Sreeni (Others) 24 March 2013

Expense sharing in apartments in bangalore/karnataka.

Respected Lawyer community,

I am very sure that the query that I am going to post now would have been answered by many of you to many of your clients. The reason being, this is the most common debatable point among apartment owners.

This query is about the sharing of expenses with in apartments - is it going to be based on flat rate or based on pro-rate? The pro-rata is very confusing for a common man. pro-rata means is it based on usage of any service or it always depends on the size of the apartment that you are residing. This is again debatable in such a way - usage of water from an apartment of size 1200sft, with just a couple staying in it is far far less than the apartment with a size of 700 sft where 4 people are staying in it. This way every service is debatable in apartments.

The bye-law which was made in the year 1992 (yes it was made 21 years back and says constituted under the subject to the provisions of the Karnataka Apartment Owners Act of 1972 and rules there under) and I am unsure if the amended act says any thing in particular about a mandated practice about sharing of expenses. (such as fixed or based on area). Or is this totally left to individual associations to implement as convenient to all.

The bye-law from Deed of Declaration just states as below:

"All owners are obliged to pay monthly assessment imposed by the association to meet all expenses relating to the apartment, which may include an insurance premium for policy to cover repair and reconsreuction work in case of hurricane, fire, earthquake or other hazard or calamity. The assessment shall be made prorate according to the value of the unit owned as stipulated in the declaration. Such assessments shall include monthly payments to a general operating reserve and reserve fund for replacements"

You all know that there bifurcates two sets of people one with higher living area and other set with a lower living area in the building debate on the above quoted point. Due to which every meeting would end up with these discussions (I better say arguments or fire fightings).

I request the respected lawyers to comment on this matter - if the ammended karnataka act says any thing in particular about this or is it just left to individual buildings to manage?

PS: Another curious question - how is in different states?

Thanks in advance & Regards,

Sreeni

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2 Replies

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer) 24 March 2013

The laws on sharing of expenses among members of an apartment comples whether a condominium, a co-operative society or any other form of association vary from State to State. The State of Maharashtra has a long tradition of apartment complexes. Many other States refer to Maharashtra laws for drafting their own laws. In Maharashtra in a co-operative housing society some of the expenses are shared equally among all members, some according to the area of the flat and some based on value (original book value) of the flat. The book value and area may give approximately the same proportion. Under the Tamilnadu Apartment Ownership Act, 1997 all expenses are to be shared in proportion to the area of the flat.

The principle of sharing the expenses in proportion to the area of the flat is based on the concept of social justice, just as a person with higher income not only pays a higher income tax, but also a higher percentage.

What does the Karnataka Act say in this regard? If the law is silent on this issue, the byelaws of the society or association should stipulate this. Any good legislation would state this clearly. Otherwise there is bound to be quarrel among members.

Sreeni (Others) 24 March 2013

Dr Ramani sir,

Thanks for sharing your thoughts.

In the context of Karnataka Apartment Owner's act:

Clause-10 talks about the sharing of the common expenses by the apartment owners as below.

"10. Common profits and expenses.- The common profits of the property shall be distributed among and the common expenses shall be charged to, the apartment owners according to the percentage of the undivided interest in the common areas and facilities."

The issues arise in this case because we have two blocks (B and C) maintained by a single association.

The Deed of Declaration is common for these two. All B block apartments are very small in size and all C block apartments are large in size. Since these two are under common umbrella, people from C block feels that by charging the maintenance based in size, B block would shelve out less money but they would enjoy all benefits at the lower cost. One similar example is : In the recent times the lift has been re-structured and C block people have to shell out double the money. But B block residents enjoy all the facilities at a very very low price. People always argued that lift cost sharing is nothing to do with the size of individual apartments.

With this disparity in the cost sharing - would it be possible to seperate the associations seperately?

Would it be possible to manage two seperate accounts for two blocks (it is left to them how they charge individual flats) and spend the money on the common expeneses based in % of houses between these two blocks?

Legally can these associations be seperated? What is the legal hassale in this? Who all should approve for this seperation?

Thanks

Sreeni