Karnataka RERA Directs Bengaluru Developer to Pay Compensation for Unhanded Flat
The Karnataka Real Estate Regulatory Authority (KRERA) has taken a significant step in protecting the rights of homebuyers. The authority recently directed a Bengaluru-based developer, Surya Homes, and its partner, Bagpack Suites Bangalore Pvt Ltd, to pay ₹12 lakh annually to a homebuyer for 'loss of rent.' Additionally, the developer was ordered to pay ₹2 lakh as compensation for 'mental agony.'
This decision comes after the developer failed to hand over possession of a flat despite executing the sale deed. The homebuyer, who had invested a substantial amount in the property, faced significant financial losses and inconveniences due to the delay.
‘This court cannot ignore the prevailing rental/commercial realities in a metropolitan city such as Bengaluru. Apart from the financial loss, the complainant has also suffered inconvenience, uncertainty, and hardship due to the failure of the respondents to give the rent of the said flat to the complainant,’ KRERA stated in its order.
The developer and its partner initially argued that disputes relating to rent were outside the authority's jurisdiction. However, KRERA rejected this claim, emphasizing the need to protect homebuyers' rights and ensure fair practices in the real estate sector.
The homebuyer entered into an agreement in July 2019 to purchase an apartment in the Surya Elegance project, including a covered parking space. He initially paid ₹17.7 lakh and later completed the purchase in December 2019 by paying the remaining ₹93.2 lakh. In addition, he spent around ₹20 lakh on interiors, bringing his total investment in the property to about ₹1.30 crore, as noted in the order.
The developer agreed to pay a rental of ₹1.06 lakh per month from the date of registration. However, as of December 16, 2022, the developer had only paid ₹7.69 lakh, leaving a rent amount due of ₹30.81 lakh. The homebuyer approached KRERA seeking compensation for the loss of rent and mental agony caused by the delay.
The developer contended that they had completed the construction in 2018 and obtained the occupancy certificate in November 2018. They argued that their obligation towards the flat was completed once the sale deed was registered on December 6, 2019, and that they had handed over possession on the same day. The developer further stated that they were not obliged to pay any rentals to the complainants as no rental agreements had been entered into.
KRERA, however, noted that even though the developer had executed the sale deed and received the full payment, they continued to retain the flat under the pretext of paying rent, thereby depriving the complainant of using the property or earning rental income from it for a significant period. The authority held the respondents accountable for the resulting financial losses and the hardship caused to the complainant.
The authority's decision underscores the importance of adhering to the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), which aims to protect the interests of homebuyers and promote transparency in the real estate sector. This case serves as a reminder to developers to fulfill their obligations promptly and to avoid delays that can cause significant financial and emotional distress to homebuyers.
A list of questions has been sent to the developer. The story will be updated once a response is received.
