What is a ‘Handover Takeover’ (HOTO) audit and why is it important for RWAs?

In the normal course of events, the sequence is as follows: an apartment is purchased, then you get it checked before moving in, then you move in. Thus far we have made sure the purchase we have made is of good quality but only within the four walls. What about the external area? What about the other parts of your apartment complex for which you are entitled to and have also paid – the common areas? When is that going to be verified and checked? What about the documentation that accompanies these huge constructions, along with their warranties and or guarantees?

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There are many companies in India now that provide the niche service of Residents’ Welfare Association (RWA) Handover Takeover (HOTO) from the builder.

Why is a HOTO audit necessary?

In any new residential society – be it an apartment complex or villas – the builder generally collects a corpus fund from every owner. The reason for collecting it, is to form the Apartment Owners Association, in general parlance termed as Residents’ Welfare Association (RWA).

In many cases where the builder is not forthcoming or has not taken the initiative, the owners themselves form an association of people or an ad-hoc committee to run the society. After some time this ad-hoc committee is formalised into a RWA under the appropriate legal codification.

This RWA is a requirement, because, as the units are sold and residents start moving into the premises, it becomes necessary to look at the operation and maintenance of all common areas. These various areas may include basements, gardens and amenities, lifts, generator sets, sewage treatment plant (STP), swimming pool, clubhouse, etc.

Before the assets and the amenities are formally and legally handed over to the RWA through the process of conveyance, it is the responsibility of the builder to maintain them. Once the handover has taken place, the responsibility passes to the RWA. This is why it is imperative that when the RWA takes over from the builder, the managing committee (MC) that represents the society as a whole knows that the assets are in good working condition. If this technical due diligence is not conducted, the RWA may end up having to spend on upkeep and maintenance of these amenities and assets, which are not in the best of conditions. Apart from this the RWA may also not have received all the technical documentation that it needs to run the whole society smoothly.

See also: What is a conveyance deed

What does the HOTO process consist of?

HOTO has 4 parts to it

Quality audit of the MEP and civil aspects: ensures that all the installations are done properly.
MEP design audit: checks for the adequacy of the provisions.
Documentation audit: ensures that all documents are handed over.
AMC advisory: ensures that required AMCs are in place.

What does quality audit consist of?

To design and build a project, the builder engages many professionals such as an architect, plumbing consultant, electrical consultant, firefighting consultant, etc. All, if not most of these consultants, end up creating documents to execute on the design, based on the client’s project requirement. All these consultants will share their drawings and specifications for this particular project. These drawings are used by the project construction team to build the project and further to operate various systems and building services that are an integral part of the project. At the time of HOTO, the RWA needs to ensure that all the teams have completed the construction and further operations are as per specifications and as per various governing standards such as the National Building Code (NBC) and the Bureau of Indian Standards (BIS) or if there are no specific standards, then, they follow the best general industry practice.

Mainly, a quality audit comprises of two aspects:

Civil engineering aspects: Covers all the workmanship of basic constructions and finishing items.
MEP (mechanical, electrical and plumbing) aspects: Covers all the assets that are required for running the society – e.g., DG sets, STP, RWH, etc. This also includes firefighting aspects.

Civil aspect

Essentially all the common areas within the society are to be checked.

Logically we start with the basements to check for any incomplete / imperfect works, cracks and damages, water seepages and dampness, etc.

Then we start looking at buildings within the society, which are technically called the superstructures like towers, club house, swimming pool, DG (diesel generator) rooms, STP (sewage treatment plant). These need to be checked for quality of workmanship both internally (lobbies, stairways, rooms, etc.) and externally for improper finishing – works, cracks, dampness, etc. We are only speaking of common areas here, as these audits do not happen within your individual apartment.

In terraces, the areas checked include overhead water tanks (OHT) which should be checked for cracks, dampness spots, rain water leakage points, proper waterproofing, etc.

Finally the podium area is checked for any problems in pathways, side drains, garden areas, water bodies, park benches, play areas, transformer yard, organic waste converter (OWC), etc.

MEP aspect

Here, the workmanship of installations and their functionality is checked. It needs to be ascertained that the asset performs the task to the required level at site.

Generally it starts with the electrical transformer yard, followed by the electrical panel room. There are panel rooms at each building/tower and electrical shafts in each wing of the tower. These are checked for workmanship of installation as per IS codes/best industry practice like required earthing, proper cable dressing (proper way of laying the cables), proper tagging of cables for identification through circuit diagrams, any missing safety devices like ELCB/RCCB (earth leakage circuit breakers/residual current circuit breakers) which avoid accidental electrocution, etc. While checking workmanship, focus should also be on statutory requirements. If statutory requirements are not met then the RWA could face stiff actions/penalties by the authorities. Further a safety hazard is potentially possible, because poor electrical workmanship could lead fire, endangering lives.

DG (diesel generator) sets are checked for improper connections, missing earthing and any other imperfections in the installation as per norms. What also needs to be checked is working of auto-start function within the prescribed time of the mains power failure. This is to ensure that the building is not left in the dark when the main supply line fails.

Elevators or lifts are some of the most used but also the most overlooked assets within the society. It is imperative that this set of equipment needs to be checked for smooth and proper operation by stopping at all required levels including emergency preparedness. As earlier, any non-compliance to statutory requirements here could attract penal action from the Electrical Inspectorate, the government body that issues licences to operate the lifts.

A plumbing system audit will start with the public water supply lines, sumps, bore wells, water treatment plant (WTP), overhead water tank (OHT) piping, the respective pumps, etc. STP is a mandatory and integral part of apartment complex, requiring a thorough check by professionals, to ensure proper operation and also that it meets statutory compliances. In many societies treated water is used for flushing in the toilets. Untreated water that is directly led to tanks or malfunctioning STPs that release untreated sewage into public drains, can cause health hazards and invite criminal action.

A fire-fighting system is mandatory, in high-rise buildings where the height of the building is more than 15 metres from ground. A fire-fighting system is composed of two parts: 1. Fire alarm system and 2. Fire-fighting system. Both of these systems need to be checked by professionals, to ensure proper installation as per norms. It is common to see the fire alarm systems switched off in many apartment complexes, where the systems continually malfunction. In other cases, frequently, one may find the hose nozzle missing inside the fire cabinet or that pipes are not connected. These may seem like harmless oversights but can have serious consequences, resulting in potential death in case of a fire incident.

There are many societies which have amenities like Swimming Pools and they too need to be checked for proper functioning of their filtration system and the water purification aspects.

Essentially the overall HOTO process of which quality audit is a part of, adds value to the whole society, by helping save money on the operational budget. This happens because the HOTO agency ensures that the common areas and amenities are in good condition, before handover to the RWA from the builder.

Documentation audit

The Builder would (should have) have completed construction of all the common areas and amenities, according to the specifications and in line with the promised list in their offering document. There are documents that are related to the legal aspects and documents that are a reflection of the legality of construction (for example, Occupancy Certificate). There are many such documents that need to be checked not only for their presence but also for the efficacy of the contents. The agency conducting the HOTO audit should collect a list of common areas and amenities, so that it can prepare an inspection plan. This then leads to the work breakdown structure, followed by the audit, with all clarifications and compliances. Finally a visual and annotated report will be shared, which should be easy to understand not only for the builder to rectify the snags and shortcomings but also for the MC members who may be laypersons. This is an in depth exercise after which the RWA will be in possession of all the documents that are essential for the smooth functioning of the assets and other amenities, or even for maintenance and repairs.

How does one ensure a foolproof HOTO process?

It becomes important to note that there are many individuals who also will offer to perform the audit for a fraction of the cost that a professional company may. However, one should be cognisant of the fact that after all these are individuals and this brings about many weak links. A professional company will have continuity, accountability and deep experiential knowledge. This is why professional advice is necessary from a professional agency. Also, s most, if not all of the office bearers of an RWA are preoccupied with their own lives and are working pro bono. Even if they can make time, the HOTO process is extremely complicated, because it involves various disciplines of engineering and fire-fighting. Hence there is slim chance that the RWA members have capacity or knowledge to audit and collate various data.

Also read: How to ensure a smooth handover from the builder to the residents’ association

Can the facility management company perform the HOTO audit?

Many RWAs face this dilemma, especially in cases when the builder has their own facility management services (FMS) company and the builder internally hands over the management of the property to their sister concern. In such cases, the FMS will claim that they too can perform the HOTO audit. What the RWA should be aware of, is that in most of the cases a facility management company is engaged, primarily to run the facilities after the RWA takes over. It may look logical that the FMS can conduct the HOTO process. However it is in conflict of their own interest and that of their parent company to unearth the issues in a transparent manner. Moreover, the FMS may not have the expertise in the construction process, to understand the issues that may crop up later. Also it is in their best interest to take over with the least rift with the Builder as much as possible so they can commence their engagement with the RWA smoothly. For these reasons, it is less expensive in the long run to engage a third party with the necessary expertise who has no conflict of interest.

What needs to be checked during the HOTO audit?

It is recommended to check the following as part of HOTO.

Quality audit of civil engineering aspects of the project.
Quality audit of MEP (mechanical, electrical and plumbing) aspects of the project.
Design audit of MEP facilities.
AMC advisory for equipment and facilities.
In depth audit of STP.
In depth audit of any particular facility where necessary.
Audit of all the documents handed over to the RWA.
Guidance on the documents to be collected for future running of the RWA.

(Suresha R is COO and Uday Simha Prakash is CEO at Nemmadi.in)

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