Consequences of living in unregistered condominiums

M. M. Abul KALAM

Many developers have sold condos that they built in the mid and late nineties on mere sale agreements. The residents were not bothered at the time of such purchase about title deeds in respect of their transaction.

On a sale agreement possession of apartment unit was transferred but the ownership remained with the developer. After sometimes those who wanted to get title deeds for their units from the developer realized that the developer has not taken further steps to register the condo plans with the Registrar of Lands in the respective area and as such they are unable to get their title deeds.

This irregular practice was tolerated by the Registrars until 2004 even after the Amendment Act in 2003. In 2004, the Condominium Management Authority (CMA) under my Chairmanship took steps on the direction of the Housing Minister to implement the provisions of the Amendment Act of 2003 with regard to registration of condo plans.

It was no easy task to put the provisions into practice. A lot of ground work and lobbying and correspondence were made between the stakeholders concerned.

Registrar General’s circular

In 2005, the CMA sent several letters to the Registrar General (RG) requesting him not to register any condo plans and declaration without the Certificate of Conformity from the CMA in terms of S. 3 of Apartment Ownership Act No. 39 of 2003. This did not materialize initially and there was no awareness among the officers of the RG’s Department. So we decided first to create the necessary awareness.

Additionally, thereafter I also wrote to the Attorney General to give a ruling and/or opinion on the legal position of the CMA’s request to RG. I felt that this would make the RG comfortable in issuing circulars to all Registrar of Lands under him throughout the island. I also had few meetings with late Attorney General K. Kamalasabayson PC and incumbent Solicitor General P. Dep, PC. I got my GM and legal officer to follow up with the other relevant officers at the AG’s Department.

In my letter to the AG, I explained the untold hardships the residents encounter on account of the non-compliance of this legal provision and requested for a clear ruling on the strict implementation of the provisions by the Land Registrars all over the island. Accordingly, the AG confirmed the legal position of the CMA and it was communicated to the RG thereafter.

It was thereafter the RG issued a circular dated July 11, 2006 and No. PN 01/CP/Circ/2006. By this circular, the RG instructed all the Land Registrars for strict compliance of this legal provision. It is only after this directive, all pending issues on registration of condo declaration brought under control and things started falling line.

Following this circular by the RG, the Land Registrars in the periphery, started refusing to register the Condominium Declaration and Condominium Plans and deeds without the certificate of conformity of the CMA. It is only thereafter the developers/owners in the condominium industry turned to the CMA for the CMA’s certificate for common elements and common amenities.

Time limit for registration

According to s. 3(2) (a), the condominium plan shall be registered “within 18 months from the date of first sale or agreement to sell or 3 months from the date of the completion of such building whichever is earlier”.

According to s. 3(2) (b) “within six months from the date of completion of such building, if the sale or agreement to sell of any parcel of the building, which the first of such sale or agreement to sell took place, after the date of completion of such building”.

The CMA has found that in many condos these legal provisions have not been adhered to either by ignorance or by design. Some developers have sold the condominiums either fully complete or partly complete on mere sale agreements and have disappeared from the scene.

With the implementation of the above provisions by the CMA, the bona fide purchasers have realized that their developers have duped them by selling the apartments on a mere sale agreement.

According to s. 3(4) of the Apartment Ownership Act No. 39 of 2004, the CMA can prosecute such defaulted developers. S. 3(4) read as follows: Any person who contravenes the provisions of subsection (2) or subsection (3) as the case may be, shall be guilty of an offence and be liable on conviction after summary trial before a Magistrate to a fine not exceeding rupees fifty thousand and to a further fine not exceeding rupees fifty thousand and to a further fine not exceeding rupees one thousand for each day the offence continues to be committed, after such conviction.”

Prosecution by CMA

The word any person in this section means and include in the CMA’s point of view the developer. The word ‘developer’ is not mentioned in the relevant section. The word used here is the ‘owner’. That means the owner on whose land or by whom the condominium project was undertaken and with whom the purchasers of individual units had entered into sale agreement.

According to interpretation of the Act, the ‘owner’ means the owner of the land immediately before the subdivision thereof.

This owner is totally different from the unit owner. That unit owner is a member of the Management Corporation.

But the CMA has been in a dilemma in some cases where the owners or developers are either deliberately absconding or migrated having sold the units with or without completion or partly completed or fully completed but has contravened the mandatory provisions for registration. There are instances where the owner is a company and the company is wound up or liquidated after the so-called completion of the project having successfully sold the units to innocent purchasers on sale agreements.

In such cases, the CMA has advised and encouraged the current unit owners to get together and form a transitional management committee and to proceed with the process of registering the condominium plan. We have dispensed with the legal time bar in such cases have been acting with the best interest of the unit owners. There again I have seen the difficulty that the good Samaritans had to undergo in convincing some unit owners.

There are some honest owners /developers who have fulfilled their legal obligations even after the time limit and have discharged their legal obligation even at the heavy loss of the project. We have not prosecuted such honest developers/owners for the delay in registering the Condominium Plan.

The CMA has so far successfully prosecuted some defaulting owners/developers under S. 3(4) of the Act both in Mount Lavinia and Colombo Magistrate Courts. This prosecution has sent very strong, loud and clear message to the defaulters and also has asserted the quazi judicial power of the CMA.

The writer is an Attorney at Law and Chairman of the Condominium Management Authority - CMA)