Corpus Fund
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By Staff Reporter
The Karnataka Real Estate Regulatory Authority (KRERA) has issued a significant directive to a developer involved in a senior living project near Bengaluru, emphasizing the importance of adhering to legal requirements in real estate developments. The Authority has ordered the developer to transfer the entire corpus fund of Rs 62.26 lakh to the Resident Welfare Association (RWA), ensuring that legal obligations are met.

In a related development, KRERA has also clarified that Registered Welfare Associations (RWAs) formed under the Karnataka Societies Registration Act (KSRA), 1960, and the Karnataka Apartment Ownership Act (KAOA), 1972, are not considered the registered body for collecting maintenance fees in a housing project.

The order, dated October 10, specifically refers to the RWA “Sharadindu Senior Commune Owners Association,” which was registered under KAOA 1972 in 2022. KRERA highlighted that the Karnataka Apartment Ownership Act stipulates that the developer should facilitate the formation of an association or cooperative society. Past Karnataka High Court rulings have discouraged RWAs from being registered under KSRA 1960. For stalled, abandoned, or delayed projects, it is imperative that allottees themselves form the registered entity to exercise their legal rights, according to the order.

The case involves the senior living township “Sharadindu State III,” which is situated near Mandya, close to Bengaluru and is being developed by Shree Senior Homes. The developer was responsible for maintaining the project and providing services from 2016 until the RWA’s formation in 2022.

Despite their responsibilities, the developer had not transferred the corpus fund to the RWA. The developer argued that the complaint was unsustainable because the homebuyers belonged to Phase 1 of the project and had obtained an occupancy certificate (OC) before the RERA Act came into effect, making them exempt from the Authority’s purview.

After reviewing the case details, KRERA concluded that the entire project should be categorized as ongoing rather than being developed in phases. The Authority pointed out that the masterplan, established in 2012, and the commencement certificate did not specify unit development in phases. KRERA also noted that various amenities catering to senior living had not been provided as promised. As a result, the developer was ordered to transfer the entire corpus fund to the RWA within 60 days and complete the pending amenities within two months.

This case underscores the commitment of KRERA to ensure that developers adhere to legal requirements, protect the rights of homebuyers, and maintain transparency in real estate projects.

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