BENGALURU: Those who have a revenue share in real estate projects will be treated as promoter (land owner), making them equally liable and answerable to home buyers, states a recent order of the Karnataka Real Estate Regulatory Authority (RERA).
The order stated that the promoter and the developer will be held liable to provide details of transactions carried out before obtaining the occupancy certificate for projects. It also states that the owner or promoter will have to deposit 70% of the sale proceeds released from the allottees of land owners’ share to the Escrow account before obtaining the occupancy certificate.
K-RERA officials explained that the orders were issued for owners who take a share of the built-up area and sell them individually. For example, many builders and land owners enter into agreements where the builder takes 60% of the built-up space for sale and the land owner takes 40% of the built-up area and sells it individually. But the land owner is not booked for RERA violations, as the name of the builder is different. To address this issue, the order has been issued.
It has also been observed that during online registration process, especially of ongoing projects, developers enter into agreements with individuals or organisations, where the latter are entitled to a share of the total revenue generated from sale of apartments or from the total developed area. So now promoters (land owners) will have to disclose revenue and will also be liable if the buyer files a case in RERA.
This circular was issued after holding a meeting with all stake holders and real estate agencies at K-RERA recently. The K-RERA officials said that since the decision has been taken after the meeting, the realtors cannot object.
M S Shankar, Convenor, RERA-Karnataka Chapter, said: “This was required as there are many cases where land owners take money and escape. By doing this, K-RERA will have more powers to bring the land owners to book.”
Plea for PM’s intervention
Forum for People’s Collective Efforts has written to PM Narendra Modi, Finance and Corporate Affairs Minister Nirmala Sitharaman and Secretary, Ministry of Corporate Affairs, Inketi Srinivas, appealing to intervene and stop the proposal to amend the Insolvency and Bankruptcy Code demanded by builders.
Members of the Forum said that builders are not honouring the SC judgment, but are demanding that National Company Law Tribunal not accept cases filed by individual home buyers.M S Shankar said the builders are opposing as it will affect their business and reputation. This is required, as so far, there are 1,620 cases, where each petitioner is to get an average compensation of Rs 10- 15 lakh. And so far only six to seven cases have been heard, but the builder has not yet paid the buyer compensation. The amendment will only dilute these cases.