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In a recent ruling, the Karnataka Real Estate Regulatory Authority (KRERA) has provided crucial clarity on the issue of builder liability concerning changes in amenity locations from the conceptual plan (Brochure) to the sanctioned plan [N Rajashekhar & others Vs Astrum Value Homes Private Limited]. This decision holds significant implications for both developers and homebuyers, offering insights into the interpretation of real estate regulations and the responsibilities of builders in adhering to approved project plans.
Background:
The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to protect the interests of homebuyers and promote transparency and accountability in the real estate sector. One of the key objectives of RERA is to ensure that developers adhere to approved project plans and deliver projects as per the commitments made to buyers.
The Issue at Hand:
A common source of contention in real estate transactions is the deviation of project amenities’ locations from the initial conceptual plan presented in project brochures. Homebuyers often rely on these brochures when making purchase decisions, expecting the amenities to be located as advertised. However, developers may sometimes alter amenity locations during the project’s execution, leading to disputes regarding builder liability for such deviations.
Karnataka RERA’s Decision:
In its recent decision, Karnataka RERA addressed this issue head-on, asserting that a change in amenity locations as depicted in the conceptual plan (Brochure) does not automatically render the builder liable for deviating from the sanctioned plan. The regulatory authority emphasized the importance of distinguishing between the conceptual plan presented to buyers and the officially sanctioned project plan approved by relevant authorities.
Key Rationale Behind the Decision:
Distinction Between Conceptual and Sanctioned Plans: Karnataka RERA’s decision underscores the distinction between the initial conceptual plan presented in project brochures and the sanctioned plan approved by regulatory authorities. It acknowledges that changes may occur during the project’s development, provided they align with the approved plan and do not adversely affect buyers’ interests.
Importance of Transparency and Disclosure: While developers are expected to adhere to the commitments made in project brochures, Karnataka RERA’s decision highlights the need for transparency and disclosure regarding any subsequent changes to amenity locations. Developers are encouraged to communicate such changes to buyers promptly, ensuring informed decision-making.
Focus on Regulatory Compliance: The decision reaffirms the importance of developers complying with regulatory requirements and obtaining necessary approvals for project modifications. By aligning changes with the sanctioned plan and obtaining requisite permissions, developers can mitigate potential legal risks and uphold their obligations to buyers.
Implications for Stakeholders:
Developers: The decision provides developers with clarity regarding their liabilities concerning changes in amenity locations. It emphasizes the importance of adherence to approved project plans and regulatory compliance while acknowledging the flexibility to make modifications as long as they are aligned with the sanctioned plan.
Homebuyers: While homebuyers may expect amenities to be located as advertised in project brochures, Karnataka RERA’s decision underscores the importance of understanding the distinction between conceptual and sanctioned plans. Buyers are encouraged to conduct due diligence and seek clarification from developers regarding any discrepancies.
Conclusion:
Karnataka RERA’s decision represents a significant development in clarifying builder liability concerning changes in amenity locations. By emphasizing the distinction between conceptual and sanctioned plans and prioritizing regulatory compliance and transparency, the decision provides valuable guidance for developers and homebuyers alike. Moving forward, adherence to approved project plans and effective communication between developers and buyers will be crucial in fostering trust and accountability in the real estate sector.