RERA to promoters: Transfer corpus to owners’ association

Bengaluru: In a relief to many homeowners’ associations, apartment associations and communes, the Karnataka Real Estate Regulatory Authority (K-RERA), in a recent order, directed promoters or builders to transfer the corpus fund to the owners’ association within 60 days.  

In a case filed by the owners’ association of a seniors’ living commune in Pandavapura, Mandya, K-RERA noted that the “very purpose of the corpus fund is to transfer it to the association of allottees”.

Though the Karnataka Real Estate (Regulations and Development) Act, 2016 mandates that the promoter encourage the owners to set up an association and transfer the corpus funds to them, a majority of them do not adhere to it and the associations have been struggling to receive the funds. Activists in the sector hailed the order as a historical judgement that could set a precedent for future cases.

“This is the first time a clear order is passed, entitling the owners’ association to corpus funds. In many cases, since the funds run into crores, the promoters or builders delay the transfer of funds. In such struggles, the judgement could be used as a reference and the process will definitely become easier, going ahead,” said M S Shankar, general secretary, Forum for People’s Collective Efforts (previously known as ‘Fight for RERA’).

While the order speaks about the transfer of corpus funds, the observations in the judgement could open up new discussions and help owners, said Dhananjaya Padmanabhachar, convener, Karnataka Home Buyers’ Forum.

“The judgement notes that there has not been a transfer of undivided land share as well. Land value is the most important aspect for a home buyer and the transfer of title deed to the associations is crucial. We are happy that this observation has been made and RERA is looking in this direction,” he said.

The order also clears the air about the legality of associations, Shankar said. “Many of them are confused if they should register the association under the Karnataka Societies Registration Act, 1960, or the Karnataka Apartment Ownership Act, 1972. The builders took undue advantage of this to delay the process. The order will help establish the legality of the associations formed under the  Karnataka Apartment Ownership Act, 1972,” Shankar said.

Padmanacbhachar, however, urged the government and RERA to issue an official order that will help the home buyers. “Many states, including Gujarat and Orissa, have set clear guidelines on the registration of associations. Though the issue was discussed many times, there is no government order on the same,” he said.