The Karnataka Real Estate Regulatory Authority (RERA) has ordered that a Bengaluru-based real estate company developing a township that contains several phases and mixed developments needs to create multiple resident welfare associations for each phase of development.
The authority on June 5 also ordered the developer, Fire Luxur Developments Pvt Ltd, to provide details about bank accounts for advance maintenance charges collected, transfer the corpus fund and hand over the common areas for the phases already launched to each association.
In this case, the developer is developing a 200-acre township, The Empyrean, in Malur near Bengaluru that contains villas and plotted developments.
The court ordered the developer to restrict the plotted developments to a "villa theme" on the complaint of the association of buyers.
The case
According to information provided by the developer, KRERA noted that the township has about 52 acres of land under Phase 1 that has already been completed, and thus does come under Real Estate (Regulation and Development) Act, 2016, registration.
From the balance, only 35 acres have been opened for sale under Phase 2A and 2B and are currently RERA-registered. Both phases are plotted developments.
The resident welfare association (RWA) of Phase 1 demanded that the developer complete the project including all amenities promised.
However, the developer contended that Phase 1 does not come under KRERA and, thus, the complaint is not maintainable. Additionally, the developer told KRERA that most amenities had been provided under Phase 1, and the rest will be completed by December 2023.
The association claimed that the developer will be selling the plots as high-rise buildings against the initial promises of villa developments, thus deviating from the plan.
KRERA finding
KRERA noted that the developer is developing a large "mixed development" township, parts of which have already been launched while some are yet to be. The common amenities are integrated across the developed, the under-development and yet-to-be-launched portions, it said.
"Thus, the developer needs to form different associations as per the phases in the project and integrate new developments after it has been launched over time," the order said. The developer will form an umbrella association of different associations, and will ensure that the associations take independent decisions in respect to each phase, it said.
To enable transparency, KRERA said, bank accounts should be provided to each association regarding the spending and deposits for advance maintenance charges. The developer must issue the handover of corpus funds to respective associations and set up rules for regular usage, KRERA added.
Most importantly, the authority said that the agreements of sale for villas and plotted developments are similar. "The developer is directed to put restrictions in the sale agreement for plots so that the theme of villas will be maintained as demanded by the homebuyers," the order said.
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