Karnataka recovers only 12% of homebuyers' money pending from delayed projects, to recover Rs 627 crore

The listed developers owe over Rs 16.3 crore, about 2.5 percent of the total money pending to be recovered.

Developers in Karnataka owe homebuyers more than Rs 627 crore in refunds for delayed delivery of apartments, a Karnataka Real Estate Regulatory Authority (KRERA) document accessed by Moneycontrol shows.

The state revenue department has managed to recover only Rs 79.9 crore, or about 12.5 percent of the total money, as of August 2024, the document showed. This includes 185 cases filed at Karnataka RERA for recovery, amidst a total of 1,354 cases.

According to the Real Estate (Regulation and Development) Act, 2016, if a builder fails to pay compensation or refund money to homebuyers, the regulatory authority can issue a revenue recovery certificate (RRC), directing the state revenue department to recover the money from the builders.

Bengaluru has over 26,030 delayed projects, worth over Rs 28,072 crore, that are running behind schedule. Previously, former KRERA Chairman Kishore Chandra had said that homebuyers can approach the authority to take over and complete delayed projects themselves.

Listed developers owe Rs 16.3 crore

Listed developers owe over Rs 16.3 crore, or about 2.5 percent of the total money pending to be recovered.

The developers include Kolte Patil (Rs 70 lakh), L&T (Rs 3.1 crore), Puravankara (Rs 5.8 crore) and Shapoorji Pallonji Group and its subsidiary Relationship Properties (Rs 58 lakh).

Among non-listed developers, Ozone Group owes more than Rs 160.1 crore or almost 25 percent of the total money owed to home buyers.

Money to be recovered jumps 30 percent in 6 months

The total money to be recovered by the state's revenue department has jumped by about 30 percent to Rs 486 crore in March 2024.

One reason for the delay in recoveries is that the money to be collected from builders is categorised as revenue from land arrears. Advocates say there is no time limit for the recovery of money in the case of land arrears.

“The recovery is done as land revenue. There has been no development as such in the last two years,” said Anil Kalagi, founder of the Bangalore City Flat Owners’ Association. “The district commissioner is a coordinating authority for several districts. However, we find the DCs are not acting on the orders promptly. We have to get homebuyers to prompt DCs to attach other developers' assets to get their money back.”

The absence of a recovery timeline, according to Dhananjaya Padmanabhachar, President of Karnataka Home Buyers Forum, indicates that the state department is not doing its bit to assist buyers. He said that the state government needs to make this process time-bound for both the revenue department and the RERA.