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Can you sell your car parking slot?

There's nothing new about parking woes. Every day you hear about builders charging between Rs 1 lakh and Rs 15 lakh for a single parking slot along with their flats. Mumbai-based Vishwanath Sahu is among the lucky few on the other side of the fence. When he purchased a flat in the Gorai area of Malad six years ago, the developer offered to sell him a parking slot in addition to the space he was officially allowed to purchase, as there were no takers for it.

"The car park cost me around Rs 1 lakh, but since I had a motorcycle and a car, I thought it would be better to take two slots," says the 39-year-old cinematographer. Today, given the increasing number of car owners in his housing society, there is a shortage of parking space and Saha is keen to capitalise on it. "A member has offered me Rs 5 lakh to purchase my slot. I am planning to sell it, but don't know how to go about it," he adds.

Chances are that Saha will find it a legal nightmare to sell his slot, especially if someone challenges the transaction. This is because of the 2010 Supreme Court ruling, according to which flat buyers need not pay extra money to buy parking spaces, both open and closed, from property developers. The judgement, delivered by Justices RM Lodha and AK Patnaik, rejected real estate development company Nahalchand Laloochand's argument that they were entitled to sell garages/stilt parking areas as separate flats to owners who wanted to use it as a parking.

According to the ruling, "If a promoter does not fully disclose the common areas and facilities, he does so at his own peril. Stilt parking spaces will not cease to be part of common areas and facilities merely because the promoter has not described the same as such in the agreement with the flat purchaser. The promoter has no right to sell any portion of the building which is not a flat."

Ravi Goenka, advocate, Mumbai High Court, explains that though a developer cannot sell the car park to a person who purchases a flat from him, he can "allot the same on a first come, first served basis without charging any money from him". According to him, the housing society has to then take the responsibility for reshuffling the parking spaces to other members at periodic intervals. "The allotted space means that the member has the right only to park his vehicle. He is not the owner of the space and cannot sell it to others at a premium," says Goenka.

The housing society is allowed to frame its own parking rules. Most of them ask for a copy of the vehicle documents before allotting a parking slot. This is to restrict non-members from parking inside the society premises. The rule of thumb is that no member will be eligible for allotment of more than one stilt/covered parking space per flat. If any slots remain vacant for want of applicants, which is sometimes the case for open parking, a second parking space may be allotted to interested members. This procedure is supposed to be followed on an annual basis, provided the empty slots are not required by a member who is yet to bag even one designated parking space.

The bad news

Far from accepting the ruling and living by the book, developers in most cities are actually charging flat owners twice for the same parking space. "In most of the top metro cities, where transactions generally take into account the super built-up area (total area of land where the project is spread divided by the total number of flats), the parking area is also divided and added to it," says Ganesh Vasudevan, vice president of , a Chennai-based real estate portal. This means that the developer has charged flat buyers for the parking space even before possession. Despite having charged for the total land, the developer then sells parking slots at exorbitant rates.

Typically, car parking slots sell for Rs 1-3 lakh in mid-level housing projects and can go up to Rs 10 lakh in premium housing projects in the metro cities. According to Goenka, even if developers take extra money and sell the parking space to the buyer, they take utmost care not to mention it in the agreement as it is illegal and can be challenged in court.

New tricks of the trade

Given that selling parking spaces is a lucrative source of additional revenue for developers, they are trying hard not to forgo it. So they have come up with innovative ways to carry on business as usual. Says Subhankar Mitra, head, strategic consulting (west), Jones Lang LaSalle India: "If developers are restricted from selling slots directly, they find ways to apportion the cost, say, by increasing the charge for the super built-up area or by raising the overall per square foot rate. In other words, property buyers will continue to pay for parking either directly or indirectly."

According to him, many high-end transactions have been known to fall through due to the developer's inability to meet buyer requests for multiple parking slots with each flat. This problem has cropped up in areas such as Bandra, Nepean Sea Road, Peddar Road and the like in Mumbai. In the case of commercial property, the acceptable industry norm is to provide one parking slot per 1,000 sq ft. If a project provides more than this, it can command a premium price, claims Mitra.

The Supreme Court ruling ensures that even if you find a buyer for your parking slot, you won't be able to sell it. However, you may consider renting out the space if it is agreeable to the housing society. As yet, there are no tax implications on such rental income, but it will be better to check with a tax expert before doing so.

Source : Can you sell your car parking slot? Find out your legal rights - Economic Times
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