Karnataka RERA Rules: Landowners Deemed Promoters, Must Compensate Homebuyers for Delayed Possession

On October 30, 2025, the Karnataka Real Estate Regulatory Authority (K-RERA) determined that landowners also fall under the definition of promoters as outlined in Section 2(zk) of the RERA Act, 2016. This ruling has significant implications, as it holds landowners liable for delays in the handover of possession to homebuyers. Consequently, K-RERA ordered a landowner to pay Rs 6.5 lakh as interest compensation to a homebuyer for the delay, which constitutes a violation of the RERA Act.

This ruling arose from a case filed by two families of homebuyers who had purchased apartments in a housing project. The development agreement was signed on October 3, 2019, between the builder, landowner, and others, leading to the construction of the housing project. Even though the apartment was developed and promoted by the builder, it was allocated to the landowner, who then executed an Agreement for Sale cum Construction on April 12, 2022, in favor of the homebuyers for a total sale price of Rs 1.1 crore. The homebuyers have already contributed Rs 22 lakh from their own funds and Rs 79 lakh through a home loan to the landowner.

The developer and landowner were expected to hand over the possession of the flat to the homebuyers by December 31, 2022, with a grace period of 6 months, up to June 30, 2023. Despite paying over 90% of the sale price upfront and the developer obtaining the Occupancy Certificate on March 24, 2023, the homebuyers did not receive any notice about possession. The landowner has been postponing the release of the developer's share of the apartments as per their agreement and is demanding an extra Rs 4,000 per square foot.

Homebuyers felt they had no choice but to file a complaint with the RERA Authority, stating that they were ready to immediately pay the pending installments for the apartment, but the developer and landowner were not fulfilling their obligations under various agreements, thus breaching the terms and violating the RERA Act.

The K-RERA ordered the builder and landowner to pay compensation and hand over possession of the apartment to the homebuyers. In its order dated September 6, 2024, K-RERA stated, “To pay a sum of Rs 6,58,759/- towards interest on delay period calculated at SBI MCLR + 2% from 30.06.2023 to 06.02.2024 to the complainants within 60 days from the date of this order; The interest due from 07.02.2024 shall be calculated likewise and paid to the complainant till the date of possession.”

The builder filed an appeal in Karnataka RERA against this order. On October 31, 2025, the homebuyers won the case in Karnataka RERA.

Subrata Mukherjee, Partner at SNG and Partners, Advocates & Solicitors, explained the reasoning behind the K-RERA's decision. The authorities held that the landowner falls under the definition of ‘Promoter’ under the RERA Act. The definition of ‘Promoter’ includes “a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees.”

K-RERA has previously stated, in terms of Circular dated 06.11.2019 bearing No. KRERA/Circular/3/2019, that if a landowner grants a developer the right to develop the land belonging to him/her, in exchange for a share in the developed area or a share in the proceeds from the sale of the developed area, then the landowner shall be deemed to be a 'Promoter' under the Act.

The developer sought to set aside the K-RERA order dated 06.09.2024, citing the fact that they had completed their obligations in a timely manner and obtained the Occupancy Certificate within the agreed timeline. The landowner contended that the delay in handing over possession and the execution of the sale deed was due to a temporary injunction in a partition suit. However, the homebuyers filed a memo concurring with the developer and acknowledging that the delay was solely attributable to the landowner.

In the appeal against the earlier K-RERA order (2024), Karnataka RERA in its order dated October 30, 2025, stated that the points of contention were whether the impugned Order dated 06.09.2024 passed by K-RERA in Complaint No.01641/2023 warranted interference in the appeal. K-RERA found that the delay was solely attributable to the landowner and that the developer had completed their obligations in a timely manner. Therefore, the K-RERA confirmed that the landowner is liable to pay the compensation and hand over possession to the homebuyers.

This ruling underscores the importance of clear and transparent agreements between developers, landowners, and homebuyers to avoid such disputes and ensure compliance with the RERA Act.