Haryanas Apartment Law on Shaky Ground

By: Property

Twenty-five years after its enactment, two notifications and one amendment later, the Haryana Apartment Ownership Act (HAOA), which seeks to regulate the development and administration of group housing colonies in the state, desperately needs a re-look. The law was passed when the first condominium to come up in Gurgaon was still another six years away. With no local know how, the government drew perfunctorily on the experience of other states.

Lackadaisical drafting lead to a host of conflicts between the promoters and apartment buyers. An opportunity to correct the situation in light of ground experience, which arose in 2002, when the Act was amended to bring commercial complexes under its purview, was not made use of.

The augury was not right for HAOA from day one. After the legislature passed it in 1983, it took the state government three years to notify it in the official gazette. Then, it was discovered, that the wrong department had notified it! It took another 11 years to rectify this error, and re-notify it. And the reason, it is commonly believed, was that the law, as its acronym suggests, is a 'hawooa' for the builders and they resisted its implementation for as long as they could.

The basic premise of HAOA is that each complex will eventually be transferred to and administered by elected representatives of the residents. That means that the colonizers will have to part with lucrative common areas and facilities, which they are loath to do and which is the single major cause of conflict between them and residents' associations.

In Gurgaon, the first city in the state to get self-contained, promoter-constructed colonies, well known complexes such as Silver Oaks, Heritage City, Garden Estate and Central Park are embroiled in disputes over who will eventually own and run common facilities such as shops, school or club, constructed as a part of these condos.

The builders have not followed a consistent policy. Wherever the residents' associations are perceived to be 'friendly', these areas have been handed over to them. Where they are not so considered, either rival bodies have been floated, or the colonizers have retained these facilities.

What helps the builders is that the law itself is double-faced. While its spirit demands that all areas within the complex, other than private residential units, should be common, collective properties of the buyers, there is a provision in HAOA which gives the builders the discretion to include in the 'transfer declaration' whatever is to be handed over, and what they wish to retain in their own possession, or sell separately as commercial properties.

And this despite the fact that the law talks about 'profits' generated for the associations from 'common areas'. For Som Vihar complex in Delhi, for example, shop rentals are a major source of revenue for the residents' body.

Much time and effort can be saved if this aspect of the law can be clarified, for the future if not retrospectively. It goes without saying that the spirit of condominium living would be wrecked if outsiders with crass commercial interests were allowed in. There are other defects in the law. For example, it states that contribution to common expenses and voting rights in any colony will be in the ratio of the respective values of all units (clause 11f). In a colony in which there are 300 flats, there could be 300 values because of differences in the location, size and floor of each apartment.

The model apartment act circulated by the union Ministry of Urban Development, in 1992, specifies only 'built-up area' and not 'value' as the basis of voting rights, expense contribution and sharing of profits. The same clarification was issued some years ago in the case of Garden Estate, which brought down the number of 'values' from 373 to less than 10. But this was through an executive order. The law still harps on 'value' as the determining factor.

Again, rule 48 under the Act says: 'the Secretary may retain in his personal custody an amount not exceeding Rs 100 for petty expenses.' Most privately developed group housing colonies in the state would have annual budgets of over crores of rupees. How can any such association be ever administered with a 'petty cash' holding of just Rs 100? Even in 1983, when the law was first drafted, this would have been impractical. Twenty-five years is enough time to assess the working of any legislation, especially if it covered virgin territory to start with.

It is about time that the government undertook a review of HAOA (and along with it, its big brother, the Haryana Development and Regulation of Urban Areas Act, 1975) to make them more user friendly and eliminate potential areas of conflict between developers, buyers and the government.

And this time, involve all parties concerned in the exercise, instead of just a few bureaucrats undertaking the task and the responsibility on their own.

India Properties
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