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Karnataka RERA has issued a clear and uncompromising message to real estate developers: insure common areas or be prepared to pay for disaster-related repairs out of your own pocket. The authority’s latest ruling, delivered in a case involving a fire at an apartment clubhouse on Kanakapura Road, reinforces the statutory obligation of builders to provide complete insurance documentation before handing over common areas to residents. For homebuyers and housing associations, the order underscores stronger accountability and greater protection against unexpected losses.
The Case That Triggered the Ruling
The ruling stems from an incident that took place on January 30, 2024, when a resident noticed smoke emerging from the clubhouse of Block 4 in a residential project on Kanakapura Road. The fire severely damaged the ladies’ washroom and the sauna room. According to the complainant, despite repeated requests, no repair or restoration work was initiated by the promoter.
What worried residents even more was the uncertainty about whether the clubhouse or the wider project had any insurance coverage at all. The complainant alleged that the promoter had not shared any insurance documents under Section 16 of the Act, had not created the association of allottees, and had not transferred the common areas as required under Karnataka RERA.
This led to a formal complaint filed on May 4, 2024, seeking restoration of the damaged clubhouse and the handover of all insurance-related documents.
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Builder’s Response: Handover Already Completed
The builders denied all allegations and claimed that responsibility for safety and upkeep no longer rested with them. According to their submission, the clubhouse and other shared amenities were handed over to the owners’ association on November 2, 2019. After this handover, they argued, the association was responsible for maintenance and disaster management.
The developers also relied on an inquiry report commissioned by the association, which stated that the fire was triggered by overheating of the sauna heater—not by any construction defect or electrical issue. They further emphasised that the complainant did not make the association a party to the proceedings, despite its relevance to the case.
Karnataka RERA’s Assessment: No Repair Liability, But Insurance Lapse Established
After hearing all parties, the Karnataka RERA tribunal accepted the conclusions of the inquiry report and agreed that the promoter could not be held liable for repair obligations arising years after handover. However, the authority found a crucial non-compliance: the promoter had not submitted any insurance documents required under Section 16 of the Real Estate (Regulation and Development) Act.
The tribunal noted that the promoter failed to furnish:
- Insurance policies for common areas
- Premium payment receipts
- Endorsements or proof of transfer of insurance benefits to the association
These omissions constitute a violation of statutory obligations, as Karnataka RERA mandates insurance coverage for common areas to protect residents against unforeseen events.
The bench observed that “insurance for common areas is mandatory under RERA” and that residents should never be burdened with losses that should have been covered by insurance.
The Final Order: Furnish Insurance Documents Within 30 Days
On November 29, the bench chaired by RERA Chairman Rakesh Singh and Member Gurijala Ravindranadha Reddy issued a directive instructing the builders to provide:
- All insurance policies covering the entire project
- Premium payment proofs
- Endorsements issued by insurance companies
- Insurance records for the clubhouse and shared amenities
The documents must be furnished within 30 days.
For residents, this is a significant victory. As the complainant Dhananjaya emphasised, the order confirms that promoters must secure insurance for common areas—and if they fail to do so, they can be held responsible for any disaster-related repair.
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What This Means for Builders and Homebuyers
The ruling provides clarity on a long-standing issue related to compliance with Karnataka RERA. For builders, it is a strong reminder that insurance obligations cannot be overlooked, delayed, or brushed aside during handover.
For homebuyers and associations, the decision brings three key gains:
- Greater transparency – Residents now have a clear right to demand complete insurance documentation.
- Stronger protection – Insurance ensures financial safety against fire, structural damage, and other disasters.
- Higher accountability – Builders who fail to insure common areas may face liability exposure under Karnataka RERA.
The case also highlights why housing associations must stay vigilant about verifying and renewing insurance policies after handover.
Conclusion
With this ruling, Karnataka RERA has reinforced a crucial aspect of homebuyer protection: common areas must be insured, and the promoter is legally responsible for ensuring compliance. Builders who fail to follow the rules now risk being held financially accountable for disaster repairs, even years after possession.
For residents, the order not only brings relief but also sets a strong precedent for transparency, safety, and accountability in Karnataka’s real estate sector.
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Ans 1. Karnataka RERA ruled that builders must insure all common areas in residential projects and provide complete insurance documents to the residents’ association. Failure to do so may make the promoter liable for disaster-related repairs.
Ans 2. The ruling applies to all residential projects under Karnataka RERA’s jurisdiction. It ensures that insurance obligations for common areas are mandatory regardless of when the handover of amenities occurs.
Ans 3. While the housing association manages maintenance after handover, the promoter remains responsible for submitting insurance policies and proof of coverage under Section 16 of RERA at the time of handover.
Ans 4. Builders are required to furnish insurance policies covering all common areas, premium payment receipts, endorsements transferring benefits to the association, and records for facilities like clubhouses and shared amenities.
Ans 5. If a builder fails to furnish insurance documents, they may be held legally responsible for repair costs arising from disasters, even years after possession, as per Karnataka RERA regulations.
Ans 6. The decision ensures greater transparency, financial safety against disasters, and higher accountability from builders. Residents now have a clear right to demand insurance documentation for shared areas.
Ans 7. Yes, associations must stay vigilant to verify, renew, and ensure insurance coverage remains active to protect residents from potential fire, structural damage, or other disasters.
Ans 8. Karnataka RERA clarified that builders are not automatically liable for repairs after handover if damage occurs. However, failing to provide insurance documentation constitutes non-compliance and can lead to accountability.
Ans 9. The ruling reinforces homebuyer protection, promotes transparency, and ensures builders cannot neglect mandatory insurance obligations. It sets a precedent for accountability in the real estate industry.
Ans 10. In the Kanakapura Road case, Karnataka RERA instructed the promoter to submit all insurance policies and related documents within 30 days, emphasizing timely compliance.