Homebuyers in Bengaluru to Take Over and Complete Delayed housing Project

Bengaluru:  29, February 2024, In a landmark decision, the Karnataka Real Estate Regulatory Authority (KRERA) has ordered homebuyers in Bengaluru to take over and complete a stalled luxury villa project from the developer. This rare move comes after the residents' welfare association (RWA) approached KRERA, frustrated by the project's eight-year delay.

Project Details and Delays:

Located in Anekal, the project comprises 73 villas and 6 units designated for the economically weaker section. The RWA, registered as a cooperative society, filed a complaint with KRERA stating that construction had begun eight years ago but remained incomplete. According to the RWA, approximately 85% of the project is finished, with an estimated Rs 26 crore needed to complete the remaining work.

KRERA's Decision and Reasoning:

KRERA, citing Section 8 of the RERA Act which empowers resident welfare associations to take over stalled projects, ruled in favor of the homebuyers. The order highlighted several factors contributing to its decision:

• Developer's Failure to Deliver: LGCL Urban Homes LLP, the developer, had failed to fulfill its obligation to hand over possession of the villas even after ten years.
• Non-compliance with RERA: The developer neglected to submit mandatory quarterly reports to KRERA, as stipulated by the RERA Act. Additionally, the developer faces complaints regarding other projects in Bengaluru.
• Homebuyers' Initiative and Legal Standing: The RWA's formation as a cooperative society under the Karnataka Cooperative Societies Act, 1959, demonstrated legal legitimacy and proactiveness on the part of the homebuyers.

Project Completion and Funding:

KRERA outlined the plan for project completion and funding:

• Available Funds: Homebuyers have already contributed Rs 14.3 crore towards land acquisition for power and infrastructure.
• Future Funding: The remaining costs will be covered through the sale of unsold units. If necessary, homebuyers may be required to contribute additional funds, with the possibility of recovering them later from the cooperative society's funds. The authority estimates Rs 24 crore can be generated from selling the remaining units.
• Developer's Obligation: KRERA directed the developer to hand over all approved documents and no-objection certificates necessary for the project's completion.
• Completion Deadline: The RWA has been directed to finalize the project within 18 months from the date of the order.

Significance and Context:

This decision sets a significant precedent for homebuyers facing project delays in Bengaluru. With over 26,000 delayed projects worth more than Rs 28,000 crore, empowering residents' associations to take charge offers a potential solution for resolving such issues. This case also underscores the importance of developer accountability and adherence to RERA regulations.