DEED OF DECLARATION UNDER KAOA 1972, GRANTS OWNERSHIP OF LAND  OF APARTMENT OWNERS TO BUILDER ETERNALLY

According to Section 2 of the Karnataka Apartment Ownership Act, 1972, the Act is applicable only to Properties which have been submitted to the provisions of the Act by the sole owner or all the owners of the properties by executing and registering a Declaration in the manner prescribed in the Act. The Proviso to section 2 of the Act states that the properties can be submitted to the provisions of the Act if it is mainly used or intended to be used for residential purposes. Rule 3 of the Karnataka Apartment Ownership Rules, 1974, prescribes that the Declaration to be executed and registered under section 2 of the Act has to be in Form A. Form A  provides for commercial facilities in the ground floor and therefore, the property is commercial also.

Under Section 3(j) of the Act, the Declaration is an instrument by which the property is submitted to the provisions of the Act. The Declaration is registered with the office of the Sub-Registrar as any other document registered under Registration Act, 1908. The  Declaration has to be executed by the sole owner, i.e. the builder, if he is the sole owner of the property, which includes land, building all improvement and structures on it. In case of joint development agreements, the  Declaration has to be executed by all the owners of property. The Declaration cannot be executed by the owners of the flats and therefore, it has to be executed by the builder as sole owner of the property or all the owners of the property before the first conveyance of the flat. This is crystal clear in Form A provided under Rule 3 of the Karnataka Apartment Ownership Rules, 1974, which clearly mentions the purpose of executing the  Declaration as submitting the property to the provisions of the Act and not for formation and registration of Association. Form A also refers to the Grantor as owner of land who has constructed or proposes to construct and will sell the flats. This point makes it very clear that the Declaration has to be executed by the Grantor (Builder) before conveyance of first flat for the purpose of submitting the property to the provisions of the Act and not for formation and registration of Association. There are two annexures to the Declaration i,e, the Floor Plans and the Bye Laws. The Declaration is nothing but the description of the property i.e. the land, buildings and structures on it as provided under section 11 of the Act.

The Act under section 5(2) also provides for execution of Declaration by the flat owner for the purpose of submitting his flat to the provisions of the Act, and a Deed of Apartment in the manner prescribed under the Act. The Declaration in Form B has to be executed by each flat owner under Rule 4(1) of the Rules for submitting the Apartment to the provisions of the Act and under Rule 4(2) of the Rules it has to be signed by the flat owner and verified in the presence of the Magistrate or any other competent person to administer oath and shall be filed with the competent authority within thirty days of its execution. Under Rule 6 of the Rules, the parties to the Deed of Apartment are the builder(Grantor) as first party and the flat purchaser(Grantee) as Second Party. Subsequently, for resale of the flats, the first party will be the first owner of the flat and the second party will be the transferee.  The Deed of Apartment is also the Description of the Property under section 12 of the Act.

Under section 13 of the Act, the Copies of the Declaration, Deed of Apartment  and floor plans have to be registered in the sub registrar office and a separate register of Declaration and Deed of Apartment with index has to be maintained in the sub registrars office. Under section 11(2) of the Act, true copies of Declaration along with Bye Laws and under section 12(2) of the Act, true copies of Deed of Apartment have to filed in the office of the competent authority.

It is very clear from the above, that the purpose of the Declaration is only to subject the property to the provisions of the Act wherein the Grantor (Builder) declares himself to be the owner of the property and under section 14 of the Act, it can be removed from the provisions of the Act only when all the Apartment Owners who have subjected their Apartments to the provisions of the Act removes it. Only on removal from the provisions of the Act, the property shall be deemed to be owned in common by the Apartment Owners. If not removed the Declaration which declares that the grantor(builder) is the owner of the land with the description of the land remains eternally in the name of the builder.

To sum up,, this Act is applicable to the Properties which have been subjected to the provisions of the Act by the Builder before the sale of the first flat and the Act is not for the formation and registration of the Association. Formation and registration of the Association under the Act is not within the spirit of the Act. The Declaration deprives the flat owners of their right to property by providing the builder the right to property for his lifetime until the property is removed from the provisions of the Act. This also amounts to violation of sections 11(4)(f) and 17 of the Real Estate (Regulation and Development) Act, 2016, which provides for execution of registered conveyance deed to the Association of Allottees i.e. the Cooperative Societies formed and registered under the Karnataka Cooperative Societies Act, 1959, as prescribed under Rule 2(b) and 2(c) of the Karnataka Real Estate (Regulation and Development) Rules, 2017. However, in practice the Act has been misused by claiming to have formed and registered the Association under the Act in the absence of the provision for formation and registration of the Association.  It is a settled legal proposition that in absence of any statutory provision, the provision cannot be construed as to provide for a fiction in such an eventuality. When there is no provision under the Act for formation and registration of Association under the Act, any association claimed to be formed and registered under the Act will amount to an illegal association.