Table of Contents
Introduction
Improving economic and financial conditions of people in the county alongside continuous urbanization has led to an increase in the demand for standard accommodation and office spaces and has accordingly necessitated real estate development projects to increase, especially in metropolitan areas. With a great number of people using private vehicles for conveyance regularly in cities, it is now considered as a basic facility to provide for common spaces for parking vehicles to be used exclusively by buyers of accommodations or offices. These common parking spaces specifically assigned to buyers of the property is to ensure that no inconvenience is caused to them in regularly searching for spaces to park their vehicles. Parking spaces specifically designated for the use of owners of property create a sense of security for them as well in terms of assuring that no outside interference is allowed except with the permission of owners.
Think of a situation where a builder offers to separately sell or assign parking spaces to individuals other than those who own some property in the project area or building or offers selling it separately to owners by charging them an amount over their purchase of property and does not allow anyone to park their vehicles in such spaces with spending the demanded charge. These categories of cases directly exploit the interests of buyers or allottees of property by depriving them of a basic facility expected to be provided to them in busy or metropolitan cities and is therefore declared impermissible under the law to protect and safeguard their interest. This Article attempts to deal with issue of builders selling the parking spaces separately.
Legal Framework Governing Parking Spaces
The basic law governing the sale, lease or other kind of transfers of immovable assets like plots, buildings, houses, flats, apartments, or offices spaces through agreements is the Transfer of Property Act, 1882, with other legislations like Registration Act, 1908 supplementing the transfer by dealing with aspects of its documentation. But, witnessing the increase in development projects coming up in the country, the Parliament enacted the Real Estate (Regulation and Development) Act, 2016 (RERA hereinafter) which primarily regulates the promotion, development, sale and maintenance of real estate projects in India. The objective of enacting this legislation ostensibly is to establish an adjudicating authority in the form of Real Estate Regulatory Authority casting upon it the duty to regulate, and promote an efficient and transparent mechanism for, sale of plots, apartments, buildings and real estate projects in India. Moreover, it aims to secure and protect the interests of consumer (buyers/allottees) in real estate sector.
RERA is an enactment of Parliament of India, and several states have legislations regulating real estate sector in addition to RERA. One major legislation and a good example of a legislation regulating real estate in a state is the Maharashtra Ownership Flats Act, 1963 (MOFA hereinafter).
While RERA deals with parking spaces under Section 2 and Section 17. Section 2 defines “common areas”, clause (n) sub-clause (iii) mentions and includes open parking areas within the definition of common areas. And Section 17 mandates or casts an obligation upon the promoter of the real estate project stating that the “promoter shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority, as the case may be, and hand over the physical possession of …………. the common areas to the association of the allottees or the competent authority….”
A joint reading of section 2 and 17 implies that the promoters are obliged to transfer and hand over the possession the open parking spaces to the association of the allottees or the competent authority, as the case may be. This conclusion can be drawn by connecting the inclusion of open parking spaces under the definition of common areas and the mandate under section 17 requiring the promoter to transfer undivided proportionate title in common area in favour of association of allottee or competent authority. Transfer of undivided title presents a necessary corollary that any single individual cannot hold an absolute title over a specific portion of the common area, and hence a portion of common area cannot be sold separately, instead it can only be used as a common space by all the allottees.
Moreover, Section 19 of RERA which deals with rights and duties of allottees, states in sub-section (3) that the association of allottees shall be entitled to claim the possession of common areas as per declaration provided under Section 4 of the Act
Judicial Interpretations and Key Cases
One of the most significant and landmark judgment on the issue of legality of sale of common areas, specifically parking spaces, was delivered by the Hon’ble Supreme Court of India in the case of Nahalchand Laloochand Pvt. Ltd. vs. Panchali Co-operative Housing Society Ltd.[1] wherein the court held at paragraph 40 that promoters are not entitled to sell “stilt parking spaces” separately and the entire land area has to be conveyed in favour of the organization formed for regulating and managing the society or building.
The judicial reasoning given in the above case was that the stilt parking forms part of the common areas in flat accommodations and held that parking spaces are neither flats nor garages within the meaning of law or grammatical sense and does not fall under the sellable category of spaces provided in MOFA.
In a recent case of M/S Anandam Flat Owners Association v. The Principal Secretary Housing and Urban Development the Hon’ble High Court of Madras, while citing the Nahalchand judgment [2] observed at paragraph 8 as follows: “…this Court has little to doubt that the impugned notice demanding payment for parking slot is bad in law and has no legal sanction”
The High Court was dealing with the validity of notices issued directing for the payment of charges for using parking spaces in a society by members of association of allottees.
Another important case on the point discussed is DLF Limited v. Manmohan Lowe and Others[3] wherein the Hon’ble Supreme Court observed at paragraph 35 that: “Common areas and facilities shall also remain undivided and the apartment owner or any other person can use the common areas and facilities in accordance with the purpose for which they are intended without entering or encroaching upon the rights of other apartment owners”
This observation of the court deals with the essential nature and reason for having a common area or facility in an apartment or building. These remarks make it absolutely clear that that no common area could be sold by the builder and an undivided interest shall remain intact with the apartment owners for general and shared use by all of them, without adversely affecting the such rights granted to other apartment owners situated in a same or similar position.
Understanding the Nature of Parking Spaces
To be able to better understand the decisions of the courts referred to in the above discussion, it is essential to distinguish between the terms “common areas” and “exclusive use areas”. While the former refers to areas used as common facilities used by all the allottees in a society or building with an undivided title, whereas the latter refers to the enclosed structures, portions or areas which are meant independent use by one single individual or group and measured with a specified portion of area for their use without interference by anyone, as they have an absolute and divided title over it. Exclusive use areas are separate and self-contained for use of limited or specified people like apartments or private offices.
Once the association of allottees is formed or incorporated, as the case may be, members are collective responsible for the maintenance and administration of affairs of the residential society or building or commercial building. These associations may make regulations for better administration of the common use spaces and other undivided facilities of the developed area like gardens, etc. Moreover, they may contribute in certain proportion for the maintenance of the facilities mentioned.
Conclusion
In Nahalchand judgment[4] the Hon’ble Supreme Court has categorically declared stilt form of parking in apartment residencies as common areas which cannot be sold separately to an individual. Moreover, the RERA also defines common area to include open parking, making it evident that it cannot be sold separately either when read in consistency with Section 17 of RERA.
In conclusion, parking spaces irrespective of its type, whether stilt or open parking, cannot be sold if it forms a part of the development project as they are common use areas and have to be shared and utilised with all the allottees in undivided but regulated proportion as decided by the organization regulating or overseeing maintenance common allotted areas.
[1] Nahalchand Laloochand Pvt.Ltd v. Panchali Co-operative Housing Society Ltd., 2010 (9) SCC 536
[2] ibid
[3] (2014) 12 SCC 231
[4] ibid
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