MC Explains: Do Karnataka homebuyers really own the land their apartment is built on?

After saving for several years, and often with the help of a house loan on top of that, you have landed your dream apartment in, say, Mangaluru. But do you and others who have bought into the project actually own the land on which the apartment has been built? Several activists in Bengaluru who have much time on the subject say homebuyers in Karnataka do not.

How do we buy an apartment?

After completing the purchase of the apartment, homebuyers sign a sale deed with the builder before registering the property at the sub-registrar’s office under the Registration Act of 1908. The builder also registers a deed of declaration (DoD) with the office that describes the property—the building, all its apartments, the common facilities such as lifts, generators, firefighting equipment, pool, gym, etc—along with the ownership scheme giving the percentage share of each apartment.

The DoD mentions the undivided share of land each apartment owner gets along with other details like super built-up and carpet area, etc. The undivided share is a part of the land held by the buyer of the apartment in a residential complex on a plot on which it is constructed. At this point, an association will be formed comprising all the homebuyers in the project. Currently, the association can be registered under two different acts, Karnataka Apartment Ownership Act, 1972, (KAOA) and Karnataka Co-operative Societies Act, 1959, (KCSA).

Once the project is complete as per the approved plan, the developer has to execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of allottees or the competent authority to comply with Section 17 of the Real Estate (Regulation and Development) Act, 2016 (RERA).

What is the problem?

Dhananjaya Padmanabhachar, Sanchalak or director, Karnataka Home Buyers Forum, said, “However, today in Karnataka after the registration of the DoD, the builder exits the project without executing the registered conveyance deed. As the DoD mentions the undivided share of land, homebuyers are left under the impression that the land title has been transferred to them and they are the owners.”

Padmanabhachar said the land records at the land revenue department continue to reflect the names of the previous landowner. "Sale deeds mention apartment owners have an undivided share of interest in the title, but land records in the revenue department mention the original landowner. With this technical mismatch in revenue department records, as per our knowledge none of the apartment owners in Karnataka legally own the land,” he said.

Abhilash Naik, an advocate, said the purpose of the DoD is simply to register the apartment and it does not transfer the land title to the homebuyers. Almost all builders exit the project without registering a conveyance deed, and the land is never transferred to the association. “No association across Karnataka today has the land transferred to them,” said Naik.

A deep-seated problem

Ameya Usgaonkar, an IT professional and activist, said before the enactment of RERA, apartment complexes in Karnataka were governed by two the Karnataka Ownership Flats Act (KOFA) and KAOA.
KOFA is a regulatory act and a statute to regulate the construction, sale, management and transfer of an apartment complex. Unlike KOFA, KAOA is an elective act and, therefore, optional. Its objective is to make the title to an apartment transferable and heritable while also calling out the maintenance of the apartment complex.

Problems with KAOA

KAOA has no words like “builder”, “developer” or “promoter”. Therefore, a builder/promoter cannot claim the submission of property under KAOA. Additionally, KAOA does not mention the type of association or the manner of its registration. Therefore, no association can be registered under KAOA.

Most importantly, even after 40 years of enactment of KAOA, the government has not notified rules for the competent authority. Hence, an aggrieved homebuyer is forced to approach the civil court for any relief.

Naik said though KAOA mentions the Registrar of Cooperative Societies in Karnataka as the competent authority, the state government has not notified the rules for them. In 2020, Naik said, in a right to information (RTI) reply, the office of the Registrar of Cooperative Societies in Karnataka had said that no powers have been conferred to it to address the grievances of homebuyers whose apartments are registered under KAOA.

Unlike KCSA, KAOA does not mention specific norms for developers. Activists say builders prepare the bylaws themselves which are mostly preferential. In 2021, Naik filed a public interest litigation (PIL) with the Karnataka High Court asking the state government to implement KAOA. The matter is currently sub judice.

KS Naveen, additional registrar of cooperative societies, said, “We have not been notified, so we cannot do anything in this matter. Karnataka copied the entire thing from Maharashtra without making any changes, hence the ambiguities have come up.”

Naveen added that the department has sought clarification from the state legal department through the principal secretary and is awaiting a reply.
Another official who did not wish to be named said the state government is in process of drafting further reforms to provide a solution for the homebuyers. However, this will take time.

So do Karnataka homebuyers actually own their land?

Padmanabhachar said as per Section 11 of KOFA and Section 17 of RERA, the complete project land is to be conveyed to the association of owners under the Transfer of Property Act. However, this has been avoided for the last four decades and the state government has failed to monitor the process, he added.

Mamatha BR, the current inspector general of registration and commissioner of stamps declined to comment on the matter.

Usgaonkar said an apartment purchaser’s ownership becomes “complete” when both the apartment (conveyed by sale deed) and its share in the common areas (via conveyance deed) are conveyed. Until such time, the property belongs to the promoter and, as per Section 6 of KOFA, is to be maintained by the developer at its own costs.

"Though the sale deeds mention the names of the homebuyers, the land records mention the previous landowners. This becomes a major hurdle when the apartment complex needs to go for redevelopment or reconstruction. Who will be responsible for the land then, the homebuyers or the landowners? So a conflicting claim arises and will definitely open up further legal battles," Padmanabhachar noted

So what can the homebuyers do?

Naik said the only solution to the problem is for the state government to implement KAOA and empower the competent authorities mentioned in the act.

Additionally, Naik said that in 2020, the RTI reply had also mentioned that homebuyers can ask the builder to register the association under KCSA, which offers more protection than KAOA. “In 2020, five or six associations were registered under KCSA. In 2021, several others migrated from KAOA to KCSA. However, this process is legally cumbersome and is time-consuming,” he added.