VILLAS IN MIXED-USE DEVELOPMENTS – STRIKING A BALANCE

BY Realty+

Mr. Nandur recently purchased a villa from an upmarket developer. The brochure said that he would own plot with an Italian styled spacious villa built thereon. The idea was superlatively exciting for Mr. Nandur. The villa was tucked away in a beautiful corner of a mixed-use development comprising of over 8 residential towers or apartment blocks, villas, a commercial building, club houses, swimming pools, sports arena, garden areas, pet parks and a very impressive cultural zone. 

The paperwork was not painful, and the developer was able to offer pre-approved loans. The agreement to sell was presented by the developer and Mr. Nandur was glad to note that he possessed the exclusive right to use and occupy the villa plot and the same was identified by way of a coloured block in the layout sketch attached to this agreement to sell. Developmental related approvals and copies of the same were also provided to Mr. Nandur.  

The villa was ready for occupation and relevant approvals were obtained by the developer. The developer executed a sale deed and the possession of the villa was handed over to Mr. Nandur. The developer also executed a Deed of Declaration, subjecting the entire development including common areas and facilities under the provisions of the Karnataka Apartment Ownership Act, 1972 and an association was set up comprising of both the apartment and villa owners.

For a couple of years, matters relating to the administration of the entire residential portion of the development seemed to operate smoothly, but gradually the villa owners were faced with some issues which were unique only to them.  For instance, the area of the development housing the villas required a very different type of drainage maintenance as opposed to the drainage system maintenance of the apartments. The issues and grievances raised by the villa owners at the meetings of the association, garnered little support as they were outnumbered by the owners of the apartments. 

Although the coverage area of the villas in the overall development was larger, the apartment owners being fewer in numbers are often placed in a disadvantageous position in having their say in matters relating to the governance and management of the overall development and more specifically to enforce matters unique to their dwelling units and surrounding spaces. Their collective voice is weaker than the majority voice of the apartment owners and it’s a herculean task for a villa owner to be elected to the apartment owner’s association. 

The villa owners are constantly in a state of displeasure and aggrieved by their inability to propose any mechanism to resolve the stalemate between them and the apartment owners in matters concerning the villa owners. 

Being an owner of a villa, in a multi-use development, Mr. Nandur realised that while he has physical and exclusive possession of the villa and the plot, he had little or no leverage to undertake any changes or alterations to the villa - like closing an open balcony or adding an additional room on the open portion of a floor. The agreement to sell and sale deed executed between 

Mr. Nandur and the developer had several restrictive clauses which prevented him from undertaking any form of alteration or modification to the villa. This is when he realised that although the villa plot and the building constructed thereon was sold to him, with the plot being marked exclusively for his use and occupation, he did not own the plot by way of ‘metes and bounds’. 

The floor space index (FSI) which would have been otherwise available for full exploitation of the villa plot only, is now leveraged across the entire development. However, this issue did not seem as large and overbearing as much their inability, as villa owners, in having an active say in the matters of the association. 

In these situations, developers would have to adopt a balanced approach to ensure that the interests and rights of villa owners are adequately protected. The deed of declaration and the bye laws of the association when adopted, should make appropriate reservations for the villa owners in terms of their voting rights and representation on the management of the association.

Further, to the extent possible and permissible under applicable laws, flexibilities should be provided to ensure some rights to villa owners which may be specific to the upkeep of their dwelling units. Finally, in the case of any mixed-use development, it would be advisable for the developer to execute and file the deed of declaration and the byelaws prior to the execution of the sale deed and handing over possession and not wait for the deed of declaration to be executed and registered by the owners of the development. 

Tags : villas development balance Gerald Manoharan Partner JSA Sanmathi Dayanand Associate JSA