Why Project Structures Do Not Always Survive Court Scrutiny

In many residential projects, disputes do not arise because the law is unclear. They arise because the structure chosen at the beginning of the project no longer aligns with how the project functions in practice. It is common for landowners or developers to retain title to land through a company or similar entity, while purchasers are brought in through alternative arrangements such as memberships or patron-based allotments rather than direct flat sales. At the outset, these structures often appear commercially sensible and legally defensible.

Difficulties tend to emerge much later, after possession has been handed over, buildings are occupied, and day-to-day control has shifted away from the original owner. At that point, courts tend to focus on a simple question. What is the real nature of the arrangement as it operates today? If purchasers have paid full consideration, occupy defined premises, and bear the continuing responsibilities connected with the property, courts are unlikely to accept that they are something other than flat purchasers, irrespective of how the documentation describes them.

This is where project structures begin to come under strain.

Housing statutes such as MOFA are concerned less with labels and more with outcomes. Where an arrangement functions in substance as a flat sale, statutory protections apply. Describing purchasers as members or patrons carries little weight if those individuals have no voting rights, no role in management, and no control over the property they occupy. Over time, this gap between structure and reality becomes more pronounced. Housing societies are formed not as a tactical step but as a practical necessity. Someone must maintain the building, pay municipal dues, manage utilities, and deal with authorities. When these responsibilities are shouldered entirely by the occupants and the original owner remains inactive, the balance inevitably shifts. Courts attach significance to this conduct. They examine who maintains the property, who pays taxes, and who interacts with regulators. Sustained patterns of responsibility often matter more than formal ownership clauses drafted years earlier.

This is also why delays in executing conveyance attract close scrutiny. Under housing law, conveyance is not a matter of convenience. It is a statutory obligation intended to provide certainty of ownership. Once an association of occupants is formed and conveyance does not follow within the prescribed period, the law provides a remedy. Deemed conveyance exists to prevent prolonged uncertainty that affects residents, lenders, and the market. Regulatory conditions attached to land frequently enter these disputes. Such conditions may continue to bind landowners in their dealings with the State. However, courts are cautious about allowing regulatory restrictions to be used as a blanket justification for denying ownership to occupants who were always intended to use and reside in the property. Regulatory compliance and housing law obligations are treated as parallel responsibilities.

Procedural objections also surface in these situations. Arguments based on lack of notice or improper service rarely succeed where notices have been sent to addresses reflected in statutory records. Courts generally do not accept that internal administrative lapses should undermine statutory proceedings. What emerges from judicial reasoning in such cases is not a new doctrine but a consistent principle. Ownership, in legal terms, follows responsibility and practical reality rather than structure alone.

For landowners and developers, the lesson is straightforward. Project structures that defer conveyance or retain control must continue to reflect how the project operates on the ground. Once possession, responsibility, and management shift decisively to occupants, legal outcomes tend to follow that reality. For occupants and housing societies, the message is equally clear. Long-term possession, collective management, and statutory compliance are recognised by law. Where conveyance is delayed without justification, legal remedies are available and courts are prepared to enforce them. Housing disputes are rarely decided by clever drafting. They are decided by whether the legal structure still corresponds to how the property is actually lived in and managed. When that alignment is lost, structure usually gives way.

Target Audience:

• Real estate developers

• Landowners and landholding entities

• Promoters using membership or alternative allotment models

• Housing societies and apartment associations

• Residential real estate investors

• Redevelopment consultants and project managers

• Banks, NBFCs, and other lenders

• In-house legal and compliance teams

• Property and facility management firms

• Real estate dispute resolution professionals