Redevelopment continues to throw up complex disputes for cooperative housing society (CHS/the Society) members, especially when developers deviate from agreed terms or when structural changes create conflicts among stakeholders. Issues such as misuse of Society spaces, questions around amalgamation decisions, encroachment into common areas, and recovery of dues from developers often require members to understand both their contractual rights and their statutory remedies. This week’s queries highlight some of these recurring challenges and outline the appropriate course of action available to societies and their members.
Redevelopment Security: Validity of Lease and Protection of Society’s Interests
Question: Our Society’s registered redevelopment agreement provides for a bank guarantee of ₹15.30 crore. At the request of the developer, the Society waived the bank guarantee and accepted a lien on his sale component of equivalent value. However, the developer has not registered the lien in favour of the Society as security and has leased the premises to a third party without the Society’s permission.
When the Society members objected, the office-bearers asked the developer to execute the lien as promised in the agreement and the developer agreed. My question is whether the lease agreement now executed by the developer as security is valid, given that he has already executed a lease agreement with a third party prior to this. How can the Society protect members’ interests in the event of the developer's default?
Answer: On the same set of saleable flats, the builder cannot enter into lease agreements with two parties. If a lease has already been executed with a third party, the builder cannot create a new valid lease for the same premises without resolving the earlier agreement.
He should cancel the lease agreement with the third party, then execute a lease agreement with the Society, and register it. If the builder wants to continue with the same party for those flats, the Society will have to enter into a separate agreement with that party.
De-amalgamation of Societies during Redevelopment: Who Decides?
Question: Seven separate Societies amalgamated to form one Society for redevelopment. The plots are still not amalgamated. Now, if one of the earlier Societies wants to de-amalgamate, is the approval of the majority of that erstwhile Society sufficient, or is approval of the newly-formed Society required?
Answer: The newly-formed combined Society should call a general body meeting to consider the de-amalgamation of one of the societies. A decision of the combined society will be required for such de-amalgamation, and not merely the majority of the erstwhile society.
Such a de-amalgamated society should be given the same area of land, and then the entire land of the remaining societies can continue as amalgamated.
Encroachment of Common Areas
Question: In my apartment, the owner of the adjacent flat has blocked the common area corridor by enclosing it with a grill, a door and a fibre sheet. Because of this, we are losing light, air and the entire street view. I complained about that flat-owner to my Society and the local municipality, but there has been no response. I am very distressed. Can we do anything about such a nuisance?
Answer: I hope your flat is in Maharashtra, as my reply is applicable to co-operative housing society flats in the state.
Kindly hire a good lawyer and, under bye-law no. 174(B)(x), make a complaint against the said flat owner in the cooperative court, and make the local municipal office and your CHS parties to the complaint. You may also follow up with the municipal authority for action against the unauthorised structure.
Maintenance Charges on Unsold Flats: When Is the Developer Liable?
Question: The managing committee has not raised maintenance charges on the developer for unsold flats after obtaining the occupation certificate in a redeveloped society, for the period between the date of the occupation certificate and the date of registration of sale deeds of the flats.
Answer: The Society should collect maintenance charges for all saleable flats from the date of allotment of flats to members.
A developer cannot refuse to bear maintenance costs for flats that remain unsold, including in redevelopment projects. Under the Real Estate (Regulation and Development) Act, 2016, the promoter is required to fulfil all obligations towards allottees and the association until ownership of units and common areas is formally transferred.
In a judgement, the Bombay High Court held that maintenance dues are continuous statutory liabilities linked to the property itself. In effect, whoever holds or benefits from the flat is responsible for paying such charges, even in the absence of formal ownership transfer or society membership.
In case the builder’s unsold flats are not charged maintenance from the date of allotment of flats to others, you can make a complaint to the deputy registrar of cooperative societies to recover maintenance charges from the builder for the unsold flats.
NOTE
We will not be answering queries posted in the comments. Only questions sent through the Moneylife Foundation's Legal Helpline will be answered. If you want to seek guidance or ask questions to Mr Shanbhag, kindly send it through Moneylife Foundation's Free Legal Helpline. Here is the link: https://www.moneylife.in/lrc.html#ask-question
Disclaimer: The guidance provided in these columns and on our Legal Helpline is on the sole basis of the facts provided by the reader/questioner and does not amount to formal legal advice in any form whatsoever.
(Shirish Shanbhag has an MSc in Organic Chemistry, a Diploma in Higher Education, and a Diploma in French and has completed his LL.B. in first class in 2021. Before his retirement, he was a junior college teacher at Patkar College from July 1980 to May 2012, teaching theoretical and practical chemistry. Post-retirement in 2012, he started providing guidance and counselling to people on several issues, specifically focusing on cooperative housing society-related matters. He has over 30 years of hands-on experience in all matters about housing societies and can provide out-of-box solutions for any practical issue.)
