What happens if group housing property is damaged or destructed or aged

We have received this query from our readers very often as to what will happen to their high rise property in case the construction is old enough to be destructed or if in worst case, there is a complete damage of the said property (e.g. say in cases of earthquake).

For the clarifications of our readers, either one of the two events would take place:

1) RWA can decide to re-construct/re-build the property. Generally re-construction is done on same tower plot size. Owners may pool money among themselves for construction or RWA may construct 4-5 more floors which can be put on sale to bear the construction cost. Mostly, as seen in Mumbai and Kolkata, the latter is the practice hence apart from a year or two of construction, it means no major financial loss to the owners.

2) If RWA decides not to construct, in that event:

a) The property shall be deemed to be owned in common by the apartment owners;
b) The undivided interest in the property owned in common, which shall pertain to each apartment owner, shall be the percentage of the
undivided interest previously owned by such owner in the common areas and facilities;
c) the property shall be subject to an action for partition at the suit of any apartment owners in which event, the net proceeds of sale together with the net proceeds of the insurance on the property, if any, shall be considered as one fund and shall be divided amongst all the apartment owners in the percentage equal to the percentage of undivided interest owned by each apartment owner in the property after paying out, all the respective shares of the apartment owners to extent sufficient for the purpose and all charges on the undivided interest in the property owned.

In short, point 2 implies that the owner’s share in the plot on which tower is built and his/her share in common area based on flat size (this is defined as part of form A submitted by builder to authority) combined forms the owners complete share in total fund received as part of sale of the property plot.

Hence, there is no major worry for the owners. Its a hassle but not a financial loss.

Hope it helps!!!

Comments/Feedback invited.

Last updated: May 1, 2015 at 3:49 am

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robby sharma

Your point 1 is wrong the RWA will not be able to build extra floors as the builder will most likely have used up entire f.s.I. Even if the government increases the f.s.i to give relief the flat owners will loose money because the buyers of extra floor will get undivided interest in land diminishing the interest of all the original owners.

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