Deemed Conveyance in Large Housing Complexes: Legal Challenges, Practical Pitfalls & Recommended Approach

Introduction In Maharashtra, deemed conveyance is a powerful legal remedy under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 ("MOFA") and the Maharashtra Government Notification dated 27.09.2010, enabling societies to obtain conveyance of land and building in their name when the builder fails to do so voluntarily. However, in large multi-phase complexes with multiple societies and shared infrastructure, practical and legal challenges arise. This blog outlines the real-world issues and provides a legally sound roadmap for societies facing such scenarios.

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1. Legal Framework

Section 11 of MOFA: Obliges the promoter to convey title to the society or association of flat purchasers within four months of formation.

Rule 11(1) of the Maharashtra Ownership Flats Rules, 1964: Provides the procedure for applying for deemed conveyance.

Section 5 of the Maharashtra Apartment Ownership Act, 1970 (in some layouts): Requires execution of deed of apartment.

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2. Practical Problems in Large Complexes

2.1 Phase-Wise Development and Absence of Composite Conveyance

Builders often register separate societies for each phase/building.

No single apex body gets formed or registered initially to take common area conveyance.

Each society is left in limbo without clarity on common land, infrastructure and amenity rights.

Legal Issue:

As per MOFA and RERA, developers are duty-bound to disclose common areas and must ensure conveyance for the entire layout including undivided share in land and infrastructure.

2.2 Physical Possession Without Legal Demarcation

Parking areas, gardens, and common roads are being used but not formally demarcated or conveyed.

The promoter takes advantage of undefined boundaries to either retain control or misuse the land.

Legal Position:

As per the Supreme Court in Nahalchand Laloochand Pvt Ltd v. Panchali Coop Housing Society Ltd (2010), parking spaces form part of common areas and must be conveyed.

Possession and usage, although indicative of ownership, do not substitute legal title unless backed by formal conveyance.

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3. Federation vs Individual Society Deemed Conveyance

Option 1: Federation Applies for Common Area Conveyance

A federation under the Maharashtra Co-operative Societies Act, 1960 is formed.

It applies for deemed conveyance of common infrastructure, roads, clubhouses, parking, etc.

Pros:

Unified representation for common areas

Avoids duplication and future inter-society disputes

Cons:

Federation can only be formed after conveyance of individual buildings (per Circulars issued under MOFA & RERA).

Delay in forming federation can hold up conveyance.

Option 2: Individual Societies Apply for Building & Adjoining Land

Each society files deemed conveyance for its own building and surrounding area.

Pros:

Faster route for societies to secure ownership

Cons:

No clarity or control over shared infrastructure (e.g., sewage, water, electricity, clubhouses)

May cause overlapping claims on common areas

Legal Suggestion:

Societies should first apply for their own deemed conveyance including a carve-out clause that excludes common areas meant for federation.

Simultaneously, societies should collaborate and register a federation to apply for open spaces and amenities through a second phase deemed conveyance.

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4. Documentation Gaps and Absence of Handover Protocols

In most cases, there is no inventory of what is handed over (equipment, infrastructure, warranties).

No audited statement of expenses or liabilities.

Legal Recommendation:

Societies must insist on executing a Handover-Takeover Memorandum, including:

Asset inventory

Operation & maintenance manuals

Pending liabilities and dues

Transition plan and SOPs

If builder refuses, an affidavit to this effect may be annexed in the deemed conveyance application.

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5. Misrepresentation and Variation in Agreements

Flat purchasers in the same complex find different versions of agreement clauses and varying rights.

Promoters mislead purchasers regarding ownership or usage rights of amenities.

Legal Maxim:

Ex turpi causa non oritur actio (No action arises from an immoral cause)

Builders cannot benefit from concealment or misrepresentation of statutory obligations.

Legal Reference:

Section 4 of MOFA mandates full and true disclosure of layout, amenities and future development.

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6. Refusal to Allow Legal Participation and Transparency

Promoters often refuse video recording of meetings, restrict entry of legal advisors, and deny transparency during transition.

Legal Response:

Societies are entitled to legal representation under natural justice principles (audi alteram partem).

There is no law preventing recording of meetings or restricting advisors.

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7. Recommendation for Best Practice Process

1. Each Society: Apply for individual deemed conveyance for building + defined footprint.

2. Simultaneously: Collaborate to form and register Federation.

3. Federation: Apply for second-level deemed conveyance of common areas post-society conveyances.

4. Documentation: Collect RTI documents, maintain usage evidence, and prepare technical reports for all infrastructure.

5. Legal Audit: Vet all flat agreements and compare promised amenities.

6. Expert Involvement: Engage legal advisors and engineering consultants to prepare handover checklist and inspection report.

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Conclusion Deemed conveyance is not merely a procedural milestone—it is the foundation of legal ownership and operational independence. For large, multi-phase complexes, a dual-path approach is most viable: secure each society's footprint and then collectively pursue federation-level rights. Transparency, documentation, and legal vigilance are key to protecting long-term interests.

Disclaimer: This write-up is for general awareness. Societies are advised to consult legal counsel for specific advice based on facts and records.