Karnataka RERA holds landowner, developer responsible for not executing sale deed

KRERA said though the developer and the landowner handed over the apartment, they failed to execute the sale deed, thus violating the sale agreement.

The Karnataka Real Estate Regulatory Authority (KRERA) has held a landlord and an absconding developer responsible for failing to execute the sale deed with a homebuyer for a Bengaluru-based project.

Balakrishna Vegi, the homebuyer, signed an agreement for an apartment in September 2011 and paid Rs 32 lakh over several instalments to Yogananda Reddy, the developer, and an additional Rs 4 lakh to Bharat A, the landowner.

"Despite signing the sale agreement, both the developer and the landlord
failed to execute the sale deed within the stipulated time as per the agreement," a KRERA order dated June 23 mentioned.

The KRERA has held the developer and landowner responsible and asked them to execute the sale deed within 30 days of the order date.

The project, Pavan Tranquil Homes, developed by Pavan Builders, is located in southern Bengaluru's Uttarahalli Hobli.

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Vegi had also taken a home loan from Vijaya Bank.

What is the homebuyer’s complaint?

Under the agreement, the sale deed was supposed to be executed within December 2019, Vegi said.

"However, after receiving the money, the developer went absconding and changed all contact numbers, including email ID," he claimed.

At this point, the landowner collected Rs 4 lakh from the homebuyer to complete the project. The order mentions only one buyer, and it is unclear whether the developer collected money from other buyers also.

Vegi, who was under a severe financial burden, moved into the project in November 2013 without a sale deed in place.

Today, the landowner is demanding Rs 10 lakh to execute the sale deed, and thus the homebuyer has approached KRERA for relief, the order mentioned.

KRERA finding

KRERA noted that though the developer and the landowner have handed over the apartment, they failed to execute the sale deed, thus violating the sale agreement.

"It is obvious that the homebuyer has paid the entire amount to the respondents. And having accepted the money without executing the sale deed, the developer and the landowner have failed to keep to their promises," KRERA said.

Thus the developer and landowner are responsible to execute the sale deed within 30 days of the order date, it added.

Absconding developers

Advocates say, in such cases, where the developer goes absconding, it is a clear breach of trust and thus is a commitment of fraud.

"The homebuyers can approach the police and file an FIR. Additionally, landowners are jointly and separately liable. Thus, they have to execute the order when the developer fails to do so," Advocate Chandrachur Bhattacharyya said.

However, if the project is already complete, advocates say in cases where the builder is absconding, several critical issues will come to the surface.

"Every joint development agreement signed between the developer and the landowner will have shares of apartments that belong to both. If the homebuyer's apartment belongs to the landowner’s share, he can execute the sale deed. Otherwise, the developer will have to be present," Karnataka High Court advocate Vittal BR said.

In this case, the homebuyer should approach KRERA again, seeking a review of the order, especially when the developer is absconding, he added.

Options before homebuyers

Advocates say that if homebuyers approach the consumer forum, the court will issue a bailable warrant and an arrest warrant for the police to act on locating the developer at the earliest. However, till today, we have not seen such suo moto actions from KRERA, Vittal said.

For incomplete, pre-RERA projects, the homebuyers can also approach the Authority to take over the development. Speaking at a conference in June, KRERA Chairman Kishore Chandra said homebuyers of such delayed projects can approach the Authority to form an association of allottees aiming to complete the project.