Apartment RWA Rules Have Changed! Karnataka High Court Judgment 2025

Summary

This discussion explores the legalities surrounding residential associations in Karnataka, specifically focusing on the Karnataka Apartment Ownership Act (KOA) 1972, cooperative societies, and judicial rulings. It delves into a May 2025 Karnataka High Court judgment, which clarified the applicability of the KOA Act for residential complexes and how the sale deed plays a crucial role in determining the type of association to be formed. The conversation also distinguishes between residential, commercial, and mixed-use properties, outlining the legal requirements and options available to builders and residents when forming associations under either the KOA or cooperative societies act.

Takeaways

• 😀 The Karnataka High Court's ruling in May 2025 clarified that residential societies should ideally be formed under the Karnataka Apartment Ownership Act (KOA 1972) if the sale deed specifies it.
• 😀 If the sale deed does not specify the act under which the association should be formed, builders have the choice to form it under either the Karnataka Apartment Ownership Act (KOA) or the Cooperative Societies Act.
• 😀 The Karnataka High Court emphasized that if a residential society is formed under the Cooperative Societies Act, and the sale deed does not mandate KOA, the society can continue to function legally under the Cooperative Societies Act.
• 😀 Mixed-use buildings, where part of the building is commercial but the primary purpose remains residential, can still form an association under the KOA 1972, provided commercial areas are used for residents' benefit.
• 😀 If commercial areas in a mixed-use building are open to the public, the property is considered commercial, and the society must be formed under the Cooperative Societies Act or Companies Act instead of KOA.
• 😀 The judgment reiterates that the Karnataka Apartment Ownership Act (KOA) is intended for purely residential apartments, but societies can still function under other legal frameworks if the sale deed allows it.
• 😀 A property’s sanctioned plan plays a key role in determining whether it qualifies as a residential or mixed-use property. If the plan designates the space for commercial use, the society must be registered under other applicable laws.
• 😀 According to the ruling, once an apartment is sold and the sale deed is signed, the association must conform to the regulations of the Karnataka Apartment Ownership Act (KOA) unless otherwise specified.
• 😀 The ruling also clarified that the Karnataka Ownership of Flats Act will apply when residents opt not to elect for the Karnataka Apartment Ownership Act, and instead form a society under the Cooperative Societies Act.
• 😀 Builders are obligated to form the association under the specified act if the sale deed mandates it, but if there’s no such mandate, societies may opt for the Cooperative Societies Act, provided the property is not mixed-use or commercial.

Q & A

What was the recent ruling passed by the Karnataka High Court in May 2025 regarding apartment associations?

In May 2025, the Karnataka High Court ruled on a case involving the 'Rami One North' association, clarifying that if the sale deed specifies the Karnataka Apartment Ownership Act (KAOA) for the formation of the association, then it must be formed under that act, not under the Karnataka Cooperative Societies Act.

Can a builder choose the type of association to form, and what does RERA provide in this context?

Yes, builders can choose whether to form an association under the Karnataka Apartment Ownership Act (KAOA) or the Karnataka Cooperative Societies Act. RERA allows builders the option to form either type of association, but if the sale deed specifies one, it must be followed.

What is the significance of the sale deed in determining which act governs the apartment association?

The sale deed is significant because it may specify the act under which the apartment association should be formed. If the sale deed mentions the Karnataka Apartment Ownership Act (KAOA), the association must be formed under that act. If no specific act is mentioned, the builder has the option to choose.

What does the term 'residential society' mean in the context of these legal discussions?

A 'residential society' refers to an apartment complex that is primarily meant for residential use. Commercial activities are allowed only in a small percentage (up to 10%) of the total area, and those commercial activities should primarily serve the residents.

What happens when a residential society includes commercial spaces or amenities like a gym or spa?

If a residential society includes amenities such as a gym, spa, or shop, it can still be considered a residential society as long as the commercial spaces are for the exclusive use of residents. If these spaces are opened to the public, it becomes a 'mixed-use' property.

How is the distinction between residential and mixed-use properties determined?

The distinction is determined based on the sanctioned plan for the property. If the property is intended for mixed use (such as a residential building with commercial spaces), it will be treated differently than purely residential properties and will need to form an association under the Cooperative Societies Act.

What happens if a property is designated as 'mixed-use'?

If a property is designated as 'mixed-use', it cannot form an association under the Karnataka Apartment Ownership Act (KAOA) since this act is meant solely for residential properties. Instead, it must form an association under the Cooperative Societies Act or the Companies Act.

What does the Karnataka High Court's previous judgment on the Karnataka Ownership of Flats Act clarify?

The court clarified that if a builder sells an apartment and the association is formed under the Karnataka Ownership of Flats Act, it can later opt to move to the Karnataka Apartment Ownership Act (KAOA) once the residents decide. Once this election is made, the Karnataka Ownership of Flats Act no longer governs the society.

What legal implications does signing the sale deed have for an apartment buyer?

Once the sale deed is signed, the apartment is legally considered sold, and the association formed must adhere to the act specified in the sale deed. If no act is specified, the builder has the option to choose, but once the association is formed, the respective act must be followed.

Can an apartment society formed under the Cooperative Societies Act continue to operate even after a ruling such as the May 2025 judgment?

Yes, an apartment society formed under the Cooperative Societies Act can continue to operate as long as the sale deed does not mandate the Karnataka Apartment Ownership Act (KAOA). However, societies cannot form under the Karnataka Societies Registration Act, 1960.