Why is the conveyance of property in the name of Co-operative Housing Societies important?

If you look at the bye-laws of a cooperative housing society, you may find that the main objective of a CHS is to obtain the conveyance from the landowner/developer in its name. Conveyance is a transfer of the title deed of land and building by the builder and developer/landowner in favour of housing society by execution of conveyance deed. The developer should execute the conveyance deed within 4 months from the date of registration of the co-operative Society as per section11 of Maharashtra Ownership flat Act 1963. After the registration of conveyance deed in favour of co-operative society, the title of the property is, in conclusion, to be recorded in the property card and revenue records, so that the property becomes a free and marketable asset of the society.

If the conveyance is not executed in favour of the Society, the Society does not have legal rights or ownership of the land on which the Society’s building stands. If the legal title of the land and building is not in the name of the society, it is not possible for the society to take up redevelopment projects of the building at some stage. Even for using additional FSI or for carrying major repairs, Municipal authorities will insist on NOC from the Landowner of the building.

The other drawbacks of non-conveyance of property are listed below.

1. Though all the members of the society have purchased the ownership flats, legally members of the society are not the owner of the land and building.
2. The developer /owner may sell the entire Development Rights and the Legal Rights of the land to third party involving the third party interest in the property. In such a case, the Society will have to incur an exorbitant amount of expenses to clear the same which may be difficult for the society to withstand.
3. In the unfortunate event of building collapse or damage sustained by the building, the Society cannot reconstruct the building without the permission of the Developer/land owner.
4. In the case of emergenies, Society cannot borrow money from financial institutions by mortgaging the building property as a security.
5. The developer /owner may transfer the FSI/TDR of building to his other projects and enjoy the commercial benefits, depriving the flat purchaser/Society of it legal entitlement.
6. There is also a possibility that the developer may mortgage the property as a legal owner holding the title deeds of the property.
7. The developer/land owner may make profit by sale of open spaces, gardens, terrace and parking spaces supposed to be belonged to the society.

It is the common experience of housing societies that the builders do not transfer the title of the property (ownership of the property) to the co-operative housing society because of benefits to him as explained above. However, many societies do not initiate any action against the builder for conveyance property due to ignorance of members of the society even committee members regarding the subject matter and lack of knowledge/information, which can be disastrous to the flat owners in long run.

In a situation when a promoter or owner of residential premises/ buildings does not transfer/convey the ownership of the flats to the housing society, in spite of communications/reminders to them to do so, the society can make an application to the Registrar of Co-operative Housing Societies u/s 11(3) of Maharashtra Ownership Flats Act, 1963, to transfer the ownership of the said land and building to them. Later, the Application is heard by the Registrar and he may grant an order for deemed conveyance. The order for deemed conveyance received from the Registrar, same shall then be produced before a court for execution. Subsequent to the registration of conveyance deed in favour of co-operative society through the court, the title of the property is to be recorded in the property card and revenue records. This process is known as deemed conveyance.