Bengaluru Real Estate: KRERA Orders Developer to Pay Compensation for Delayed Villa Handover
The Karnataka Real Estate Regulatory Authority (KRERA) has taken a strong stance against a developer in Bengaluru, ordering them to pay nearly ₹70 lakh as compensation to homebuyers for a two-year delay in handing over a luxury villa in the northern part of the city. The authority's decision comes after a lengthy legal battle, where the developer attempted to shift the blame to the buyers for the delays.
The project, known as ‘After the Rain Phase 1,’ was originally purchased by an investor in July 2014 for ₹3.21 crore. The property was later resold to the current complainants for ₹4.77 crore in 2022. Despite multiple deadline extensions and assurances, the villa remained incomplete, prompting the buyers to approach KRERA for relief.
KRERA has directed the developer, Total Environment, to execute the sale deed and pay delayed compensation to the homebuyers. The compensation is to be calculated at the rate of SBI MCLR+2% on the consideration amount of ₹3.3 crore from May 2023 until the offer of possession in July 2025.
In this case, the villa in question has a saleable area of 3,090 sq ft and a carpet area of 2,475 sq ft. The original owners entered into a sale-and-construction agreement with the developer on July 2, 2014, and paid a substantial amount towards the property. The villa was later transferred to the current complainants through an assignment deed executed in October 2022 with the developer’s consent.
The complainants contend that the developer repeatedly revised and postponed the possession timelines, providing false assurances that the villa was nearing completion or ready for possession. However, as of January 2025, the construction remained incomplete, as evidenced by photographic documentation.
In response, the developer told KRERA that the delay was due to the ownership transfer process and the homebuyers’ failure to pay the final instalment. They also claimed that the project was largely complete, with only ‘minor works’ pending. The developer argued that the delay was partially due to customisation work requested by the buyers.
KRERA, however, rejected these arguments, stating that the developer’s obligation is to ensure continuity of construction irrespective of changes in allottees. The authority noted that the developer’s contention that construction was halted due to the resale of the villa cannot be accepted as a valid ground for delay. KRERA emphasized that the promoter is required to complete the project within the agreed timeline, and the transfer or assignment of the unit does not absolve the promoter of this obligation.
The authority found that the delay was primarily the developer’s responsibility, although the complainants also contributed slightly by failing to pay the remaining balance on time. As a result, KRERA ordered the developer to pay the buyers delayed compensation for two years and to hand over physical possession of the villa to the complainants upon receipt of the balance sale consideration.
This decision by KRERA is a significant victory for homebuyers in Bengaluru, reinforcing the regulatory body’s commitment to protecting the rights of consumers in the real estate sector. It sets a precedent for future cases where developers fail to meet their contractual obligations, emphasizing the importance of timely project completion and adherence to agreed timelines.
A list of questions has been sent to the developer, and the story will be updated once a response is received.
