Residential Apartments and their Legal issues

By far, the most difficult area of managing an apartment is the manner in which maintenance expenses are charged and collected by the Association of Apartment Owners concerned. Often, it is a thankless job for the office-bearers. At times, the level and intensity of charges laid against an office-bearer can make this position traumatic. Most of the associations are managed in such a manner that no person wants to get into any trouble. In others, troubles are the order of t he day.

Maintenance expenses will include amounts payable by an apartment owner to the Society or Association of Apartment Owners. The basic purpose of collection is to defray the expenses towards administration, maintenance, repair or replacement of common areas and facilities. The expenses also include legal and audit expenses and such other expenses as may be resolved to be common expenses.

Apart from the nature of expenses, several doubts arise in the minds of owners. Various reasoning is employed for this purpose and many such issues prop up during meetings or otherwise, making, primarily the collection of expenses difficult and further throwing many other issues which adversely affects the functioning of the Association. Let us take a look at some of these issues from a legal perspective.

Use of lift

You are occupying the ground floor of an apartment complex. You may justifiably feel that you are not using the lift at all. However, there are many lifts in the complex and considerable portion of the expenses may be attributed to the usage of lift by the others. You may have a feeling that this portion of your contribution is unjust and that there is no need for you to pay for usage of lifts. Please note that this may be logical, but is of a nature that will result in others making arguments of several other facilities that a particular owner may or may not use. For example, in this case, even though your apartment may be in the ground floor, nobody can prevent you from using the lift. You may use it for all necessary purposes for visiting any person in the same complex. The fact is that it is a facility which is available for use and actual use is not the criterion for determination of payment of expenses or otherwise.

There may be certain facilities in certain blocks of an apartment complex. A similar facility may not have been installed or completed in your block. You are put to considerable difficulty because of this. You want to stop payment of maintenance expenses on this account. The problem is that there could be a logical justification, but not a legal justification. You may still have to pay your share of the expenses for the same facility which is being used by others in other blocks as such facility may be part of a common facility.

Legally justified

In many instances, the maintenance expense is collected on ownership basis irrespective of the size of the apartment. In such instances, you will find that there is a levy of maintenance expenses which is the same for small sized as well as big or even huge apartments. If you feel that you are the owner of a smaller apartment, but you are forced to pay the same sum as the owner of a large sized apartment, then this is a justified feeling. At times, the office-bearers own large-sized apartments and if this system of levy is made in the background of such ownership, then it is definitely doubtful whether the system has been introduced in good faith. Your expectation to be charged on the basis of the percentage of ownership is justified logically and legally.

You may have purchased an apartment and may have kept it locked. Yet, you may be required to pay the same amount of maintenance as others who are using the apartments by occupying the same or letting out the same. Please note that your non occupancy is not a justification for non-payment of maintenance as this amounts to only a voluntary decision of not using the apartment and consequently common areas and facilities.

You may feel that you have a small family. This could be two or three persons. Logically, another apartment owner having a large family say, seven, eight or more persons, will consume more water, use the facilities more than you can possibly do and may derive such benefits better on a day-to-day basis. In some apartments, there could be some permanent guests which will definitely increase the overall consumption of facilities and amenities. Logic will tell you that it is most unreasonable that you are charged on the same footing as that of owners having large families or guests. In this case also, you may have to pay the amounts originally agreed to be paid as part of maintenance or common expenses.

Behaviour

Several problems and issues may arise out of office-bearers who are overbearing, intimidating and often, bullying types. The maintenance charges may be collected on the basis of whims and fancies of these persons. Application of funds for improvement or betterment of certain facilities to these and certain select persons cannot be ruled out. Meetings may not be conducted. Explanations for expenses may not be given. Some people are intolerant of the smallest questions being raised. Unfortunately, the position of an office-bearer is at times, looked upon as a cloak of authority, which places the person concerned above challenge. Then, there could be groups among the owners. There could be issues relating to sale of apartments which are very old, when one or two people, who do not want to sell when all others have decided to sell.

Another problem is that the issues are of such nature that it may be relevant and very important for a particular individual. However, it may be expensive to take it to court when the issues are not properly considered or looked into. The individual concerned may not have time or inclination to fight out the issues in court. Further, however justified the cause may be, it cannot always be assumed that the case will be won. In such matters, humiliation may also result. These circumstances have paved way for autocratic functioning of certain associations.

In such a background , it will be good for all people concerned to realise that the very purpose of forming an Association is to take the collective interest of all the apartment owners into consideration. The common areas and facilities will have to be used in such manner that each person has the potential to realise the full benefits. The common expenses have to be fixed in such a manner that it is not burdensome to either the apartment owners or the association. Little sacrifices are needed on the part of the apartment owners, taking into consideration the larger and common interest. Many problems can be sorted out easily if such problems are not approached from an ego based angle.

The issues and concerns highlighted by the apartment owners should be addressed with sensitivity and concern notwithstanding that it may look trivial. Efforts should be made to promote tolerance and harmony. Many owners who are completely indifferent to the aspects of functioning and difficulties that may confront the office-bearers, can also take some time to reflect, think and thank those office bearers who are putting in yeoman service with dedication and sincerity. Many issues can be solved by anticipation and provision for the same in the bye-laws. Well-drafted bye-laws would be an asset for the Association.

Courtesy : The Hindu

Changing Scenarios in Real Estate Sector

Much has been talked about the meltdown in US and how India will not be affected much. However in a scenario where the entire world is learning after having a bad fall, India has a chance to adopt different economic strategies without really paying so heavily, thanks to our stringent banking system. The country is springing back to plug the holes as much as reorienting its policies to adapt to the new era. Indian housing sector too is changing its dynamics.

According to Anuj Puri, country head, Jones Lang LaSalle Meghraj India, “India and China represent an economic scenario that has evolved separately and on very different parameters from the economies in most developed countries. It is an emerging economy, with an emerging and maturing real estate market. The fall in demand will prevail for approximately ten to twelve months, but it will not be of a magnitude comparable to that of other countries.”
Under these circumstances according to a report from JLLM in Mumbai the real estate mantra of the current era is middle-income housing. This is where the opportunity lies feel most developers who are now recognising this as the real moneyspinner in the long term. This has opened up the market for investing in mid-priced housing, especially in Mumbai.

It is with the middle to higher income group within the middle class that the investment opportunities lie, as these are the people to whom home loans are available says Gulam Zia, national director, advisory services, Knight Frank India, and developers are now working at making housing available to this group.

Not surprising, considering that in India housing is a primary need and most people are still buying their first homes. In a scenario when there is a severe liquidity crunch world over and salaries hikes are expected to be marginal, the young working couples in the corporates who are the main drivers of housing sector are increasingly looking for affordable housing at easy loans that could be paid off without much difficulty. On the other hand, fund crunch is also affecting the developers and they are increasingly looking for optimising their resources and employing right strategies to find success in their projects.

Indian Real Estate Sector will feel the Heat of Inflation

The recent fate of real estate stocks on the bourses mirrored the first signs of trouble ahead for the industry. Fuel price hike and lower IIP (Index of Industrial Production) numbers were recent setbacks to the sector and now with a 11.05% growth in WPI (wholesale price index), inflation has emerged as a serious threat to the sector, which has been cooling off in recent times.

Market experts predict further softening of prices. “Even though prices have corrected by 10-20% and even beyond in some regions, it has not yet touched the bottom. It is advisable to wait till at least the year-end to buy homes,” says Jai Mavani, real estate practice head, KPMG.
However, since many developers are holding onto prices and even operating as a cartel in some prime pockets like Mumbai, postponing purchase decisions may not really be a solution. Despite the fact that volumes have fallen sharply, established developers are clearly unwilling to drop prices. According to Kotak Institutional Equities’ research report, home prices in Mumbai market continue to rise since last October.

“Our Mumbai price index shows a 155 increase over the past six months. Indicative prices in key locations in Mumbai vary between Rs 6,500 and Rs 35,000". Many Mumbai developers have raised funds through PE route. The surplus funds these developers have raised allow them to hold on to properties with out releasing the same into the market, thus creating an artificial demand supply mis-match in the system., In Mumbai market, many pocket developers are acting as cartels,” a senior official with a real estate fund said.

Liquidity crunch has already forced developers to go in for high interest loans. While the primary market for real estate has virtually dried up, private equity players are also following a very cautious approach. Only those developers who have internal cash flows and have not gone for recent land acquisitions will be able to sustain these tougher times. Earlier they were seeking mortgage against property but now credit requirement has forced them to pledge their own shares for securing mortgage, industry officials said.

“The current market meltdown has put downward pressure on sales and further weakened market sentiment. These higher inflationary trends will call for some regulatory moves which will ensure better affordability” said. Sunil Rohokale, head mortgagee & real estate, ICICI Bank. Though the sector has already factored some of the news impact, there is scope for further correction. Some of the Tier II cities might further see some 5-7% correction, says Vipin Aggarwal, executive director, Omaxe.