Is your apartment complex in Karnataka being managed under the right law? And what you can do about it…. (Updated)

Over the past many years, scores of articles have been written on this topic, each claiming to provide a definitive understanding. But many of these provided only part of the picture and conflicted with others,  leading to readers getting more confused. This article attempts to bring clarity through a different way – by providing a historical background of cooperative housing (which enabled joint ownership of housing layouts much like today’s apartment complexes) and why certain laws came into being by using reasoning and correlation – and then analysing the complete spectrum for applicability and suitability to today’s situations. It’s a little lengthy, but stay with us and we are certain that  you will be convinced at the end…

Cooperative housing in India in the 1900s.  Cooperative housing in India traces its roots back to the British colonial era. In 1904, India adopted its first Cooperative Societies Act, which initially focused on credit cooperatives. In 1909, The Bangalore Building Cooperative Society emerged as India’s first housing cooperative, providing affordable shelter to its members in the State of Mysore (now Karnataka). In 1912, The Cooperative Societies Act was amended to include non-credit societies, such as housing cooperatives, at the state level. In 1913, the Bombay Cooperative Housing Association (BCHA), a non-official body, was founded in the State of Bombay (now Maharashtra). This association played a pivotal role in propagating the concept of cooperative housing societies.

Cooperative housing remained relatively marginal until the 1950s due to inadequate organizational support and non-supportive legislative and administrative frameworks. However, post 1950, there was a significant surge in cooperative housing development especially in Tamil Nadu and Maharashtra. Around the 1960s, Cooperative Societies Acts were promulgated across many states, with Karnataka’s in 1959 and Maharashtra’s in 1960. The 1964 Working Group on Housing Cooperatives emphasized that housing cooperatives were the best means to provide decent housing for lower-income groups. On their recommendation, the National Co-operative Housing Federation (NCHF) of India was founded in 1969 for promoting, educating and providing expert advice to cooperative housing schemes.

Maharashtra’s story. Maharashtra, and Mumbai in particular, saw the construction of hundreds of multi-storied buildings and apartment complexes after the  1950s. Since the BCHA had widely promoted the concept, most of Mumbai’s apartment complexes were and are managed as cooperative housing societies. Maharashtra formally enacted its Cooperative Societies Act in 1960 and has been amending it periodically for addressing emerging needs.  In 2013, it added a separate chapter for cooperative housing providing useful guidelines on the organisation, functioning, responsibilities and other important aspects.  The chapter provides the legal basis for a Model set of Bye laws which has been disseminated and is being used widely across the State.

Jointly-owned apartment buildings in Karnataka.  Karnataka, on the other hand did not have an equivalent to the BCHA and started experiencing the construction of multi-storied buildings and apartment complexes much later.  Some of these were built by state housing boards which collected contributions of individuals and handed over apartments which they occupied (or tenanted) with certain subscriptions. In some cases, groups of individuals pooled in money to buy land and build apartments which they subsequently occupied. In both these cases, the occupants did not possess a title to their individual apartments and hence these could not be mortgaged for loans or easily sold or transferred to heirs.  

It is apparently for the ibid reasons that the Karnataka Apartment Ownership Act (KAOA) was promulgated in 1972 (Maharashtra’s was enacted in 1970). This legislation enabled single or  joint holders of property to declare the share of land and the apartments which they had paid for and were occupying, on a legal document and which was registered in the government offices. A Deed of Declaration (DoD) was needed to be signed by all the joint owners for the apartment complex giving out the boundaries of the land, area, buildings etc. In addition, a Deed of Apartment (DoA)  was to be signed by each apartment owner,  specifying the location and size of his apartment and the share of the land or common property. These two documents entitled each apartment owner to his rightful property and share in the common land and thus enabled it to be sold or inherited. The KAOA also provided useful information on association bye laws and its running.

Promoter-builder developed apartment buildings in Karnataka. In the 50-60s, another arrangement also arose,  where a few individuals or construction companies acquired land for developing apartment complexes using private funding and entered into sales agreements with prospective apartment buyers. These buyers would pay deposits and instalments to the developer who would use them to construct the buildings and then hand over apartments on completion. Unlike the situations in the ibid paragraphs, here, the title of the land was held by the developer. And apartment buyers were transferred titles of only the apartments which they occupied. This led to conflicts between apartment owners and the developer on how the land was to be maintained and used.

It is apparently for the ibid reasons that the Karnataka Ownership Flats Act (KOFA) was promulgated in 1972  in the same year as the KAOA (Maharashtra’s was enacted in 1963). This legislation provided the procedures and responsibilities of various parties to ensure that the apartment buyers received legal titles to their apartments and that of the land which they were built on. Since the land and apartment complex needed to be jointly managed, KOFA stipulated that cooperative societies (or companies) should be created.  These entities are termed “body corporates” to whom the land can be legally transferred to and which pass on the right of ownership of a share of the land ( and common property ) to each individual apartment owner through share certificates. This transmission of individual shares of land is not possible in the case of associations or charitable/non-profit societies. Unlike KAOA, KOFA is termed an obligatory/mandatory law with clauses stating actions that "shall" be followed.

What builders and apartment owners did. Despite Karnataka’s Cooperative Societies Act (KCSA) being enacted in 1959, and the experience of Maharashtra’s cooperative housing societies being available, most apartment complexes in Karnataka, turned to KAOA 72, apparently because it recommended bye-laws for administration and seemed more appropriate than the KCSA which, while covering apartment layouts did not ( and still does not) make any mention of them. But KAOA did not provide for the registering of an entity which could receive and hold finances.  Forming apartment owners cooperative socieities would have solved this issue, but maybe due to the longer, more detailed process involved, they instead turned to another act – The Karnataka Societies Registration Act (KSRA) 1960 to do so.  This Act however, was and still is intended for charitable societies with the objects of promoting charity, education, science, literary work,  sports to the public.

Societies, whether cooperative under KCSA or charitable under KSRA, are registered by the Registrar of Societies in all states including Karnataka. The two are however, run a little differently - with KSRA societies being easier to set up and having greater autonomy ( but less accountability) in decision making. The Cooperative ones, though autonomous, are subject to some scrutiny by the Registrar of Cooperative societies and hence the management committees are more accountable.  Today , most of Karnataka’s apartment complexes, (and which are largely builder developed)  are running reasonably smoothly, but in legal terms, erroneously as KSRA 60 societies and on KAOA 72 compliances.

Besides being untenable, the applying of a KAOA – KSRA  combination to a promoter-builder arrangement has a chilling effect – there is no provision for conveyance of the land to the owners.  Sale Deeds may mention payment for Undivided Share of Land (UDSL) but it is between the builder and buyer, with registration of the Deed document ( not the land ) by the registrar. It does not mean the land records have been mutated to include the buyers names. Proof of collective ownership of the land is the encumbrance certificate which can be obtained from the land records. While having the land title in the promoters/builders names does not immediately hamper the occupation and running of these complexes, it may affect calculation of property taxes or mandatory land compliances and severely affect the sub-development of a portion of the land or re-development of the land when old buildings are brought down.  With many complexes now being 50 years old, this is becoming a reality which needs to be addressed.

Latest understanding. In the past decade, many owners and lawyers have woken up to this reality as well as to issues of mis-management caused by the relatively lower accountability of KSRA society management committees. With an increasing number of complaints and owners turning to litigation, the courts have stepped in over the past few years directing clearly that apartments cannot be managed by KSRA societies.[i] In early 2023, the legal department of Karnataka directed that (and this has been endorsed by advisory bodies) that these complexes should apply KOFA and create cooperative societies under KCSA so that the land can be conveyed to the apartment owners and the complexes themselves can be better managed by accountable committees.[ii]  

Where does RERA come in?  In 2016, The Real Estate (Regulation and Development ) Act (RERA)  was enacted and is applicable in all states of India. The Act provides for increased transparency, accountability and efficiency in the land development process thus benefiting  and balancing the interests of both home buyers and developers. However,  in Sec 17 it ambiguously directs the conveyance of common property to an “association” ( of apartment owners) while in sec 19(9) asks that every apartment allottee participate in the formation of an association, society, cooperative society or federation.   Not withstanding this, it does not hamper in any  way the understanding or process for adopting KOFA and KCSA to enable conveyance of land to the cooperative society of apartment owners.

Can apartment complexes be administered by private companies?   Para  11 of  KOFA  72 states that land can be conveyed either to a cooperative society or a company.  There are hence views being shared in the environment that Non-Profit Organisations (NPOs)  or Sec – 8 ( of the Indian Companies Act 2013) Companies can be formed to administer to residential apartment complexes. But, a closer look reveals that the objects of an NPO as defined in the Companies Act, is to provide Public service and could be in a range of areas such as sports, culture, social impact etc. This does not fit in with the object of  administration of property that is shared by apartment owners. Further, companies ( NPOs and For-profit ones) have share holdings based on investments and then voting rights which are based on them. If this concept were to be applied, owners of larger apartments ( with larger UDSL) will have larger voting rights compared to owners of smaller apartments. This will highly complicate  the voting processes and decision making. Compliances and disputes will be governed by the Indian Companies Act and under the Ministry of Corporate Affairs (MCA) which does not involve itself in residential apartments administration.  Hence, forming a company for administering apartment complexes after they are constructed and handed over to apartment buyers is highly unsuitable and inadvisable.

However, there are now complexes such as Suvidha Homes ( for assisted living of seniors) which work as companies. These provide buyers with the option of buying a share in the company whose value is commensurate with an apartment and which then entitles the right to occupy it. However the property title of the apartment and the land on which they have been built remains in the name of the company. Share holders vote for selecting directors who manage the complex. Share holders can also transfer their shares to other buyers. As we can see, converting an existing builder - apartment buyer arrangement, to such a company will need a radical change in outlook and purpose, with immense documentation for transfers of property titles to the company and likely disputes on valuation of shares and methods of management.

Advantages of the KOFA – KCSA route (for builder - apartment buyer arrangements). Besides enabling legal sanctity to manage the complex and the conveyance of land, transitioning to the KOFA – KCSA combination has many other advantages.  These are :

• Holding the title to the land will likely reduce the property tax being levied on apartment owners since the internal access roads, street lighting etc is being maintained by the society.  As per an advocate dealing in property matters,  such tax could erroneously  be applied at par with independent houses whose access roads and street lighting etc is being maintained by BBMP, since the title of the land has still not  been conveyed to the apartment owners. Also, as long as the title remains with the builder, the onus of compliance to outgoings for electricity supply, water supply etc lies with them, and if they default, the apartment owners will jointly suffer penalties/supply cuts etc.

• The cooperative society model legalises renting out and earning profits/returns from common  assets such as community shops. KSRA societies are essentially charitable in nature and earning of profits from such assets is questionable.

• The cooperative society model authorises the concept of share certificates (purchased at nominal values) entitling each apartment owner to a share of the common property and land. This share certificate enables the apartment owner to legally transfer his share to his heirs/buyers.  KSRA societies have no provision to issue these shares certificates.

• KCSA provides legal statutes for recovery of pending dues for maintenance from members. KSRA societies do not have these since contributions are considered to be donations and not fees for specific services such as maintenance.

• Disputes among owners or with the management can be quicker disposed off by the  Dy Registrar of Cooperative Societies (who is a quasi-judicial authority) instead of approaching the courts. 

• While KCSA societies are autonomous, guidelines by the State cooperative housing federations enables better running and more accountability of managing committees.

Apprehensions on the cooperative society framework.  But there have been numerous challenges and some apprehensions voiced on running of cooperative societies. Some of the major ones and their clarifications are shared below:

Challenge/Apprehension	Solutions/clarification
KCSA 59 (unlike the Maharashtra one) does not mention housing/residential management anywhere.	A draft chapter on housing societies has been offered to the government and is likely to be approved once the number of apartment owner cooperative societies in the state reach at least 50. This number will allow a federation to be created and which can voice the collective need for this additional chapter. Even in the current state, there are over 20 apartment complexes running smoothly as cooperative societies. Hence, this reason should not block apartment owners from pursuing this objective.
The government department handling  cooperatives is perceived to be corrupt, unduly harasses societies, interferes in their functioning and imposes large costs for conducting elections, inspections etc	It is clarified that cooperative societies are run largely as autonomous bodies and it is only on important occasions such as elections or when members complain of malpractices that the department may step in. This regulatory oversight also helps to resolve disputes faster by Registrars who are quasi-judicial authorities and avoids persons fighting long drawn cases in civil courts. Corruption can be prevented by following compliances and dealing with the higher management in the department.  Routine inspections and supervision of elections are beneficial to ensure transparency and accountability and if that is so,  there is no need to fear harassment by the department.
KCSA stipulates a long 5 year tenure for managing committees which will lead to their entrenchment, loss of motivation and abuse of power.	On the contrary, members of managing committees ( called boards of directors/managers) are more accountable to the members and they can be indicted and tried by the registrars on proven charges. Members may move no-confidence motions also, in case they find the board non-responsive and force the election of a new one.
KCSA restricts the board to maximum 13 members and requires two seats to be reserved for SC/ST and women each.	The size of 13 is considered to be optimal for taking decisions, especially if it involves building a consensus. If SC/ST members are unavailable, their seats can be filled by persons from the  general quota.
KCSA disallows persons from being members of multiple cooperative societies	This is unlikely to affect most persons especially since very few apartment complexes are currently transitioning to  cooperative societies. Hopefully the new chapter can bring in a relaxation on this rule.
Transfer of Corpus funds of KSRA societies to the new KCSA societies may be difficult, if not impossible	KSRA society funds are received as donations and are typically never returned to donors. One way to overcome this is to stop collecting maintenance subscriptions by apartment owners with the condition that the same will be collected by the new cooperative society.  The funds in the KSRA society are then expended for maintenance or administrative work.
Cooperative societies need to pay 2% of profit to education fund and 5% to the welfare fund of the Cooperative Society Federation and 25% of the profit is to be saved in an FD which cannot be withdrawn without the departments concurrence.	Cooperative housing societies, unlike others in agriculture, dairy farming etc, do not work for profits. Minor income from community shops or centres are used up in maintenance or administrative tasks. Hence, there are practically no profits and no requirement of depositing portions of them. Some minimal subscriptions to the education or welfare fund may be required which is highly affordable.
The Registrar of Cooperative Societies and its departments are not adequately staffed and equipped to deal with a large increase in apartment cooperative societies.	Government authorities are now aware of the situation and are openly advocating for KSRA societies to transition to KCSA. Since the momentum in this direction is likely to build up gradually, they have sufficient time to build the needed capacity.

So what should apartment owners who want conveyance of their land and better management do?

The Bangalore City Flat Owners Association (BCFOWA) which comprises of around 60-70 activists and legally knowledgeable persons have been spreading awareness of the infirmities of the KSRA-KAOA arrangement and advocating the KOFA-KCSA one for the past many years. They have helped around 18 communities transition to KOFA-KCSA so far, through intimate guidance and hand-holding over a year. However some of these cooperative societies have apparently come up against challenges in compliance and in conveyance of the land to them.

There are other organisations such as the Bangalore Apartment Federation (BAF) and Karnataka Home Buyers Forum (KHBF) which are also taking immense interest and effort in looking for solutions. Some of these solutions draw from what other states such as Telengana, Odisha, have implemented, where their SRAs have been amended to include management of apartment layouts or their AOAs have been amended to provide additional powers for charging of maintenance fees. KHBF has been approaching the government for directing an appropriate agency/functionary to take on the duties of a competent authority, since the Registrar of Cooperative Societies, while listed in the KAOA as the competent authority, has apparently expressed an inability for the same. These appear to be easier paths than conversion to cooperative societies and hence most apartment associations are waiting and hoping that these will materialise.

For those who are convinced about converting to cooperative societies, it is worthwhile knowing that, the draft chapter on housing proposed for the KCSA is unlikely to be passed unless around 40-50 such societies are created under a federation which can press forward the proposal.  Efforts are being made by the BCFOWA and a few persons to build such a federation but it may take time, especially due the challenges that new cooperative societies have faced. BCFOWA has filed a Public Interest litigation (No 511/2021) for clearing the way towards KCSA and the outcome is awaited.

On July 7th , 2025, however the Times of India reported that the Karnataka government has drafted a new law to replace the KAOA, 1972 with the aim of providing legal recognition of owner's associations; to enable representation in consumer forums, RERA and the courts; to provide a framework to manage funds and common areas; to ensure legal recourse to both owners and associations in case of disputes or dues. This move appears to be driven by public sentiment and voiced through BAF and KHBF. No doubt, if such a new law can provide these needs, it will be a great achievement, and it may be prudent for communities to wait for the same.

We hope you found this article useful. Do write in to Contact@cocreed.in with your feedback and queries.  

Disclaimer: The views in this article are personal and for general information only. Readers are advised to obtain professional legal advice for specific cases.

Notes:

[i] As examples, please see Writ Petitions filed in Karnataka High court,  No 3613 of 2021 Mr Vikas Vs SNR Silver Ripples Owners Welfare Association and No 11833 of 2022 Mr Suresh Babu Vs Hoysala Commanders Retreat Owners Welfare Association, both available on the Official Website of the High Court of Karnataka. Similarly, please see WPs 7193/2021, 3674/2021, 293/2022.

[ii] See Big relief for flat owners (indiatimes.com)