When you buy an apartment you see that the age of the apartment is increasing day by day which means it is becoming weaker and weaker over time but the price of apartments is rising. Demolition of such structure might happen in two ways. First, the building has attained its natural age and is no longer considered safe and habitable so the govt may order for its demolition. Second, the building gets destroyed in some natural calamity.

Now the question is if you happen to own an apartment in such a building which is about to be demolished or is destructed in some natural calamity, what will you get afterward?

Read this article till the end to know about what the flat owner gets when the flat is demolished and what are the things that you should look for before buying the flat.

What a Flat Owner Gets When Building is Demolished

When you buy an apartment flat, you are not just acquiring a physical structure, you are also getting a share of the land on which that structure stands. This shared ownership of the land is referred to as a homebuyer’s undivided share in the land (USL). 

It’s important to understand that this USL is a key factor in the property’s overall value. Even as the physical structure of the building ages and undergoes wear and tear, the value of the apartment unit appreciates over time because the value of land is increasing with time.

The value of an apartment in a housing society is determined by the percentage or specific area allocated as a buyer’s undivided share in the land, and it’s imperative for potential buyers to be well-informed about this aspect before making an investment decision.

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How is the undivided share in the land (USL) calculated?

In a typical real estate transaction, whether in a buyer-seller agreement or a builder-buyer agreement, the buyer’s undivided share in the land is clearly outlined. It is usually expressed as a percentage (e.g., 1%) or a specific area (e.g., 500 square feet). To ensure that you are receiving your rightful share, a simple mathematical calculation can be performed to verify the accuracy of the provided information.

Here’s how you can calculate your undivided share of the land:

A simple example

Suppose, you have invested in a housing project spanning in areas of 1,000 sqft which has 10 units, each measuring 100 sqft. In this case, each buyer will have 100 sqft as their undivided share in land.

A complex example

Most housing projects have complex setups with 1 BHK, 2 BHK & 3 BHK apartments. In this project, your USL will be proportional to the size of your apartment. 

Suppose a society has 20 1 BHK apartments, 30 2 BHK apartments and 40 3 BHK apartments. The area of 1 BHK is 500 sqft, 2 BHK is 1000 sqft and 3 BHK is 1500 sqft. 

Total area of society = (20*500) + (30*1000) + (40*1500) =1,00,000 sqft

Your undivided share of land in the society (for owning a 1 BHK flat) would be = 500/100000*100 = 0.5%

Your undivided share of land in the society (for owning a 2 BHK flat) would be = 1000/100000*100 = 1%

Your undivided share of land in the society (for owning a 3 BHK flat) would be = 1500/100000*100 = 1.5%

It is important to note that the above calculation is not applicable to cooperative housing societies. In cooperative housing societies, each member has an equal UDS, irrespective of their unit size.

Why is USL important?

The true value of real estate lies in the land, not the building itself. As buildings age, their value depreciates, while land values tend to appreciate over time. This is why the amount of land an owner possesses is crucial. A wise buyer will consider the UDS (undivided land share) of a property before investing, as it determines their ownership stake in the land. Without a significant UDS, an owner may face difficulty selling the property or achieving substantial returns on their investment.

Ownership of Parking Space

1.  An allotted car park is a very prized possession for the calculation of UDS. If the owner has a car park, the UDS becomes UDS calculated + car park land in sq ft. Thus, it is important to ensure that the developer documents the car park in the owner’s name.

2.  As per Indian law, an open car parking can only be sold as part of a common area and cannot be legally included as part of the floor area for individual apartments.

USL is a home loan criteria

When applying for a home loan, banks will assess the property’s UDS (undivided land share) to determine its value and loan eligibility. For resale properties, banks require a share certificate from the housing society to verify ownership rights. Similarly, property registrars and home loan insurers also examine the share certificate to ensure proper documentation.

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Conclusion

When you decide to buy a flat, the concept of Undivided Share (UDS) becomes extremely important to understand. It plays a pivotal role in determining property ownership, especially in multi-unit or multi-story buildings. By understanding UDS, buyers and investors can make well-informed decisions and protect their rights and interests.

However, when dealing with UDS in real estate transactions, doing thorough due diligence and seeking legal counsel is important. A clear understanding of the bylaws, regulations, and legal implications associated with UDS is essential to prevent future disputes or misunderstandings. Consulting with professionals and experts in real estate law can provide invaluable guidance and ensure a seamless process.

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