Karnataka's real estate regulator asks developer to enable formation of association as a cooperative society

The authority ordered the developer to form the association and also provide a copy of the occupancy certificate within 60 days of the order.

The Real Estate Real Estate Authority of Karnataka (KRERA) has directed a developer of a project in Bengaluru that has not been registered under the Real Estate (Regulation and Development) Act to form an association of allottees as per the Karnataka Cooperative Society Act, 1959 (KSCA).

Passing an order partly for a homebuyer in Istartha Apartment in western Bengaluru, the authority asked the developer to provide an occupancy certificate and also to take immediate steps in resolving issues regarding the formation of the residents’ welfare association (RWA).

"It is necessary that the allottees form an association to collect money for development and all commercial activities in the form of a cooperative society under KSCA 1959," the order dated July 31 read.

KRERA added that it is the duty of the developer to form the association. "It is just and essential that a cooperative society of allottees be formed to enable the homebuyers in taking over the project," it said.

In this case, the buyer, Chetan KT, had approached the authority alleging undelivered amenities and failure to provide occupancy certificates to the homebuyers.

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Sub Editor|Moneycontrol

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KRERA finding

According to the facts in the case, the developer executed the sale deed in July 2018 for a consideration of Rs 64 lakh.

Chetan alleged that common amenities including lifts remain incomplete despite the collection of maintenance fees.

"The electric bills have not been transferred to the name of the homebuyers and the association has not been formed," the buyer told KRERA.

However, the developer contended that the khata—legal document used for computing and filing property tax in Karnataka—of the property has been bifurcated and transferred to the names of the owners, according to an order issued by the local municipal body in 2022.

"The electricity bills have also been transferred to the names of individual owners, and the homebuyer has been directed to meet Bangalore Electricity Supply Company Limited to get the same transferred to his name," the developer told the court.

The order

After checking the documents submitted by both parties, the authority noted that the khata had been bifurcated and transferred to individual buyers' names.

KRERA noted that the undivided share of apartment units has been clearly mentioned in the sale deed executed between the developer and the homebuyers. Additionally, the project had no deviation from the building plan approved by the competent authority.

"The developer has claimed that the occupancy certificate has been obtained in 2016. However, the developer did not provide any documents to support the claim," the order said.

Thus, the authority ordered the developer to form the association and also provide a copy of the occupancy certificate within 60 days of the order.

Additionally, KRERA asked the developer to pay Rs 5 lakh to the buyer in compensation for harassment.