares along with share certificate.
Membership application for the purpose of transfer Resignation letter from the original member.

Prescribed transfer fee, membership fee, price of the shares premium amount, copy of the stamp duty paid agreement, declaration by both transferor/transferee under urban land (ceiling and regulation) act 1976, if applicable; various reasons for transfer declaration to use the flat for the purpose which it is brought, under taking to discharge all liabilities to the society, no objection letter from the financing agency, if the seller has availed loan, No objection letter from the district collector, if the land is allotted to the society by the government, No objection letters from any other statutory agency, which has given land to the society.On receipt of all these requirements, the application of transfer will be placed before managing committee. However, only general body has powers to admit a new member,
The affairs of the Housing Society are managed by a managing committee, elected by the member from out of the members.

Generally, the builders/owners sell the flats to the purchasers, but will not convey the land to the societies formed by the purchasers. In such cases the title of the purchasers is not perfect, since the land stands in the name of the builder owners.

In such cases the owner will be entitled to further FSI if permitted. Many states provide in their statutes that the builder/owner should take steps for registration the Housing Co-Operative society and thereafter transfer the land to the society within a time frame. As per the sections 10, II of the Karnataka Flats Ownership act 1972 and Karnataka Flat Ownership rules 1975, Rule No.10, 11, the promoter builder shall submit an application for registration of the society within four months from the date of which minimum number of persons require to form a society have taken flats - Thereafter the promoter shall convey the land to the society within four months from the date of registration of society.

5. Another interesting aspect is the charge created on individual flats/ apartments by the members. The right of the member is limited, to reside and enjoy the flat, but they do not have any ownership right. So the members can mortgage their right to reside, hence such flats cannot be alienated, since the ownership rests with the Housing Co-Operative Society. In case of sale, only the right to reside in the flat is transferred to the purchaser, he will not acquire absolute ownership. So is the case, where the flats are mortgaged to the financial institutions by members.No objection certificate from the Co- Operative society is essential to mortgage the flat.

Generally, the builders/owners sell the flats to the purchasers, but will not convey the land, in such cases the title is not perfect.

In case of the transfer of flats by transfer of shares, the Co-Operative societies will not register the flats in individual names, and the entire property stands in the name of the Co-Operative. Societies; the property is also assessed for tax as a single entry.

Karnataka government is of the view, that individual flats should be registered in individual names by regular conveyance deed duly registered and tax assessment should be done flat wise. Tracing the title of the flat requires verification of the society records, its byelaws and share certificates Conveyance:Essential for Co-operatives societies The purchasers must not neglect to acquire the title of the property or flat he/she purchasers on a purchase of the flat by acquiring share certificate, the purchaser gets only the right to occupy which is not title to the property. It is observed that he builders themselves do not acquire ownership of land from the landowners. They enter into development agreement and GPA with the landowners to develop and sell the flats, which is not a good practice. But some builders acquire ownership from the landowners them start construction which is in a way easier to convey title to the purchaser i.e. from the builders to the purchaser.

Housing societies to witness freedom
The Mumbai scenario of purchasing and acquiring the flat by share certificate is slightly different. Nearly 60,000 flat owners are having only share certificates. Maharastra Govt. has made certain provisions easy for them.

By approving the self-reliant legislation by the cabinet, co-operative societies have been made self reliant, so that there is no dual control on them. Self-reliant legislature is on the pattern of 'Atma-Nirbhar' legislation successfully implemented by Madhya Pradesh. Under the new legislation the co-operative society can opt to be administered or continue under the existing act. If they opt the self-reliant or 'Atrna-Nirbhar' law, responsibility of the co-operative department will be only to register such societies, while the rest of the affairs will be managed by the society. 'Atma-Nirbhar' law provides for setting up machinery for redressed of grievances. The societies or its members need not approach the co-operative department.


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