Karnataka Real Estate Regulatory Authority (KRERA) has ordered L&T Realty to hand over common areas for the L&T Realty Raintree Boulevard project in Bengaluru to the resident welfare association (RWA) and also to transfer the entire corpus (amount collected from homebuyers as pre-maintenance) collected.
"The developer is directed to transfer the corpus fund and hand over the common areas to the resident welfare association," the order passed on January 20 said.
Advocates say the problem of builders not giving homebuyers their due share of land rights can become a bigger issue in Karnataka’s real estate sector unless it is addressed immediately.
"Once the conveyance deed (as per Section 17 of the RERA Act) is executed, the undivided share of land (UDS) is transferred to all the homebuyers who have paid for it in the sale deed," advocate Vittal BR added.
In the context of real estate, UDS refers to a portion of a property (common amenities, staircases, etc) that is collectively owned by multiple owners or homebuyers.
Hand over common areas to the association
The project spread across 25 acres comprises 2,242 apartments, with some luxury units costing upwards of Rs 4 crore, according to Suhail Ahmed, the advocate for the homebuyers in this case.
Ahmed claimed before KRERA that under Section 17 of the RERA Act, the developer is liable to hand over the common areas to the RWA after completion of the project.
"After completion of the project, the developer must form an association and hand over the common areas to the RWA. Additionally, the developer should also provide bank accounts and transfer the entire corpus fund collected to the association," KRERA said.
RERA not empowered to order demolition
KRERA noted that L&T Realty had violated the sanction plan without the two-thirds majority of the home buyers and that the clubhouse is smaller in size than mentioned in the sanction plan.
However, even in case of violation of the sanction plan, under the RERA Act, the authority has not been empowered to order demolition of the building, KRERA added.
"Unless such powers are conferred, the authority cannot demolish buildings but can pass orders for compensation," the order said.
The impact
As per Section 17 of the RERA Act, once the project is completed as per the approved plan, the developer has to execute a conveyance deed in favour of the allottees and convey the land.
Abhilash Naik, another lawyer, explains that once someone buys an apartment, the builder needs to execute a conveyance deed where the entire land title, with the undivided share of interest, is transferred to the co-operative society and each homebuyer becomes a shareholder.
However, advocates say, developers in Karnataka continue to sidestep the conveyance deed, thus enjoying the land titles while charging the same from the buyers.
Real estate is a state subject. Each state has its own RERA Rules, within the ambit of which the central RERA Act is implemented. "While Section 17 of the RERA Act speaks about conveyance, the KRERA Rules do not mention it, thus creating confusion. We have sent multiple letters to the KRERA and also met the officials regarding this matter," Dhananjaya Padmanabhachar, president of the Karnataka Home Buyers Forum, said.
A right to information (RTI) reply dated December 30, 2023, accessed by Moneycontrol, said, "KRERA has not issued any circular on this matter."
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