The Karnataka Real Estate Regulatory Authority (KRERA) has issued a significant clarification regarding project registration. According to the ruling, projects that applied for an Occupancy Certificate (OC) before the Real Estate (Regulation and Development) Act (RERA) came into force in May 2017 are not required to register under KRERA. This decision has far-reaching implications for both developers and homebuyers.
The Ruling: Context and Implications
The clarification by KRERA stemmed from a complaint involving Hamilton Homes, a project by SJR Prime Corporation in Bengaluru's Electronic City. The issue revolved around incomplete flats and missing basic infrastructure, despite the developer obtaining an OC in May 2017, just before RERA’s enforcement.
KRERA dismissed the complaint, stating that projects with OC or partial OC applications filed before the Act's implementation do not fall under its jurisdiction. This ruling aligns with a 2022 Karnataka High Court judgment that excluded such projects from RERA's purview.
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The Case: Hamilton Homes and Fiesta Homes
The KRERA ruling highlighted two cases:
1. Hamilton Homes: Buyers alleged that essential infrastructure like water supply and sewage treatment was incomplete despite the OC being issued in May 2017.
2. Fiesta Homes: A buyer complained that basic works in 120 out of 359 flats remained unfinished, including tiling, painting, and plumbing.
Despite these complaints, KRERA held that non-completion of internal work does not classify a project as ongoing if the OC was applied for before May 2017.
Developer’s Defense
The developers argued that applying for and obtaining an OC before RERA’s implementation exempts them from its jurisdiction. They emphasized that minor internal works, such as tiling and kitchen fittings, are often completed after a unit is sold. The developer also noted that most of the project was completed and handed over to landowners, with the remaining units ready for possession.
Key Findings by KRERA
1. Exemption from Registration: Projects with OC applications submitted before RERA’s enforcement are not required to register.
2. Legal Basis: Citing the 2022 Karnataka High Court order, KRERA reaffirmed that its authority does not extend to projects with OCs applied for before May 2017.
3. Clarification on Internal Work: Non-completion of minor internal works does not make a project ongoing if the OC is obtained.
Conclusion
KRERA’s ruling offers much-needed clarity on project registration requirements under the RERA Act. It emphasizes the legal standing of developers who have adhered to OC application timelines, even as homebuyers may have concerns about incomplete infrastructure. This decision reinforces the importance of understanding RERA regulations for both developers and buyers, ensuring better compliance and informed decision-making.
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Ans 1. KRERA clarified that projects with Occupancy Certificate (OC) applications submitted before RERA came into effect in May 2017 are not required to register under KRERA.
Ans 2. The ruling stemmed from complaints related to incomplete infrastructure in projects like Hamilton Homes and Fiesta Homes. KRERA clarified its jurisdiction to resolve ambiguities about such cases.
Ans 3. May 2017 marks the enforcement of the Real Estate (Regulation and Development) Act (RERA). Projects with OC applications before this date are exempt from KRERA’s registration requirements.
Ans 4. Buyers of Hamilton Homes alleged that essential infrastructure, including water supply and sewage treatment, was incomplete despite the project receiving an OC in May 2017.
Ans 5. No, KRERA clarified that minor internal works like tiling and kitchen fittings do not classify a project as ongoing if the OC was applied for before RERA’s enforcement.
Ans 6. KRERA based its ruling on a 2022 Karnataka High Court judgment, which stated that projects with OC applications before RERA’s enforcement do not fall under its jurisdiction.
Ans 7. A buyer of Fiesta Homes complained about unfinished work in 120 out of 359 flats. However, KRERA held that the project is exempt from registration due to the pre-RERA OC application.
Ans 8. Developers argued that applying for an OC before RERA exempts them from KRERA’s jurisdiction. They also noted that minor internal works are often completed after unit sales.
Ans 9. Homebuyers must be aware that KRERA cannot address complaints about incomplete infrastructure if the project applied for an OC before RERA’s enforcement. Buyers should verify such details before purchase.
Ans 10. The ruling provides clarity and legal protection for developers who adhered to pre-RERA OC application timelines, reinforcing their compliance.