The Karnataka Apartment (Ownership and Management) Bill, 2025: Reforms in apartment governance

As a result of Karnataka’s rapid urbanization, apartment complexes have become the predominant mode of urban habitation and the State has witnessed a rise in large-scale, multi-phased residential and mixed-use projects. However, the legal framework governing apartment ownership and management in the State has, until now, been governed by legislations enacted in 1972.

In an effort to modernize and consolidate the law governing apartment ownership and management, the Karnataka Government has introduced the Karnataka Apartment (Ownership and Management) Bill, 2025 (“Bill”). This article examines the pre-existing legal framework, identifies its key shortcomings, and analyses the principal reforms the Bill seeks to introduce.

The primary legislation governing apartment ownership and common area management in the State is the Karnataka Apartment Ownership Act, 1972, which was enacted to provide for heritable and transferable ownership of individual apartments within a building. The Act was applicable to properties where the owner(s) have submitted a ‘declaration’ subjecting the apartments to its provisions.

Another legislation, namely, the Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972, which regulates the promotional and transactional aspects of apartment ownership.

In addition to these State enactments, the Real Estate (Regulation and Development) Act, 2016 (“RERA”) is also applicable which is a Central regulatory overlay. RERA has already imposed significant obligations on promoters, including mandatory project registration, pre-sale disclosures, timely formation of associations of allottees, execution and registration of conveyance deeds in favour of allottees, and the handover of common areas to the association of allottees for management.

Despite the existence of multiple statutes, the regulatory framework for apartment ownership and management in Karnataka has suffered from several deficiencies, such as:

1. Absence of a robust association framework. While the Karnataka Apartment Ownership Act contemplated the creation of associations through a declaration, it does not prescribe a detailed framework for the governance of apartment owners’ associations. Issues such as the conduct of elections, quorum requirements, voting rights, the maintenance of accounts, and the resolution of internal disputes are governed by the bye-laws of individual associations.

2. Limited applicability to residential apartments. A further lacuna in the existing State-level legislation has been its restricted scope of application to residential apartments. The 1972 Acts did not extend to commercial properties. This stood in contrast to RERA, which applies to both residential and commercial real estate projects, thereby creating an incongruity between the Central and State regulatory frameworks.

3. Conveyance of common areas. Although RERA mandated the execution and registration of conveyance deeds and the handover of common areas, the State-level statutes did not provide an effective mechanism for its enforcement. For example, States such as Maharashtra introduced ‘deemed conveyance’, that is, the automatic vesting of title in the association in the event of promoter default.

4. Lack of provisions for redevelopment. For older apartment complexes, questions of redevelopment, structural repair, and reconstruction become critical. The existing legislation does not address the procedural or substantive aspects of redevelopment, including the consent thresholds required from apartment owners, the rights of dissenting owners, or the appointment and obligations of a redevelopment promoter.

The key features of the Bill are as follows:

1. Unified legislation. The Bill proposes to replace both the Karnataka Apartment Ownership Act, 1972 and the Karnataka Ownership Flats Act, 1972 with a single, consolidated enactment. This consolidation is intended to eliminate the overlap and ambiguity, providing a single point of reference for all stakeholders.

2. Mandatory formation of apartment owners’ associations. Notably, the Bill applies to all projects containing more than eight apartments or villas in one or more buildings or projects, as the case may be, thereby making the formation of an Apartment Owners’ Association (“AOA”) and adherence to its governance framework a statutory requirement triggered by the scale of the project itself, unlike the Karnataka Apartment Ownership Act, 1972, under which the applicability of the Act depended on the voluntary submission of a declaration by the property owner or developer.

3. Promoter obligations. The Bill imposes specific obligations on promoters during the pre-handover period, including the maintenance of common areas, transfer of funds to the AOA, the provision of audited accounts, and compliance with approved building plans. These provisions are designed to work in tandem with RERA and are aimed at ensuring accountability during the period between the completion of construction and the formal handover of the project to the AOA.

4. Dispute resolution. The Bill establishes a structured dispute resolution mechanism, including provisions for the adjudication of disputes between apartment owners, between the AOA and promoters, and between the AOA and individual owners.

5. Provisions for maintenance, repair, and redevelopment. Recognising the challenges posed by old apartment buildings, the Bill includes provisions for the maintenance, structural repair, and redevelopment of apartment complexes, including the consent thresholds required for redevelopment, the rights of dissenting owners, and the role of the competent authority in facilitating the process.

6. In addition to the above, the Bill also elaborates upon certain other concepts that are typically a matter of disputes amongst the promoters and AOA, including a clear distinction between common parking and private parking, a specific formula for determining the apartment owners’ undivided share in land, formation of ‘federation’ which is a body formed by two or more associations to manage collective common areas for large-scale phased projects, and recovery of maintenance charges as a charge on the apartment.

The Bill represents modernisation and consolidation of the State’s apartment governance regime and aims to address a variety of issues that affect apartment ownership and project management. Having said that, it is important for apartment owners to ensure that the powers granted to the AOA, including those relating to distribution of profits and recovering maintenance charges as a charge on the apartment, are not misused and are exercised in a manner that is consistent with the spirit of the Bill.

The Bill has the potential to significantly strengthen the rights of apartment owners in Karnataka and better governance of apartment complexes.

About the authors: Mrinal Kumar is a Partner and Gouri Kotwaliwale is Associate at Shardul Amarchand Mangaldas & Co.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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