With no conveyance deeds, Bengaluru flat owners stare at massive building repair costs

Last week, parts of Bengaluru woke up to boats being deployed after heavy torrential rains hammered the city. Visuals of submerged luxury villas and rows of apartments took social media by storm.

A week later, as homebuyers gradually return to their homes and clean out their basements, they are faced with a fresh dilemma of who will pay for the damage done to the building's infrastructure and common utilities like elevators, sewage and water treatment plants.

Bengaluru floods have widened the cracks in Karnataka's real estate sector and its policies — one of the gaps dates back about 40 years.

The lacunae

Vittal BR, an advocate at Karnataka High Court said, "The apartments in the state are not transferrable on the execution of a sales deed. The Karnataka Apartment Ownership Act 1972 (KAOA) is a specific Act ensuring the transferability and heritability of the apartment. But for the Act to be implemented properly we need to amend Registration Act 1908, which has not been done."

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Abhilash Naik, another lawyer explains that once we buy an apartment, the builder needs to execute a conveyance deed where the entire land title, with the undivided share of interest, is transferred to the co-operative society and each homebuyer becomes a shareholder.

Currently, an RWA (Resident Welfare Association) can be registered under KAOA and Karnataka Co-operative Societies Act, 1959, (KCSA). However, for the last 40 years, the state government has not notified rules for the competent authority, hence the registrar's office has no powers to register the societies, especially under KAOA.

Ameya Usgaonkar, a homebuyer, has been studying the matter extensively. He 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 their own costs.

Vittal, who also filed public interest litigation on the issue, said none of the builders in the state has issued the conveyance deed and the land records continue to show the names of the landowners and not the apartment owners.

Experts say in an ideal situation, every RWA will have a sinking fund and a maintenance fund, where the homebuyers will put the money, and can use it for repaying damages in extraordinary cases like flooding.

"It will be a challenge for the waterlogged apartments last week because none of the homebuyers owns the shares of their land. And also, because the government did not notify the rules, most associations formed under KAOA today are not permitted and cannot hold bank accounts for sinking funds or maintenance funds," Vittal added.

Homebuyers in a lurch

Residents at Sterling Ascentia did not have time to remove their vehicles before the water had started gushing into their complex. Prannay Srivastava, one of the members of the RWA said, "Besides damaging more than 30 vehicles, the water had rushed into the elevators and electrical systems, including the STP plant in the basement." The entire repair will cost at least Rs 6 crore, he added.

Currently, the complex has 172 apartments spread across two towers. However, residents in Sterling Ascentia hold the builder majorly responsible for the mess. Vaibhav Kaushal, another resident said, "Currently, there are two towers under construction just next to our block. However, the builder did not take the necessary steps needed to ensure the prevention of waterlogging like retention walls or floodgates around the pits dug for construction. A stormwater drain behind our society overflowed, leading to the disaster." In fact, now they have raised a wall to prevent such incidents that ideally should have been done before," he added.

Srivastava said, "For now, we have to pay the repair costs from our own pockets as the sinking fund (a fund collected from the homebuyers for sudden incidents) does not exist and, also, the builder is not keen on paying."

Rajesh Ram Mishra, a member of RWA at Rainbow Drive Layout, a complex containing 325 villas said, the waterlogging has damaged several walls inside the complexes, STP, elevators and several common amenities like clubhouse, etc. "Just to repair the collapsed walls it will cost us in crores. Right now, the builder is uninterested in sharing the cost and we have to incur the losses ourselves, he added.

Mishra said the ownership of common areas still belongs to the builder. "We are an old community, and people were not aware of the legalities. Over the period of time, the land prices have shot up and the builder was not ready to give us the land share," he added.

Learning from the past

Rear Admiral S Pillai (retd), a resident of Sobha City said, "In 2019, the Karnataka RERA authority had asked the state government where associations should be registered – under which Act? I was an invitee in both the meetings, and still today we are facing the question."

Pillai said, on June 16, the third floor in his apartment block got flooded with water gushing into the lifts. "We lost about Rs 12 lakh and the fire brigade had to pump the water out. We chaired a meeting with the builder asking for help in terms of respite, however, received very little help," he added.

A document accessed by Moneycontrol, dated August 16, 2022, from Sobha City states, "We made it very clear that it was a natural calamity that occurred on 17/18 June 22. It was beyond anyone’s control to manage the deluge that took place due to the non-availability of a proper drainage system in the private property north of Sobha City."

Pillai said that their RWA is not registered like other associations in the state, and hence they do not have a competent authority for addressing their grievances.

The government is working on a solution

In July, KS Naveen, additional registrar of cooperative societies, had told Moneycontrol, “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.

Lawyers said in absence of competent authority for grievances, especially now with flood-related matters, the homebuyers may approach the civil court or even KRERA for legal assistance. Vittal added, "The government needs to amend the registration Act and implement the KAOA, until then we do not see respite."

Developers did not respond to queries sent by Moneycontrol.