Apartment Ownership Act & Valuation
aaaAccording to The Tamil Nadu Apartment Ownership Act 1994, the buildings that are constructed should fulfill the following conditions for attracting the provisions of the above act:
a) The building should contain five or more apartments or three or more floors
b) The construction has been made in accordance with planning and permission under the local laws
c) The building plan should be sanctioned by the Appropriate Authority under relevant laws for the time being in force. So Building Regulations under Municipal Laws and the Tamil Nadu Town & Country Planning Act, 1971 is made applicable and Section 25(2) of this Act makes it clear regarding the application of these acts.
By Section 4 each apartment together with its undivided interest in the common areas and facilities appurtenant to such apartment constitute a separate unit of immovable property within the meaning of the Transfer of Property Act, 1882. Subject to S (6), the apartment owner may transfer apartment by way of sale, mortgage, lease, gift, exchange or in any other manner. Thus the laws applicable to the transfer and succession of property and other laws are made applicable to apartments.
Section (6) explains the concept of common areas and facilities in a property. Each apartment owner shall be entitled to an undivided interest in the common areas and facilities appurtenant to such apartment in the percentage which shall be expressed in the deed of apartment, it shall have a permanent character and shall not be altered and can not be separated from the apartment to which it relates. It shall be deemed to be conveyed or encumbered with the apartment though such interest not expressly mentioned in the conveyance or other instrument. It shall remain undivided, incapable of partition or division of any part thereof. There is no provision in the Act for releasing of the property (Apartment) after registration from the applicability of the provisions of this Act.
Section (21) deals with Assessment: - notwithstanding to the contrary contained in any law for the time being in force, -
a) Each apartment and its percentage of undivided interest in the common areas and facilities and the limited common areas and facilities of such apartment, shall be deemed to be separate property for the purpose of assessment to tax on lands and buildings leviable under such law and shall be assessed and taxed accordingly; and
b) The building or the property or any of the common areas and facilities and the limited common areas and facilities shall not be assessed to any such tax separately.
The Tamil Nadu Apartment Ownership Rules 1997, S (3) defines Common areas and facilities, - The common areas and facilities in terms of clause (h) of S (3) shall be such areas and facilities which are provided on the land marked for apartments and declared as such in the Deed of Apartment.
S (4) Deed of Apartment, - The Deed of Apartment to be executed and registered under S (5) & (11) of the Act shall be as shown in Form 1. It shall be executed by the apartment owner and verified in the presence of the Magistrate or any person competent to administer the oath and shall be filed with the Competent Authority within 30 days from the date of its execution or within such longer period as the Competent authority may permit.
Bye-Laws of the __________Apartment Owners Association, Chapter VIII Mortgage S (52) defines, if an Owner mortgages his unit he shall notify the Association, to the Manager or President of the board, the name and address of the mortgagee and the Association shall maintain such information in a book entitled “Mortgage Units”aaa.
Valuation of an apartment/flat is done by composite rate method.
The composite rate is:
Value of UDS (As per Deed of Apartment) Plus Cost of Flat Divided by Super Plinth area of Flat/Apartment. e. g. The sale price is Rs 4,500/sq. ft, the FSI achieved is 1.5, prevailing land rate in the locality is Rs 4,250/sq. ft, the land component adopting FSI 1.5 is Rs 2,833/BUA sq. ft, the balance of Rs. 1,667/BUA sq. ft is for Building component including the entrepreneur’s risk. The above composite rate method is followed by many Valuation professionals. In a recent Hon. Supreme Court’s judgment (Obiter dictum) in Dilip N. Shroff (Karta of N. D, shroff HUF) V JCIT & Another did not approve this system.
In our apartment valuation, it is suggested to counter check the value arrived by Composite Rate Method with Rental Method & Land & Building Method too
aaa The Tamil Nadu Apartment Ownership Act 1994
A. M. Ibrahim
Kadayanallur – Tamil Nadu