What Apartment Owners Association Rules State About Running Small Businesses From Home

If you have a potential business idea or service that you want to try out in mind, it is always wise to consult the managing committee in your apartment association well in advance. Having a small chat with the managing committee members of your apartment association can set a lot of things straight and can help you learn more about the rules and regulations involved with running a business from your flat in the apartment complex.

The Rising Trend

Workspaces are now shifting, and people no longer have to necessarily work from offices. With the advent of the internet, people can work from home with the help of a constant internet connection. Freelancers are popping up everywhere, and this is slowly turning out to be the latest mantra.

It’s likely that many people are continuing to work from home without any idea about the regulations or rules that they may be breaking. This is not a wise move, as this may turn out to be a problem sooner or later when other residents start noticing the general happenings.

Setting up home office can be tricky

Setting up home office can be tricky

So where do apartment complexes in India stand when it comes to using residential houses for commercial purposes?

The answer for this question depends on the type of business carried out. Every apartment association may have a different take on the same issue. In an overall view, using a residential apartment for business use is strictly prohibited, regardless of whether the business is conducted by the members of the household, or by a third party. The general laws state that residential units can be put to commercial use in a scale of 20%.

Do apartment association bodies have byelaws that pertain to this scenario?

Any apartment association worth its salt will have regulations that cite such instances. However, the laws state that a residential unit should not be put to ‘commercial use’. Not all jobs fall under this broad category, and this is exactly why you should consult the members of your apartment association and ask them for their views.

Commercial activities are defined as activities that involve the purchase, production and sale of physical goods, as per the law. Any kind of service provided does not fall under this category, and if that’s what you’re looking to do – your apartment association can give you the go-ahead.

Providing Services

Commercial activities are not allowed in a residential complex by the apartment association mainly because of security concerns. Your neighbors will obviously be annoyed if people keep visiting your house in noisy packs, by parking their vehicles in spaces that are purely meant for residents.

If you’re planning on providing services that are not commercial in nature, like Yoga classes, then you can talk to the managing committee in your apartment association and get the committee’s approval. You can also provide tuitions for school or college students, and other services like arts classes, dance classes and painting classes, provided your services do not interrupt the daily lives of your neighbors.

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This article aims at collating and providing information for benefit of ApnaComplex customers and blog readers. While ApnaComplex has taken every care to ensure the information is accurate, we suggest to please use it only as a guidance for further discussion and action with help of relevant professionals. If you need professional advise on this topic and any other property related matters, please send your request through our contact us form. You may post your questions/inputs in the Comments section below and we will try and get them answered through relevant subject matter experts.

  1. subrata banerjee

    Dear Sir,
    In the matter of allowing “tenancy” in any apartment, the entire property is already submitted to the West Bengal Apartment Ownership Act, 1972, I am of the opinion that no Owner’s Association, registered under the same statute, is empowered to allow any apt-owner to let his/her apartment to a tenant who, in turn is free to use such apartment as rented apartment and enjoy the common areas and facilities at per with other owners of apartments.
    I am not a lawyer but an owner of an apartment. Owing to urgent necessity, I have to study the West Bengal Apartment Ownership Act, 1972 (along with its rules and bye-laws).During my study, I have noted the following grounds/reasons against “allowing tenancy” in any housing complex. I don’t know whether my observation is correct or not. I simply reproduce my thinking for your kind consideration and advice.
    Section 4. (1) entitles an apartment-owner to the exclusive ownership and possession of his/her apartment. The legislature has deliberately used the word “exclusive” instead of “absolute” in order to bring this provision in conformity with other provisions of this Act. In effect, the rights of any owner, under the control of this Act, are seldom absolute and often are in many respects controlled and regulated by the said Act. So, the ownership of any apartment is conditional especially for its common areas and facilities.
    Even though the owner of any apartment has the right to occupation in that apartment but has no right to alienate the apartment. More so, the legislature has cautiously used the expression “exclusive” which in effect is conditional in nature and bound by a livelihood which is based on reciprocity of obligations. Hence, the ownership here is not free and unrestricted. So, the ownership here is not of independent nature but joined together with other owners.
    So, the Section 4. (2) engrafts an exception to the general rule of property. This proviso imposes a restraint on alienation of an apartment. The object behind this restraint on alienation and sub-division is to maintain homogeneity in the housing complex and to prevent fragmentation of an apartment into small portions which will render it uninhabitable. Another purpose for imposition of such restraint is to curb influx of foreign discordant elements into the building with whom, the other resident-owners can hardly accommodate their enjoyment or possession in common interest. I presume that in case of allowing tenancy, the intention of the legislature will be the same.
    So, standing on the same reason, we can say that in order to curb influx of the foreign discordant elements into the housing complex, the legislature was silent on tenancy. Even in the statement of Objects & Reasons of Act XVI of 1972, no word is used on tenancy rather it is said that the Apartment Ownership Act is intended to regulate the conduct of the owners of the Apartments. Here I suppose, the holy conduct of any apartment-owner is not to let out his apartment and invite the dual reside-ship in a single hosing complex.
    Bye-Laws – 31 (a) to (g) imposes restrictions on certain acts of the resident of any apartment of the property. This bye-laws has recognised such right of an apartment-owner as he is deemed to have an accessory license to do the same in accordance with the principals embodied in Section – 55 of the Indian Easements Act. In model Bye-laws, there is no license given to any apartment-owner for inviting tenant/renter. Moreover, if we agree in bye-laws that we will not entertain any tenant in our housing complex, then also we can live without any tenant in our housing complex. Is it a tenable argument? By disallowing tenant/renter are we ignoring the fundamental rights of owners in general?
    Section -7 of WBAOACT1972 says that no apartment owner shall do any work which would be prejudicial to the soundness or safety of the property or would reduce the value thereof or impair any easement…………… . Now, as per definition of the property in Sec. 2(K), we note that “property” comprises the land, the building and the common areas and facilities. Apart from other restrictions, this section (Sec-7) prohibits affecting and/or impairing any easement or hereditament annexed with the property. It seems to me that allowing tenancy or allowing foreign discordant elements as tenant may destroy the principles of easement or create hindrances against smooth hereditament. We are concerning mainly on curbing of easement rights of other obedient owners of the property. Perhaps, the essential ingredients of easement shall be ignored if permission given for creation of tenancy against rent. Beneficial enjoyment of the property by other owners of the apartments will be hampered.
    Moreover, the definition as contained in this Section 3(d) embraces both “ areas “ and “facilities” and both these expressions are preceded by the word “common”. The word common has a special significance because the “common areas and facilities” has been set apart for the use and enjoyment of all the owners of the apartments in common and it enumerates some rights including easement right as well as facilities for the enjoyment of the apartment as well as the property since all the apartment owners have a common interest in enjoying the same.
    While studying on Section – 7 (Certain work prohibited), for its implementation, we find that Section – 2(k) defines the word “property” comprises the land, the building and the common areas and facilities. In the interest of proper management and administration of the entire property, apart from other prohibitions, this Section has also burdened an apartment owner with the negative duty of doing any work which may cause diminution of the value of the property. This Section has also prohibits affecting and/or impairing any easement or hereditament annexed with the property.
    Now, the fact is that the “Residential Ownership Apartment” is primarily meant for the living/dwelling of the owners and their family, not for the use of any tenant/renter. It is seen that value of a property is always diminish when the property is occupied by tenant/renter or lease-holder. Now, in an ownership residential housing complex, if there are people of different categories viz. Owners, Tenants or Renters and Lease-holders, the character of the property must thus be changed for composing of parts of different kinds i.e. heterogeneous in nature. Naturally, in a property-market, the said property must go down the just price which ought to be valued if no heterogeneous character was there. So, renting /letting out a property are synonymous to reducing the value of the property, which is against the interests of other owners of the property and is contrary to the Section – 7 of WBAOA.
    This Section also prohibits affecting and/or impairing any easement or hereditament annexed with the property. The problems of effecting the eviction of renters/tenants are known to all. Even a conflict or dispute between Tenant and Landlord may vitiate not only the respective two sides but also create disturbances to other people of the locality. In this way, the renting of property, especially residential one, may impire the easement rights of others.
    The oaths, undertakings and declarations, which ought to be taken and submitted through registration of instruments and affidavits to the Competent Authority in the way of getting approval under Apartment Ownership Act, are to be made from the side of apartment-owners, not from the side of any tenant to any Competent Authority. The liability of violation of any clause of those instruments rests only on owners not on any tenant. So, the composer of the said Act perhaps may not wanted to solve the housing problems of any tenant but agree to consider the housing problem of the purchaser of any apartment or owner of any apartment.
    Only owners are under obligation to follow the Act and its bye-laws. Apartment Owners’ Association is also liable to care-take the property in general as per the obligation of the related act, rules and bye-laws. But the tenant is boundless. The only obligation, which the tenant has to follow, is towards Tenancy Act not to the West Bengal Apartment Ownership Act.
    It is said that not just resident-owners, even tenants are entitled to use all common areas and facilities as a matter of right, for they represent the owners during their authorized occupation. Is it true?
    ‘Rent’ refers to the mutually fixed amount of money that is paid in lien for possession of the property of landlord for a fixed period of time. A person who pays rent to live or use someone else’s land or property is a tenant/renter. He/she possesses the property and uses it as per his/her requirements. The tenant enjoys the ownership of the property even if he uses it for a limited period of time. Since he has assumed ownership of the property for a certain time period, he should attempt at making his stay pleasant and not invite any legal action from the landlord. But if the tenant willingly or unwillingly invites legal action from the landlord, the Apartment Owners’ Association also faces troubles as seen elsewhere. Why the Association shall undertake such burden of troubles which is out of the orbit of the West Bengal Apartment Ownership Act 1972.
    Moreover, another purpose for imposition of such restraint is based purely on opening of holes on the security aspects in a housing complex. As per the recommendation of Kolkata Police, it is standing rule to submit and get check-up of the antecedents of every tenant from a nearby police station. Who will verify the details of the tenant from police? So, the owner of that particular apartment, who wants to create tenancy, if disagree to submit details of the tenant as per the Form (form to be prepared suitably) given by the Association, what will be the bye-laws to be followed by the Association, what will be the penalty if violated those bye-laws and under what statute it will be protected?
    Kindly advice on (1) creation of restraint on allowing tenancy from the side of Owners’ Association and construct the suitable bye-laws for the said purpose or suggest on (2) if the permission is given by the Owners’ Association against suitable undertaking from the side of apartment-owner who wants to create tenancy, then what will be the suitable bye-laws, proper undertaking and form to be filled up. Hope to get your co-operation in the matter.
    Thanking you,
    Dated 26th April, 2012 Yours faithfully,
    EMAIL: banerjee_subu52@rediffmail.com
    Subrata Banerjee
    Phone- 9433153153
    “Society wants you to efface your individuality completely, society does not like individuals. It likes you to become a member of society and not an individual”. – Osho
    “We are society; we are not independent of society. …….And the society in which we live is part of that life. Society is co-operation.” – Jiddu Krisnamurti.
    Now, let us revert to the legal question. The question of individual ownership in respect of an apartment does not arise as the element of ownership does not enter into the definition of expression “apartment” although 4(1) of this Act entitles an apartment owner to the exclusive ownership and possession of apartment (vide K.R.Agarwal v Dr. Balkrisna Jawar, AIR 1972 Bom 343: ILR (1973) Bom 373: 1972 Mah LJ 374: 74 Bom LR 238).
    Section 3 (b) defines the expression “Association formed in accordance with the provision” made in the bye-laws. Clause – 3 of the West Bengal Apartment Ownership Bye-laws, 1974 provides for the manner and mode of the formation of this Owners’ Association.
    In combined effect, it is needless to state here that once an owner becomes a member of the Association, he loses his individuality qua the Association and he has no independent rights except those granted to him by the statute and bye-laws. He must act and speak for through the Association or rather the Association alone can act and speak for him qua the rights and duties of the Association as a body (vide Daman Sing v State of Punjub, AIR 1985 sc 9731985) 2 SCC 670).
    The contextual exposition of the intention of the legislature, as expressed in the Objects & Reasons of Act XVI of 1972, can be found if the definition of “exclusive ownership” is read along with other provisions of restrictions of the said Act. An owner of apartment, under this Act, is an owner of limited purpose. Because of the fact as stated above, the Owners’ Association is given power and legal backup for the management and administration not only of the common areas and facilities but also of the property in general. In addition, the exercise of general supervision on overall affairs of community living is also its paramount responsibility. So, if the general meeting by majority decides to restrains on offer for rent of apartment, the Association can restrict the entry of any renter-resident to any residential housing complex. But the question is whether this restriction is tenable in court of law?
    Moreover, if an apartment is given out on a lease by any owner to a company etc, wherein different tenants are staying or started living for a short period, the said apartment has thus become a service-apartment or guest house which is commercial in nature. In my opinion, the Association can disallow it. Why the Association shall undertake the additional burden of administration and caretaking of such rented apartment, which is bypassing the related law and bye-laws or which is out of the jurisdiction of its power and responsibilities?
    If we are to allow renter in our housing complex, can we take the following bye-laws:-
    *Steps to be taken in case of offer for rent out of any apartment :
    If any apartment is proposed to be transferred by lease or rent, then the respective apartment-owner should intimate the Association in advance about the personal details of the lessee or the tenant in the prescribed form, available at Association’s office room, and submit the same in duplicate along with the photo of the renter and photocopy of relevant documents.
    A copy of particulars duly filled in is to be deposited at Shyampukur Police Station and “the received copy” of the same is to be submitted to the Association office before the respective apartment is occupied by tenant. As all the apartments are for residential use, apartment – owner will be permitted to lease or rent out their apartment for the residential purpose only after obtaining “No Dues Certificate” from the Association.
    *Bye-Laws to be binding on apartment owners, tenants, etc.
    (1) All apartment owners, tenant of such owners, employees of apartment owners or tenants, or any other person who may, in any manner, use the property or any part, thereof to which this Act applies, shall be subject to the provisions of this Act and the bye-laws and the rules made hereunder.
    (2) All agreements, decisions and determinations lawfully made by the Association of Apartment owners, as the case may be, in accordance with the provisions of this Act or the bye-laws shall be deemed to be binding on all apartment owners and residents.
    *Personal application:
    (a) All apartment owners, tenants of such owners, employees of owners and tenants, or any other persons or residents that may in any manner use property or any part thereof submitted to the provision of this act shall be subject to this act and to the declaration and bylaws of the Association of apartment owners adopted pursuant to the provisions of this act.
    (b) All agreements, decisions and determinations lawfully made by the Association of apartment owners in accordance with the voting percentages established in the act, declaration or bylaws shall be deemed to be binding on all apartment owners.
    Option: “No to Renter” or “Permission for Renter” —- Kindly advice the best solution, thanks.
    I owe my obligations: I have taken plenty help from the book “Law of Ownership of Apartments/Flats in West Bengal” by Tapas Kumar Mukherjee, M.A., LL.B. Advocate, High Court, Kolkata. published by Book-N-Trade, 6, K.S.Roy Road, Kolkata – 700 001.
    Dated 29th April, 2012 Yours faithfully,
    EMAIL: banerjee_subu52@rediffmail.com Subrata Banerjee
    Phone- 9433153153

  2. Ashutosh

    I agree. No tenancy.