Redevelopment Agreement Flaws - Article 5

5. Carpet Area

The most important compensation received during the redevelopment project is the additional carpet area. The redevelopment agreement always asks for quotation of this additional carpet area in terms of percentage of carpet area offered above the existing carpet area. This means if the existing carpet area is 500 sqft & the Developer has offered 50% of additional carpet area, then the carpet area provided after redevelopment shall be 750 sqft.  Hence, the determination of final carpet area to be received after the redevelopment is entirely based on the correct recording of carpet area of the old flat. The mode of measurement of carpet area may play major role. If the old flat was measured under MOFA mode & new flat measurements are counted as per RERA mode, then one will get 10% less carpet area because if you put it in simple terms the MOFA mode excludes the internal partition walls whereas RERA mode includes them. If we continue above example, then the flat owner would have received 675 sqft instead of 750 sqft carpet area. Multiply this lost 75 sqft of carpet area with the rate of property in your area & you will know the loss or price paid for the small negligence while signing the development agreement. The concerned lost area adds up to saleable area to increase the Developer’s profit. This is not the only trick to deny you the rightful carpet area when the development agreement neglects to define the carpet area measurement in required details, there are other tricks like adding the areas like flower bed, loft, terrace or measuring the area from brick surface & not from finished plastered surface etc.

Most important but most neglected clause of redevelopment agreement is the mention of procedure for determination of carpet areas of the existing as well as redeveloped flats of the society members. These areas should be recorded under joint measurements, clearly mentioning detailed mode of measurement which shall be applicable for determining these carpet areas & acceptance of the Developer for the same. Initially, prior to preparing project (feasibility) report the PMC surveys & records the existing carpet areas of the flats to be redeveloped but this has to be accepted by the Developer for which the joint measurements with the Developer immediately after signing the redevelopment agreement is most essential.

Different definitions of Carpet Area :-

If we cover the entire flat with a wall to wall carpet along width & breadth covering the entire floor area including that of bathroom, WC & kitchen under the platform, then in simple terms the carpet area can be defined to be total area covered by such carpet.

In general practice the carpet area is defined to be the net usable area within the building excluding the area covered by the walls. Traditionally, Carpet Area (rentable area had also same meaning/ definition) was measured from finished wall to finished wall (plastered & not tiled) surface & included lavatory block, common passages, portion between door jambs (in this, more accurate calculations omitted shutter area), space occupied by kitchen platform. All column projections/ independent column portions more than 300sqcm were deducted. Enclosed balcony counted 100% but open balcony counted 50%. Verandah Otlas with parapet 50% & without parapet 25%.

MOFA (Maharashtra Ownership Flats Act, 1963) neither defines the carpet area nor refers to any other official carpet area definitions. Hence mostly it has been presumed that the MOFA carpet area definition is referred to as the traditional carpet area definition mentioned above. Only mention in this act is through the amendment dt.12 May 2008, which adds clause (n) to subsection 2 of section 3 to mention that the flats shall be sold on the basis of carpet area only and defines the carpet area to be including balcony area of flat.

RERA (Real Estate Regulation Act, 2016) vide circular No.4/2017 dt.14.06.2017 has issued clarifications on definition of carpet area mentioned under RERA Act 2016 vide its section 2(k) defining the carpet area to be excluding balcony area but including the area covered by the internal partition walls of the Apartment.

In short, MOFA includes the balcony area but excludes the internal wall area whereas RERA excludes the balcony area but includes the internal wall area. Both the acts are silent about the details such as whether measurements shall be from finished surface of wall, whether pilasters along the wall shall be included in wall deductions etc.

The acts/ regulations like MOFA, RERA, DC Regulations have mentioned varying definitions of carpet area but all of them lack the required details such as whether walls thickness shall include finishes, columns to be deducted, area within door jambs to be added etc. These details are covered by BIS & NBC.

Bureau of Indian Standards (BIS) & National Building Code (NBC), both have defined the same method of measurement of carpet area & other such areas. These were formulated under IS 3861 in 1966, with first revision in 1975 to include rentable area & second revision in 2002 to add more details regarding verandahs, shafts etc. The methods of measurement have been mentioned in details. To mention some of these details, (1) The walls considered for deduction shall be inclusive of finishes. This means the measurements for carpet area shall be taken from inside of the finished (plastered/ tiled) surface & NOT from brick face (which will be required to be assumed during the physical measurements) as defined by CREDAI (Confederation of Real Estate Developers’ Association of India), (2) All independent pillars shall be deducted from carpet area, (3) Pilasters along walls shall be deducted only if more than 300 sqm in area, (4) Portions at door openings (between door jambs) are not considered to be added.

The shocking revelation of BIS definition under IS 3861 has been, that the term `carpet area’ excludes the area of bathroom, kitchen, store etc. However, the `rentable area’ definition includes all these areas. In other words, the `carpet area’ mentioned in general terms by all the concerned statutory bodies under different acts/ rules/ regulations like MOFA, RERA & even DC Regulations should have mentioned to be the `rentable area’ considering that they have presumably based their reference on BIS / NBC definitions for the terms carpet area & built-up area and the required meticulous definition/ method of measurement of these areas have been mentioned under BIS & NB codes only. BIS has mentioned the term `Plinth Area’ for the area generally referred to as `built-up area’ & it disallows the use of term `super built-up area’ calling it a non-standard terminology. The `carpet area’ has not been defined in all the required meticulous details by the acts/ regulations like MOFA, RERA, MCGM & has mostly been based on popular presumptions. This discordance be brought in consonance with the Indian Standards, else unscrupulous builders may take advantage of such lacunae.

Analysis of RERA definition of Carpet Area :-

RERA is silent on whether the measurement should be taken from finished wall surface or brick face. The builder’s organisation CREDAI (Confederation of Real Estate Developers’ Associations of India) has been propagating separate carpet area definition & has influenced defining of the RERA carpet area, for including the internal wall area. This definition by CREDAI mentions that the measurement shall be taken from brick surface & not from finished surface of wall. This will further swell up the carpet area. In this regard, it should be pointed out that all the government bodies including BIS, NBC & Legal Metrology Department (LMD) have prescribed that measurements shall be taken from finished wall surface only. The redevelopment project involves the actual measurement survey of the building to confirm the carpet area. In such situation, leaving imaginary clearance for wall finishes in measuring the wall to wall dimensions & measuring the wall thickness of internal walls shall be difficult, absurd & will tend to approximation. It is also observed that, in RERA definition, the internal columns (independent or along the wall) are also treated to be internal walls & its area is included in carpet area. Many times, particularly in high-rise buildings, very big RCC shear wall/ columns are provided & these big unusable portions shall be counted in the carpet area.

If we refer to a circular dt.02 Jan 2018 of office of Inspector General of Registration & Controller of Stamps, Maharashtra State, multiplying factor for conversion from carpet to built-up area under RERA calculations shall be 1.1 instead of previous 1.2. This means, where built up area of flat is 1200 sqft the carpet area of flat previously counted under MOFA would have been 1000 sqft but now if counted under RERA, it shall be 1091 sqft. Due to inclusion of area covered by internal walls, the carpet area of same flat swells by about 10%.

Moreover, the old buildings do mostly have balconies and RERA excludes balconies from carpet area definition. Hence adopting the RERA carpet area definition will not be advisable while surveying for the measurement of carpet area of the building under redevelopment.

Mentioning that the measurements shall be considered from finished wall surfaces or from brick surfaces is also essential. The difference in such measurements results substantially on the value of the property considering the property rates in Mumbai. For example, for carpet area of 650 sqft of flat, about 5 sqft of difference is observed in finished surface & brick surface wall measurements. For average property price of Rs. 25,000 per sqft in Mumbai Suburbs, this situation will cost Rs.1,25,000.

Conclusion :-

RERA concept of including internal partition walls in carpet area is justifiable but needs certain modifications. In MOFA concept, let us take example of two flat having same built-up area. If one of them has more partition walls (provided for creating one more room) then it shall have less carpet area than the other. However, if we want to adopt RERA definition in redevelopment agreement it shall need modifications. Firstly, the wall thickness shall be of finished (plastered) walls. Secondly, it should include enclosed balconies (100%), open balconies & pocket terraces (50%) & ground floor verandah/ otlas without parapet (25%). Thirdly, pilaster/ projections, independent columns/ shear walls more than 300sqm shall be excluded from carpet area.

Else, considering all above aspects, the carpet area definition in the redevelopment agreement shall be mentioned to be same as the `rentable area’ as mentioned under clause No.6 of IS 3861:2002. It should be specifically mentioned in development agreement that the carpet area measurement method to establish carpet area of old apartment under redevelopment & to confirm the provision of carpet area of permanent rehabilitation apartment shall be conforming to clause No.6 (rentable area) of IS 3861:2002.