Monetization of Car Parking Spaces in Residential Projects Under AP RERA, SC Law

Monetization of Car Parking Spaces in Residential Projects: Legal Boundaries under AP RERA and Supreme Court Jurisprudence

The development of residential apartment complexes encompasses various legal complexities, particularly concerning the treatment of car parking spaces. In Andhra Pradesh, the combined legal regime under the Andhra Pradesh Apartments (Promotion of Construction and Ownership) Act, 1987 (AP Apartments Act), the Real Estate (Regulation and Development) Act, 2016 (RERA), and landmark Supreme Court judgments collectively govern how these parking spaces can be monetized. While builders often seek to capitalize on parking slots, it is crucial that such monetization aligns strictly with statutory mandates to safeguard the rights of buyers and uphold regulatory compliance. This article clarifies the relevant legal framework, judicial pronouncements, and enforcement trends, providing practical guidance for builders and buyers navigating parking space matters.

Statutory Framework on Car Parking Spaces: Defining Common Areas and Restrictions

Under the AP Apartments Act, Section 2(n)(iii) defines common areas expansively to include basements, terraces, open parking, parks, and similar facilities. These areas are collectively owned by all apartment owners, underscoring their communal character. Section 24 explicitly bars promoters from selling, leasing, or transferring such common areas independently, mandating their preservation for the apartment owners’ association post-project completion.

Reflecting this, the AP RERA reinforces in Section 2(n) that parking spaces, including basements and storage areas, constitute common facilities. Section 11(4)(f) compels promoters to transfer these common areas to the allottees’ association promptly. Furthermore, Section 18 empowers buyers to claim refunds with interest if unlawful charges have been collected for these facilities, while granting RERA authorities power to impose penalties for any violations.

Together, these provisions clarify that open, stilt, and basement parking slots fall unmistakably within common areas, rendering any attempt by builders to sell or lease them independently unlawful. This statutory clarity establishes an uncompromising legal boundary that builders must respect.

Supreme Court Jurisprudence: Binding Guidance on Parking Space Monetization

The Supreme Court decision in Nahalchand Laloochand Pvt. Ltd. v. Panchali Cooperative Housing Society Ltd. (2010) 8 SCC 146 is a cornerstone ruling in this domain. The Court confirmed that stilt and open parking areas qualify as common areas and cannot be separately sold or leased. The judgment made a crucial distinction, recognizing only enclosed, demarcated parking garages—approved as independent units in sanctioned plans—as legitimate objects for sale independent of apartments.

This authoritative judicial pronouncement forms a binding precedent across India, including Andhra Pradesh, shaping regulatory enforcement and curbing unlawful parking monetization tactics by promoters. It ensures parking rights remain integral to the apartment purchase and that improper segregation or monetization of such spaces can be legally challenged and set aside.

AP RERA Enforcement: The Vertex Siri Developers Case Illustrating Regulatory Action

The practical enforcement of these principles is exemplified in the Andhra Pradesh Real Estate Regulatory Authority’s recent decision in Complaint No. 53/2022 dated 17.03.2025 against Vertex Siri Developers. This case involved the unlawful sale of 12 basement parking slots at ₹2,00,000 each, totalling approximately ₹25,75,000.

Relying on Section 24 of the AP Apartments Act and Section 2(n) of RERA, the Authority deemed such sale illegal. It ordered a full refund with interest to the affected buyers, mandated the immediate transfer of all common parking areas to the owners’ association, and required fair allocation of parking on a first-come, first-served basis. Additionally, visitor parking was to be restored, and construction defects rectified within set timelines.

This case vividly illustrates the stringent legal and financial repercussions builders face for unauthorized parking monetization, underlining the necessity of compliance with statutory provisions and judicial guidelines.

Distinguishing Parking Spaces from Garages: Operational and Legal Implications

A clear distinction must be drawn between open/stilt/basement parking and enclosed garages, as their legal characters differ substantially:

Only enclosed garages that are approved as independent units in building plans can be monetized through separate sales. Builders intending to monetize vehicle storage should incorporate such garages at the design stage with relevant approvals, conforming fully to statutory requirements.

Compliance Checklist for Builders

• Avoid selling open, stilt, or basement parking slots as separate units.
• Allocate parking slots transparently on a first-come, first-served or lottery basis.
• Plan and obtain approval for enclosed garages if separate sales are intended.
• Convey all common areas, including parking spaces, to the apartment owners’ association immediately after project completion.
• Refund any unlawfully collected parking charges with applicable interest to prevent penalties and litigation.

Buyers’ Rights and Safeguards

Buyers must remain vigilant regarding the legal status of parking facilities in their agreements. Any demand for separate payments for common area parking spaces should be challenged as unlawful. Buyers have the statutory right to claim refunds with interest for such illegal charges under RERA provisions. Prior clarity on parking rights and transparent allocation mechanisms helps avoid future disputes, protecting buyers’ financial and lawful interests.

Conclusion

The statutory framework under the AP Apartments Act, AP RERA, and the binding Supreme Court rulings collectively establish that open, stilt, and basement parking spaces in residential projects are common areas and cannot be independently sold or leased by builders. Only enclosed garages, duly approved as independent units in sanctioned plans, qualify for lawful monetization. Builders face significant legal, financial, and reputational risks for unauthorized parking sales, while buyers benefit from clear legal protections against unlawful charges.

For a robust, dispute-free real estate market in Andhra Pradesh, adherence to these legal principles is vital. Transparency, statutory compliance, and respect for buyers’ rights foster trust and sustainable growth, ultimately benefiting all stakeholders in the housing ecosystem.

( the views expressed in this article are strictly personal and author of this article can be reached at caprudhvigst@gmail.com)