Thursday 26 September 2013

What is Undivided share in land

What is “Undivided Share in Land” and why it should be mentioned in your agreement ?


You bought your “Dream Home” and you are on top of the world. The joy and pride 
you have after buying your home is amazing. The property is at a great location and 
the prices are appreciating, and you feel you are the Hero ! . Now you want to 
sell your flat for some reason and you are more than confident that you will get a 
the buyer and the deal will take just a few weeks and you will be bathing in cash from 
top to down.

Prospective buyers have started meeting you and they want to buy the property, but 
they are all rejecting it. They are “informed investors” who take care of every 
single detail and they ask you that killer question -

“Everything is fine, but where is your undivided share of land (UDS) in 
Agreement?”You are wondering what's going on, quite amazed only to realize later 
that you were only sold the building which is depreciating each moment, but “LAND” 
, which is the real thing is not owned by you.

You are SCAMED or FOOLED ! Or both ! . Let me introduce to the term “Undivided 
Share of Land” or UDS as its called generally in real estate world and why you 
Can't ignore this at any cost while purchasing properties.

What is Undivided Share of Land (UDS) ?I will keep it short and simple. Undivided 
Share of Land is the share of land owned by you when you purchase the property. 
Basically when you buy a flat or apartment, you are buying two things

1. The constructed building – where you actually reside
2. The proportionate share of the land, where the whole property is built

The Price Appreciation in real estate actually is the appreciation in land prices, 
Because technically the building will depreciate over time. It's not that cement and 
concrete structure which is the prime thing, but the land. Have you ever thought 
what will happen if there is an Earthquake and the building collapses ? What is in the 
future, the govt wants to acquire the land for some national project and wants to 
give compensation to you ?

Leave all that, imagine in the future your building after many years needs to be 
Redeveloped and a new construction have to happen. At that time, the amount of land 
you own will matter. Note that in case of co-operative societies, the Undivided 
Share of Land might be in the name of society and not on the home owner name, 
because they are share holder in the society, which is fine.

The sum of all the flat owners UDS has to be equal to the property land size. You 
should also know that the undivided share of land will be proportionate to your 
property area.

Example 1 – If there is land measuring 1,000 sq and there are 10 flats or equal 
size is constructed on that land, then each owner will have 10% of the land as 
his/her share.

Example 2 – Lets say there is a big township where 100 units of 2 BHK flats of 
1,000 sq ft and 50 units of 3 BHK measuring 1,500 sq ft . Then the total constructed 
area is (100 units * 1000 sq ft) + (50 * 2000 sq ft) = 2,00,000 sq ft . Anyone who 
owns a 1,000 sq ft flat will have 0.5% share in the total land (Because 1000 is 
0.5% of 2,00,000) and anyone who owns a 2,000 sq ft flat (3 bhk) will have 1% UDS .


There has been cases where the builder has allocated less undivided share to flat 
owners and kept some part of himself and the original land owner (a lot of times, 
Builder buys the land from someone else). Here is one such example

Current apartment which I am staying is 10 years old apartment. Building having 
total 24 flats. Whereas builder made total 26 undivided share. Other than 24 flat 
Owners one share for builder and one share for Land owner. In the share of builder 
and Land owner they constructed few shops in building cellar. SOURCE

Important Point – The above example is for apartment system . If its a Co-
Operative society, then the land share is equal for each member, irrespective of 
their property size.


What to check in the Agreement ?When you buy the property, your builder will give you a date when you have to come to the registration office and all the agreement work will be done. Most of the times, builders are reluctant to show you the agreement copy. But they will be ready to share someone else agreement copy at their office or at the main site.

Just have a look at that agreement which is like a specimen or the format, on some 
of the page, you will see “Details of Undivided Share of Land” and it will be 
mentioned in percentage terms like “0.45%” or exact area in sq ft terms. Just read 
the whole thing carefully.

Then when the actual agreement has to take place, you can then read the agreement 
in detail and make sure you look after this point in your agreement copy. A small 
tip here is that when builder calls you for registration, tell him you would like 
to come before 1 hour from the scheduled time and have a detailed look at the 
the agreement, if possible also gets a lawyer with you and have him look at the 
Agreement.

So did you check your agreement copy and see how much Undivided share of land you own ?

Friday 13 September 2013

Dy. Registrar letter regarding Audit of society and to upload the Audit report online

Following is the  letter [1 sample] issued by Dy. Registrar of C.S. Vasai  to all Auditor regarding audit of society and  to upload the Audit report online to the website. This type of letter is issued by All Dy. Registrar of C.S. In Maharashtra to all Auditor. 










Monday 2 September 2013

Salient features of the Maharashtra Co-operative Societies (Amendment) Act 2013

Some of Salient features of the MCS Act 1960 [AMENDMENT 2013] is as follow 

Some new provisions threaten the interests of voiceless and vulnerable sections such as aged citizens, troubled spinsters and NRIs. Such suffering and marginalized citizens – who are normally shy and reticent in every society -- will be compelled to attend general body meetings, or lose their voting rights or worse still, face expulsion, eviction notices etc. Their only hope lies in either being condoned by the very general body (which often acts as a mindless mob in the hands of the managing committees, victimizing and ostracizing such people) or in rushing off to appeal to the unresponsive and often corrupt officials of the cooperation department. Even if such society decisions are overturned after months or years of struggle, these vulnerable people will lose their peace-of-mind.

Other new provisions are a big blow to the influential managing committee members and society employees who carry the cooperative movement on their shoulders. Failure to comply with various deadlines can result in severe consequences, including dismissal, disqualification from contesting elections and cash penalties. Vindictive and vexatious members – who are present in every society – can invoke these provisions to do great damage to the society’s peaceful functioning. Auditors, who earn relatively small amounts (like Rs 2,500/-) by auditing the society’s accounts, are given the extraordinary mandate of filing an FIR (First Information Report) at a police station. Whenever this happens, managing committee members will become aaropi in an FIR, which may drag on for years, and result in needless harassment to managing committee members without coming to any conclusion. Currently, uniformed cops are a rare sight in societies; but now, as the new provisions slowly seep in, cops coming into societies and office-bearers being summoned to police stations will become a common sight. Needless to say, instances of bribery will become common.

The amendment has given the law some sharp edges, and also has guidelines and definite dates to societies for smooth functioning. It sets the bar on society administration unrealistically high. Below are the major changes in a nutshell.

ABSOLUTE DEADLINES:

Audits: Last date for getting books of account audited is four months after the close of financial year 31st July of every year.

Annual General Meetings: Last date for holding AGM is 30th  September. Default in this respect is almost certain to result in disqualification of the Managing Committee members for five years, and a cash penalty for responsible employees of upto Rs 5,000/-

Informing Election Authority when an election is due. The State Cooperative Election Authority must compulsorily be informed at least six months before the expiry of the present committee’s term of office. Failure to inform will disqualify them from contesting the elections.

Elections within 6 months in the case of managing committee being suspended. In case the managing committee is superseded for any default of theirs, and administrator/authorized officer is appointed by the Registrar, elections must be compulsorily held within six months, and control must be returned to the society members.

CHANGES REGARDING ELECTIONS:

Immediate voting right. Members of housing/premises society are now allowed to vote immediately after enrollment. The earlier provision required a waiting period of two years.

In a society not having any government grant or loan, no Administrators will be appointed. Instead, an active member or group of active members who were not members of the earlier managing committee (which has been suspended) may be authorized to act as “Authorized Officer”. In a Society has government aid, an administrator may be appointed, but for six months only.

Only active members will have the power to vote in the affairs of the society including elections. Also, a non-active member cannot contest the election.  A member who does not attend at least one general body meeting and does not utilize the minimum level of services as prescribed in the bye-laws is liable to be classified as “non-active member”, unless his absence is condoned by a general body resolution.

CEOs, Functional Director and other employees will be considered as“representatives” of the society, but not “members” for the purpose of voting. 

Reservation of three seats for members from SC/ST/OBC etc. and two seats for women-members. This means that over and above the regular seats on the managing committee, there will be five reserved seats to be filled up by election from such class of members. If such seats are not filled up by election, then they may be filled up by co-opting or nominating suitable members.

The State Co-operative Election Authority will prescribe procedures and manner of holding elections. Even casual vacancies must be filled up as per such procedure, and under the scrutiny and supervision of this authority.

AUDITS & COMPLIANCES:

Tough audits. Each and every society must appoint a statutory auditor from an approved panel of qualified auditors, and have their books audited by them in deadline. The auditor is mandated to point out the particulars of the defects or the irregularities observed in the audit.

FIR against managing committee members etc. In case of financial irregularities, misappropriation or embezzlement of funds etc., The auditor is required to investigate and report the modus operandi, the entrustment, amount involvement and file an FIR with the police as per Criminal Procedure Code, after getting necessary permission from the Registrar. If the auditor fails to do so, he may be disqualified from the government panel, and also, the Registrar is required to get the FIR filed by authorizing someone suitably.

Fines for offenses under Section 146 have been enhanced. For example, where the penalty was Rs 500/-, it has been raised to Rs 5,000/-.

For assistance with statutory compliances, legal and financial matters, societies are encouraged to appoint expert directors. Expert directors are defined as persons with experience in the field of banking, management, finance, and cooperatives, and includes a person having specialization in any other field relating to the objects and activities undertaken by the concerned society.

ASSESSMENT -- POSITIVE IMPACTS:

a)      Active members are empowered. Members – including managing committee members -- who are negligent in attending meetings may lose their voting rights after five years. On the flip side, those who diligently attend meetings may be rewarded with more power, and appointed as “authorized officer” if the managing committee trips up. They will gain all the powers that administrators enjoy, for at least six months.

b)      Administrators will normally not be appointed if there is no govtmoney involved in the society. If there is a vacuum of power due to managing committee being unable to function, then active members will normally be appointed as “authorized officer” or “interim committee” by the Registrar. Only if there are no active members available to fulfill these responsibilities will an outside person be appointed as “authorized officer”

c)      Regular education & training for office bearers. Apex Co-operatives or State Federal Society will be required to conduct education and training in running of cooperative societies.  Managing Committee members and employees must compulsorily attend training at least once in five years. Each society is required to set aside funds to pay for such training.

d)      Co-op. The court will encourage Win-Win compromise, not Win-Losejustice. Cooperative court is mandated to seek settlement on terms that are acceptable to both the parties, through arbitration, conciliation, mediation etc.

e)      Deadlines must be strictly followed. Managing committees are required to now observe strict deadlines for completion of the statutory audit, submitting returns to the Registrar, holding the Annual General Meeting etc. Missed deadlines will have serious consequences such as disqualification of the managing committee, with no chances of being condoned. This may lead to better recordkeeping and management.

f)       Professionalism in management. Societies are mandated to adopt modern methods and technologies for management, record keeping, compliance with deadlines, statutory requirements etc. For this, they are encouraged to appoint professionals as “functional directors” and “expert directors”.

g)      Auditing is beefed-up. Statutory auditors will have to be appointed, and they are mandated to strictly ensure that accounting is proper.

h)      Filing First Information Report (FIR) will be filed in case of fraud, misappropriation etc. If manipulation of accounts is suspected, auditors and Registrar are mandated to register FIR with the police against the managing committee. In many wealthy societies, where office-bearers who have been skimming away handsome amounts and ordinary members have been struggling to expose them, a scalding hot cup of justice is about to be served!

ASSESSMENT -- NEGATIVE IMPACTS:

a)      The 97th Amendment (which was NOT entirely struck down) has added a Directive Principle of State Policy to ensure “autonomous functioning” and “democratic control” of cooperative societies. So, it is sad and ironic that many provisions of the Amended MCS Act are diametrically opposed to autonomous functioning. They have the potential to vitiate the cooperative atmosphere and harm housing societies in the following ways:

b)      Curbing their autonomy and creating scope for constant interference by officials from State Cooperation Department, State Co-operative Election Authority etc.

c)      Giving scope for police interference and bribery, and making some managing committee members “aaropi” (accused persons) in criminal cases, which may drag on for years with “tareekh-pe-taareekh”.

d)      Declaring aged people, widows, NRIs etc. as non-active members for not attending meetings, depriving them of voting rights and ultimately expelling and evicting them from the flats. This is a grave violation of their fundamental rights. Although there is a provision for the general body to condone their absence, it is well-known that the general body often acts as a mindless mob, and can be vengeful to individuals who do not tow the line.

e)      Disqualifying managing committee members for petty procedural reasons. The many provisions for disqualifying the actual doers in societies will make them vulnerable to some vexatious and vindictive society members.

f)       Giving additional scope for disputes in co-operation department and lengthy court litigations arises from the increase in the number of statutory deadlines will cause

g)      Poisoning the atmosphere with divisiveness, caste-based quarrels and misuse of Atrocities Act, due to caste-based reservations mandated in every society. So far, nobody knows the cast of their neighbors, especially in cities like Mumbai. But now, caste-knowledge and caste-insults will be in everybody’s tongue.