Comparison Between A Condominium And A Society

Though the condominium is more than a forty-year-old ownership concept for buildings in Mumbai, it is the cooperative society model which has been the most popular so far. However, in recent times, the concept of a condominium is slowly gaining momentum. Buyers who purchase premises on an ‘ownership’ basis require to come together to manage the building and for that purpose, one of the ways is to form a cooperative society, which is governed by the Maharashtra Cooperative Societies Act, 1960 which has 168 sections and 86 rule and out of 168 sections more than hundred sections are applicable to the CHS. There are a total of 175 byelaws.

An alternative to a cooperative society was introduced by the Maharashtra Apartment Ownership Act, 1970, which provides for the formation of a condominium. Apartment act Has only 28 sections and 9 rules and 55 byelaws. The buyers of premises in a condominium are called apartment owners who form an association known as an ‘association of apartment owners’, in case of both, residential as well as non-residential premises.

Although the basic purpose of both the models is similar, there are many differences between a society and condominium, some of which are:

CONTROL OF GOVERNMENT DEPARTMENT: For CHS there is cooperative department which controls the affairs of the society. For condominium control of the government department is very limited.

FORMATION: To form a society, generally 5 persons, each from a different family who reside in the area of operation of the society (within the same city) and who have taken premises in the building, would be required. However, even one person who owns the entire building can form a condominium provided there are at least five apartments in the building.

OWNERSHIP: In the case of a society, the title of the land and the building is conveyed to the society, which becomes the owner thereof. Persons who have purchased premises are made members of the society and are allotted the particular premises. In the case of a condominium, the title of each apartment rests with the apartment owner, who also has a proportionate undivided interest in the land on which the building stands, the common areas and facilities of the building.

BYE-LAWS: A society adopts the model bylaws which has 175 byelaws in which little can be changed. While adopting the bylaws in a condominium, suitable changes can be made, so long as the provisions of the Act are not contravened. Apartment condominium has only 55 byelaws.

SHARE CERTIFICATE: A society issues certain shares to its members, as per the bylaws and the share certificate becomes an important title deed, since the allotment of the premises are related thereto. This is not so in a condominium.

MANAGEMENT COMMITTEE ELECTION: The affairs of the society are managed by the managing committee, which is elected by the members of the society. The managing committee elects a chairman, secretary, and a treasurer. There is a cooperative election authority who conducts election for CHS.

Similarly, the affairs of a condominium are managed by the board of managers, who are elected by the members of the apartment owners association. The board also elects a president, vice-president, secretary and a treasurer. There is no election authority to have control over the election of an Apartment. Election Rules are very limited.

TRANSFER FEES: Under the model bylaws, a society can charge only Rs 500 as transfer fees and a maximum of Rs 25,000 as a premium. In case of a condominium, the bylaws can be more flexible and the amount of transfer fees can be provided therein.

PERMISSION TO LET: In a condominium, the owner can give his apartment on lease or leave and license basis without informing the board of managers, while in a society, Flat owner has to inform the society. Cooperative housing societies can charge a maximum 10% of the Service charge as non-occupancy charges.

Condominiums have no such directions and  rules.

VOTING RIGHTS: In a society, every member has one vote, irrespective of the area of his premises. In a condominium, every apartment owner has a voting right in proportion to the value of his premises, which is generally as per the area of the apartment owned by him and which is defined while forming the condominium.

MEMBERSHIP: In CHS there are member types i.e. joint member (co-owner), Associate Member (Blood Relative), Provisional member (Nominee after death of the member) All types of members can attend general meeting, all have voting rights after fulfilling the conditions,

In a condominium only the first owner has the right to vote.

DISPUTES: In a society, disputes are generally referred to the registrar appointed under the Act or to a cooperative court, depending on the nature of the dispute. In the case of a condominium, the court having jurisdiction over the area in which the condominium is located, hears the disputes.

EXPULSION: A society can expel its members under certain extreme circumstances. The Registrar approves the expulsion. Society has to follow the procedure laid down in the cooperative act and rules. In a condominium, there is no such provision. However, if an apartment owner fails to comply with the bylaws or the rules and regulations, either damages or injunctive relief or both can be claimed against him in the civil court.

NOMINATION: In a society, a member can nominate a person in whose favour shares of the society should be transferred upon the member’s death. No such facility is available in a condominium. An apartment can be transferred to a person to whom the apartment owner bequeaths the same by his will or to the legal representative of the apartment owner’s estate.

RECOVERY OF DUES: CHS  can obtain recovery certificate from registrar of the area/taluka, within 4 to 6 months recovery certificate  can be obtained. Apartment Owner association has to approach civil court which is time consuming  and costly.

ENQUIRY OF THE AFFAIRS OF THE COMMITTEE : 1/5 of the members can demand for enquiry of the affairs of the society u/s 83 of cooperative act in case of any doubt. There is no provision to file complaints with any government department. Apartment owner has to approach the civil court which is time consuming.

Audit : CHS Audit has to be done in accordance with the section 81 to 89A

81. Audit. . . .
82. Rectification of defects in accounts. . . : If the audit discloses any defects in the working of a society, the society should within three months from the date of the audit report, explain to the Registrar the defects on the irregularities pointed out by the auditor, and take steps to rectify the defects and remedy irregularities, and report to the Registrar the action taken by it thereon
83. Inquiry by Registrar. . .
84. Inspection of books of indebted society. . .
85. Costs of inquiry and inspection. . .
86. Recovery of costs. . .
87. Registrar to bring defects disclosed in inquiry or inspection to notice of society.
88. Power of Registrar to assess damages against delinquent promoters, etc.
    88A. Deposit towards fees of inquiry. . .
89. Power to enforce attendance, etc. . .
    89A. Power to inspect working of society. . .

Condominium Audit rules are not framed, the government has no control over the audit of the society. There is no specific provision in the apartment act for the Rectification of defects in accounts.

POWER OF SUSPENSION OF COMMITTEE :Registrar has power of suspension of committee due to various reasons. where a situation has arisen in which the committee or any member of such committee refuses or has ceased to discharge its or his functions and the business of the society has, or is likely to ; come to a stand-still, or if serious financial irregularities or frauds have been identified.

Apartment act has not given such power to any Government authority.

APPOINTMENT OF AN ADMINISTRATOR OR ADMINISTRATIVE COMMITTEE :  CHS Registrar has powers to appoint an administrator or committee of administrators consisting of three or more members of the society otherwise than the members of the committee so suspended in its place or appoint an administrator or committee of administrators.

Apartment has no such provisions.

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