Dangling the clubhouse carrot

Clubhouses are now becoming an attractive part of new housing projects. Many flat buyers are going in for homes in housing complexes with the added incentive of clubhouse facilities attached.

Advice:u00a0Vinod Sampat

Clubhouses can be a boon considering the lack of access to sporting and recreation facilities in this city. Buyers though need to be wary of various loopholes and traps when buying a home in a complex with a clubhouse attached. Advocate and housing expert Vinod Sampat throws light on why it is important to be wary of clubhouse claims by builders and how to read between the lines.

An interview:
Q: An increasing number of new housing projects are offering clubhouse facilities. This is a big lure for buyers in a city, where club memberships have become unaffordable. Comment.
A: The decision to go for it or not is that of the flat purchaser. It is the builder who constructs the complex and has to decide the marketing strategy. Flat purchasers have no say in the same inspite of the fact that it may not suit everybody's budget - for instance, Non Resident Indians (NRIs) and other buyers who may have bought the flat for the purpose of investment and do not reside in the said premises.

Collage/Amit Bandreu00a0for representational purposes only

Q: Should house buyers go in for a society that offers clubhouse facilities, as this is a huge lure and a recreational outlet?
A: The said decision has to be taken by the homebuyer keeping his preferences and budget in mind.

Q: What should a buyer look for in the fine print when it comes to clubhouses? What questions should he specifically ask about clubhouses?
A: The prospectus normally makes a mention that plans as well as the promised amenities are ‘subject to change'. Various clauses in the agreement are one-sided and are 100 per cent in the favour of the builders. Irrespective of the questions raised by the flat purchasers, it is my experience that the builder rarely changes any of the terms and conditions of the agreement. Flat purchasers may ask specific questions such as, what if the promised amenities are not operational by the promised date? Another request that flat buyers may make is to have a clause in the agreement that the amenities are meant exclusively for the persons residing in the complex and should not be made available to other persons.

Q: What are the ways in which builders/agents can dupe people with reference to clubhouses?
A: The builder shows buyers various clauses in the agreement which give the builder blanket right to do things the way he wants to and the flat purchaser would not have any say in such matters. Builders also write that even if the property is freehold property they will ‘lease' the same to the legal entity. Builders want to retain the ownership of the premises, as they are desirous of having the FSI/TDR benefits of the clubhouse and other amenities.

What is written in the agreement is just a contract. The statute is supreme which gives right to the flat purchasers as legal entity for the exclusive control of the said facilities. The provisions of law are crystal clear that when a person is purchasing a flat, he is paying money not just for the four corners of the flat but for the undivided right, title and interest in the common areas and amenities appurtenant (adjoining) to the premises.

Admittedly, the FSI benefits are utilised by the builder. The implications of this are that builders have no right to make a profit from the same. They are trustees of the assets of the flat purchasers. The reality is, many times builders create third party rights in such clubs and provide facilities not only to the flat purchasers but also to other persons who are not residing in the complex. However, all said and done, flat purchasers are not a united lot.

Q: Have you come across certain malpractices with reference to clubhouses by the builders/promoters?
A: Yes.

Q: Can you describe certain cases?
A: The builder retains control over the common areas and amenities. He creates third party rights on such premises in a different company for an indefinite period of time for a nominal amount. He tries to enrich himself / enhance his image by showing that he is doing religious activities in the said place like constructing a temple, giving residential area to the priests, religious persons etc.

Q: Can outsiders use society clubhouses for a fee?
A: In my opinion, outsiders have no legal right to use the said facilities. However, the flat purchasers should be vigilant and should initiate civil as well as criminal action against the builder as many times, builders create third party rights, even before handing over of such facilities to the legal entity.

Q: Can promoters sell memberships of clubhouses?
A: A promoter does not have any right to sell such memberships. He normally creates a company, which sells such memberships. The said act is also illegal.

Q: Do societies have permission to charge extra for clubhouses?
A: It is at the discretion of the society, as it is a matter of internal management of the society. Normally it is seen that such facilities are enjoyed by a group of societies in the said complex through a federation.

Q: What do you see will follow clubhouses as the next trend to lure buyers?
A: The decision is arrived at after taking into consideration the type of potential customers. The builder passes on any incentive given by the municipal authorities to the flat buyers. The focus is on providing quality products for rich flat purchasers. Here the cost of construction as well as amenities is negligible compared to the cost of the land.

Q: What is the role of the government in this scenario?
A: If the authorities have the desire to protect the flat purchasers' interests, all they have to do is make a few amendments in the Maharashtra Ownership Flat Act. These will make the builder liable for certain offences, which will be cognizable offences, such as taking hefty amounts as deposit till the building completion certificate is received and conveyance is executed. The Housing Department has literally no idea of the activities being carried out by the builder. It's just passing the buck from one department to another. And the show has been going on for the last 50 years.

Club Claims
1 In a concrete jungle like Mumbai, residents feel that clubs offer them rest and recreation (R & R) through sporting facilities and at least some greenery, including walking tracks, which are a big lure.
2 Many complex clubhouses come with a ‘hall' that can be used for parties, function and get-togethers, which members can rent out for a fee.
3 With club memberships in Mumbai going for lakhs and waiting lists being very long, even if you have the money, most memberships are virtually closed or out of bounds.
4 Flat buyers are promised the earth in terms of clubhouses at the time of buying flats. Sometimes, amenities are exaggerated or rosy pictures are painted which do not translate into reality. In a status-conscious society, they put you high up in the pecking order of flat buyersu00a0 u00a0