Post construction and sale of residential building, commercial building and plots, management is handed over to the members / owners. Over a period of years handover of building/plot is done to owners in different formations based on various Acts.

Different Type of Formations

First step, for owners to understand is the formation which builder has created for management of society by owners. Formation can be in the form of :

1. Co-operative Societies
   • Service Society
   • Tenant Ownership Housing Society
   • Tenant Co-partnership Housing Society
   • House Mortgage Society
   • House Construction or House Building Society
2. Societies register under Society Registration Act, 1860
3. Association of People under NTC
4. Association of People Unregistered
5. Welfare Association
6. HUF and
7. Individuals

Relevant Acts related to Each Formations

Second step for owner is understand relevant acts, rules and amendments under which members will have to carry out their activity.

1. Co-operative Societies: Gujarat Co operative Societies Act, 1961 and amendments.
2. Association of People under NTC: The Bombay Non-Trading Corporations Act, 1959 and amendments.
3. Association of People Unregistered : As per Bye-Laws
4. Welfare Association: Society Registration Act, 1860

Understanding the Bye-laws

Third step is understanding the bye-laws. Bye-laws are rules formed under which committee and members of the building will have to operate.

RERA Act and Order Number 13 & 18

For building or plots registered under RERA,  Sec 17 of RERA Act is applicable for society formation. Additionally based on queries raised by developers, GujRERA Authority passed order Number 13 on 09 July 2018 which directed builder / developers as below: 

It is also directed that as per the requirement of Section 17 of the Real Estate (Regulation & Development) Act, 2016, the Association of Allottees could not be formed by way of Company, LLP or Society but has to be under the Co operative Societies Act, 1961

Order No 13 was further amended with Order Number 18

Read with the Gujarat Real Estate (Regulation and Development) (General) Rules, 2017 Rule 9 and para(9) of draft Agreement for Sale and as per the requirement of Section 17 of the Real Estate (Regulation and Development) Act, 2016 the association of Allottees could be formed by way of Society under Gujarat Cooperative Society Act 1961 or as a company under Section 8 of the Companies Act 2013.

Above order has cleared the air and builder or developer will be required to form Association of allottees under Co operative society under 1961 or as a company under Section 8 of the Companies Act 2013. This will help owner and members in better understand legality and compliance to be taken care of.

Reference

1. Gujarat Co operative Societies Act, 1961
2. The Bombay Non-Trading Corporations Act, 1959
3. Society Registration Act, 1860
4. Real Estate (Regulation & Development) Act, 2016
5. GujRERA Order – 13 : Dated 09-07-2018 : Formation of Association of Allottees
6. GujRERA Order – 18 : Dated 18-12-2018:  Order / Guidelines for Formation of Association of Allottees.