Mentoassociates.com – Legal Articles

BBMP is the agency to approve building plans and issue commencement and occupancy certificates for all residential and commercial buildings in lay outs developed by various government agencies( including BDA, KHB, BMICAPA) in its limits except those developed by KIADB and KSSIDC.

Carpet area: Total usable area within the four walls of an apartment or a commercial space. It may come roughly 70 to 75% of the super built up area.

Built up area: Entire carpet area along with thickness of exterior walls of an apartment and the balcony.

Super built up area: Built up area plus the proportionate share in common amenities like lift area, lobby, corridor etc.

Undivided share in land = (Super built up area of apartment x total land area) / sum of super built up areas of all apartments.

1) Does Karnataka Apartment ownership Act (hereinafter referred to as Act) apply to all apartments in Karnataka?

No. It only applies to those apartments where the property is submitted to the provisions of this act by duly executing and registering a Declaration.

2) What is property as per the Karnataka Apartment ownership Act?

Property under the act means the land, building, all improvements and structures thereon, all easements, rights and appurtenances thereto.

3) Can commercial property be submitted to the provisions of the Act?

No. The property shall be mainly used for residential purposes.

4) Who is the competent authority under the act?

The Registrar of Co-operative societies.

5) What forms the majority of apartment owners?

The apartment owners with 51 % or more of the votes in accordance with the percentage assigned in the declaration to the apartments for voting purposes.

6) Whether each apartment owner is required to execute a declaration under the act?

Yes, each apartment owner is required to execute a declaration under sec. 5(2) of the act. This is different from the declaration u/s. 2 of the act.

7) How is the undivided interest of an apartment owner in the common areas and facilities calculated?

It is calculated as a percentage by taking as a basis the value of the apartment in relation to the value of the property.

8) Is it mandatory to file the copy of declaration and bye-laws in the office of competent authority?

Yes.

9) Is it mandatory to register the declaration and deed of apartment in respect of each apartment?

Yes.

10) Can a property be removed from the provisions of the act?

Yes, all the apartment owners can remove a property from the provisions of the act by an instrument to that effect duly executed.

11) What happens to the status of the property once it is removed from the provisions of the act?

Once it is removed from the provisions of the act the property shall be deemed to be owned in common by the apartment owners.

12) On whom the act is binding?

The act is binding on all apartment owners, tenants of owners, employees of owners and tenants or any other person who may in any manner use the property or any part thereof.

13) In what form the declaration under section 2 needs to be executed and registered?

In form ‘A’

14) In what form the declaration under section 5(2) needs to be executed?

In Form ‘B’

15) Within how many days the declaration u/s 5(2) needs to be filed with the competent authority?

Within 30 days from the date of execution.

16) Within how many days shall the apartment owner file the true copy of deed of apartment in the office of the competent authority?

Within 30 days from the date of execution.

Power of attorney is a very common document used in various transactions in day-to-day life. At the same time there are lots of misconceptions about the same. In this article let us get some first hand information about the various aspects of a power of attorney.

A Power of attorney is a document in writing whereby one person authorizes another person to represent him and to do certain lawful acts. The person who confers the power is called “Principal” and the person to whom it is given is known as “Agent” or “Attorney”. When the Power of attorney is given for a specific act then the same is known as “Special Power Of Attorney”. On the contrary if a Power of attorney is given to a person to do generally various acts and to represent the principal in a wide variety of transactions then the same is said to be “General Power Of Attorney”.

A Power Of Attorney may be revocable or irrevocable. If the person, who gives the power, retains the right to cancel it, then the same is said to be revocable one. On the other hand if this power is not retained, then the same is termed an irrevocable one. Normally, Power of attorneys pertaining to immovable properties, which are given after receipt of considerations are irrevocable ones.

A power of attorney has to be sufficiently stamped and the same may be notarized or registered. Normally those involving immovable properties need to be registered in the office of the jurisdictional sub registrar. Apart from the signatures of the Principal and the Attorney, it is better to have the attestation by two witnesses.

A power of attorney may be granted by one Principal to several agents or several principals to one agent provided there is uniformity in the purpose.

The Power of Attorney is terminated on the revocation of the same by the principal, when the purpose of the instrument is completed, when either of the parties become unsound or dies and when the Principal is declared unsound.

It is a common thing that people leave out important information in registered deeds. Some times errors may creep in such documents. Such omissions or errors are fatal to those documents. People use a rectification deed to correct such mistakes.

In a rectification deed the same parties who were in the original deed, should be made the parties. Normally there is a mention about nature and contents of original deed. Thereafter the error or omission or defect in the earlier deed is described. After that, the change or addition to the earlier matter in the original deed is described in detail.

Normally in Karnataka the stamp duty for a rectification deed is Rs 100/-(Rupees One Hundred Only) and registration fee is Rs 100/- /-(Rupees One Hundred Only). In addition to this, the necessary scanning charges need to be paid. If there is some crucial changes like changes in the area of property, description of the property etc, then the subregistrator is entitled to demand the proportionate stamp duty and registration fee. It is ideal to keep the same witnesses as in the original deed. The rectification deed shall be signed by both the parties and the same shall be witnessed by the two witnesses.

For Future references the original deed and the rectification deed shall be considered together as one document. Only advocates and licensed deed writers are entitled to draft a rectification deed.

The sale agreement holder of a property is not entitled to sell the property to another person for the reason that he does not have absolute rights over the property. In such a case it is very common to enter into an assignment agreement to transfer the rights of the sale agreement holder to another person.

The person who transfers his rights is called assignor. The person who obtains rights through the assignment agreement is called assignee. Normally an assignment is done for some consideration.

Let us take an example. Assume A enters into a Sale agreement with B for the sale of a property, for, say Rs.100/- Here A is the vendor and B is the purchaser. Now B wants to assign his rights to C for a total consideration of Rs.120/-. Here B is the assignor and C is the assignee. The net profit got by B is Rs. 20/-.

Normally, the approval of the original vendor is required for an assignment. For this original owner may be made as a consenting witness. Some builders/owners may insist for a transfer fee for an assignment. The assignee gets all the rights and obligations of the assignor after the assignment agreement is signed and he steps into the shoes of the original agreement holder (assignor). An assignment agreement shall be carefully drafted with the assistance of an experienced advocate.

A Sale Agreement is a very common deed that one executes in transactions pertaining to immovable properties. In this article, let us see, the major ingredients of a normal sale agreement.

a) A sale agreement should contain the name, father’s name, age and address of the seller and purchaser.
b) It shall also contain the date of the agreement as well as the place where the agreement is executed.
c) A brief description of the property which is the subject matter of the sale shall be given in the body of the agreement and the detailed description of the same shall be given in a separate schedule which is at the last portion of the sale agreement. As a normal convention, the property which is the subject matter of a sale agreement is referred in the agreement as schedule property.
d) The sale agreement shall contain a clause, to the effect that the seller has offered the property for sale, to the purchaser and the purchaser has agreed to purchase the property from the seller.
e) There shall be a mention of the total sale consideration amount, as well as the amount which is paid at the time of entering into the agreement.
f) The period of the agreement shall be clearly spelt out in the agreement. It is the duty of the purchaser to pay the balance sale amount before the date of registration and get the property registered in his name.
g) The purchaser will have a right to appoint a nominee on his behalf for the purpose of registering the property.
h) It is ideal to give a brief description of the history of the property.
i) Normally, a penalty clause is provided in the sale agreement with an intention to derive commitment and seriousness from the parties to the agreement.
j) If there is any outstanding loan over the schedule property, the details of the same shall be mentioned in the sale agreement and the manner in which the seller shall clear the said loan has to be mentioned in the sale agreement.
k) If there are any other documents to be procured by the seller or any things to be done from the side of the seller before the date of registration, then the same shall find a place in the agreement.
l) Normally, all the expenses towards the drafting of the sale agreement, sale deed, stamp duty, registration charges etc shall be borne by the purchaser.
m) The possession of the property shall be handed over to the purchaser on the day of the registration. If the possession is handed over at the time of sale agreement, then the stamp duty on the sale agreement will considerably vary.
n) The original documents are normally handed over by the seller to the purchaser at the time of registration.
o) The sale agreement shall be signed by both the seller and purchaser and the same shall be witnessed by two witnesses.
p) Only advocates and registered deed writers are authorized to draft a sale agreement.

Gift is a very common mode of transfer in immovable as well as movable properties. Section 122 of the Transfer Of property Act defines a Gift as a transfer of moveable and immovable property by one person called the “Donor” to another person called the “Donee”. A Gift shall be made voluntarily and without any consideration. The gift shall be accepted by the Donee during the lifetime of the Donor. A gift can be made only of a property that is existing and not of future things. A gift, once given, cannot be revoked, in the normal course, for any reasons.

A Gift Deed needs to be registered and attested by two witnesses. It also attracts stamp duty. When the Donee is a member of the family of the Donor (including husband, wife, son, daughter, daughter in law and grand children) there is a stamp duty benefit when the gift of the immovable property is made. Gifts not covering the above said relations and between strangers involve stamp duty as in a sale transaction. A gift of movable property can be effected by simple delivery of the property.

As far as possible market value of the property gifted should be indicated in the Gift deed. There should be a clause that the donee has received possession of the gifted property. The Donor should not reserve any right for himself in the gifted property.

a. For lease of residential property not exceeding 1 year=0.5% of (Average Annual rent +Security deposit),subject to a maximum of Rs 500/-.
b.For lease of commercial/industrial property not exceeding 1 year=0.5% of (Average Annual rent +Security deposit).
c.For lease exceeding 1 year but not exceeding 10 years=1 % of (Average Annual rent +Security deposit).
d.For lease exceeding 10 years but not exceeding 20 years=2 % of (Average Annual rent +Security deposit).
e.For lease exceeding 20 years but not exceeding 30 years=3 % of (Average Annual rent +Security deposit).
f.For lease exceeding 30 years or in perpetuity or for not a definite term =Same duty as conveyance for the total of (average annual rent plus security deposit) or the market value of the  property, whichever is higher.

Mortgage is the transfer of an interest in an immovable property. The interest may be transferred for the purpose of:
a.Securing the payment of money advanced.
b.Securing the payment of money to be advanced by way of loan.
c.Securing the payment of an existing or future debt.
d.Securing the performance of an engagement which may give rise to a monetary liability.

The person who transfers the interest in the immovable property is the mortgagor, the person to whom the interest is transferred is the mortgagee .The instrument, if any, by which the transfer is effected is called mortgage deed. There are various types of mortgage like simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, Anomalous mortgage, mortgage by deposit of title deeds etc.

In a simple mortgage, the possession of the mortgaged property is not delivered by the mortgagor. However, in the event of the mortgagor failing to pay the mortgage money, according to the contract, the mortgagee shall have a right to sell the mortgaged property and to realize the mortgage money from the sale proceeds. In a usufructuary mortgage, the mortgagor delivers the possession of the property to the mortgagee. The mortgagee can retain the possession till payment of the mortgage money by the mortgagor. The mortgagee can receive the rents and profits, accruing from the property, and appropriate the same in lieu of interest or in payment of mortgage money.

In a mortgage by deposit of title deeds, a person delivers to a creditor or his agent documents of title to an immovable property with intent to create a security thereon. A mortgage where the principle money secured is more than Rs 100/- can be effected only by a registered instrument. However this is not applicable in the case of mortgage by title deeds.
A mortgagor has a valid right called right to redeem. This means that, at any time principle money has become due, the mortgagor has a right on payment of the mortgage money, to require the mortgagee:

a) to deliver to the mortgagor,  the mortgage deeds and all documents relating to the mortgaged property in his possession.
b) to deliver possession of mortgage property to the mortgagor and to retransfer the  mortgaged property.

A mortgagor who has executed two or mortgages in favour of the same mortgagee, shall be entitled to redeem any one of such mortgage separately, or any two or more of such mortgages together.If any accession or improvement has happened to the mortgaged property during the possession with the mortgagee, then the mortgagor will be entitled to such accession and improvements upon redemption.