CHS vs Apartment

Now a day’s real estate sector is growing very fast in Maharashtra as well as in India and it becomes mandatory & important for the project management to form a Co-Op Society /Condominium or any other legal entity. To upkeep the project posts completion. Generally, there are two major & well known legal entities are

• Co-Op Housing Society
• Apartment Association (Condominium)

When project come to completion builder start forming such entity & many consumers are not aware of which entity should form for the betterment of their project. Thus, here we have tried to provide insights about Co-Op housing society And Apartment Association ( Condominium).

• CO-OP HOUSING SOCIETY

Act – Co-operative Society, which is regulated by the Maharashtra Co-operative Societies Act, 1960.

Requirement for formation – Generally require minimum 10 members/Flats to form CHS.

Conveyance Deed of the land – The title of the land and the building is transferred and conveyed to the Society, which becomes the owner thereof.

Share Certificate – A Society issues certain shares to its members as per the Bylaws and the Share Certificate becomes an important title deed, since the allotment of the premises are related thereto.

Management Committee – The affairs of the Society are managed by the Managing Committee which is elected by the members of the Society. The Managing Committee elects a Chairman, Secretary, and a Treasurer. Election conducted by State Co-op Election Authority(SCEA)

Share Charges & Flat Transfer fee – Under the Model Bylaws, a Society can charge only Rs. 500/- as Transfer Fee with a maximum of Rs 25,000/- as a premium.

Renting Out Flats – In a Society, permission of Managing Committee including ‘Police Verification’ & Register L&L is required.

Voting Rights – Every member has one vote, irrespective of the area of their premises.

Dispute Resolution – In a Society, disputes are generally referred to the Registrar appointed under the Act or to a Co-operative Court, depending on the nature of the dispute.

Membership cease & Expel – A Society can expel its member under certain extreme circumstances.

Nomination – In a Society, a member can nominate a person in whose favour shares of the Society should be transferred upon the member's death.

Bye Laws of society – Bye-laws and Rules of 'Society' are binding on all the residents and nobody can act as per his/her whims. Hence, if the Society decides to ban any objectionable commercial activities in the flats such as noise-making music classes or using the flat for catering or courier activities etc or not to rent out to bachelors etc, then all the residents have to abide by it.

Redevelopment – When the building contemplates redevelopment after 25-30 years, the Society’s decision will be final and hence the Society members will have negotiation power with the builder at that time.

• APARTMENT ASSOCIATION (CONDOMINIUM)

Act – An alternative to a Co-operative Housing Society was introduced by the Maharashtra Apartment Ownership Act, 1970. Condominium is a Building or Complex of Buildings containing a number of individually owned Apartments or houses. ownership of common areas is shared by all.

Requirement for formation- In Condominium, even one person who owns the entire building can form a Condominium provided there are at least five Apartments in the building.

Conveyance Deed of the land – The title of each Apartment rests with the Apartment owner, who also has a proportionate undivided interest in the land on which the building stands the common areas and facilities of the building.

Share Certificate – This is not so in a Condominium of Apartments/Buildings.

Management Committee – Similarly, the affairs of a Condominium are managed by the Board of Managers who is elected by the members of the Apartment Owners Association. The Board also elects a President, Vice-President, Secretary and a Treasurer.

Share Charges & Flat Transfer fee – The Bylaws can be more flexible and the amount of Transfer Fee can be provided therein.

Renting Out Flats – In a Condominium, the owner can give his Apartment on lease or leave and license basis without the approval of the Board of Managers

Voting Rights – Every Apartment owner has a voting right in proportion to the value of his premises which is generally as per the area of the Apartment owned by him and which is defined while forming the Condominium.

Dispute Resolution – The Court having jurisdiction over the area in which the Condominium is located, hears the disputes.

Membership cease & Expel – In case of a Condominium, there is no such provision. However, if an Apartment owner fails to comply with the Bylaws or the Rules and Regulations, either damages or injunctive relief or both can be claimed against him.

Nomination – No such facility is available in a Condominium. An Apartment can be transferred to a person to whom the Apartment owner bequeaths the same by his will or to the legal representative of the Apartment owner's estate.

Bye Laws of society – But if it is an Apartment, then owners can violate the Apartment Rules and the Apartment Body can just file a case in the Civil Court.

Redevelopment – But if in case of an Apartment, the consent of every Apartment-owner is required and hence it goes into an endless delay due to lack of a common decision acceptable to everybody.

Why builder always want to form a Condominium?

• Sometimes builders are interested in using the increased/additional FSI which will be awarded by the government.
• In an Apartment, the builder retains the ownership of the open spaces which are not included in the saleable area. Example - Terrace or any open parking/stairs space which is not included in the saleable area but in case of Society, the builder cannot retain any right on any of these areas and has to hand over everything to the Society.
• The Maharashtra Apartment Ownership Act also provides for the ownership of an individual Apartment in a building and to make such Apartment heritable and transferable property.

About Author

Shankar Waghmare

We at Esanchalak realize the social impact of Co-operative movement in our country shall not only stay but also grow in times to come in various sectors. Our mission is to provide efficient governance for every co-operative organization to attain efficiency and self-sustainability for the good of every member of the society.