KOCHI: In a significant ruling, the Kerala Real Estate Regulatory Authority (K-RERA) has determined that landowners cannot avoid accountability if a housing project fails, assuming they were involved in its financing or profit-sharing. They will be regarded as “joint promoters” and held jointly accountable with the builder to fulfill the promise of delivering homes.
The case centers around a housing development by Nest Realties on land owned by Marickar Plantations, where homebuyers booked apartments between 2011 and 2022, paying nearly 95% of the total price. However, after accepting their payments, the builder left the project incomplete, failing to provide essential services like electricity and water.
“Typically, landowners argue that their role was limited to providing the land, distancing themselves from the construction process. Registered builders with RERA are often solely held liable for defaults, leaving apartment buyers with limited legal recourse against the landowners if the project remains unfinished,” explained advocate Sandeep Sreekumar, representing the allottees’ association in this case.
However, K-RERA reviewed the evidence and found the landowner significantly involved. They had taken a Rs 9-crore construction loan by mortgaging the project land, later defaulting on that loan, which led to legal complications regarding the property.
“…It is clear that the respondents failed to disclose the mortgage on the project land to the allottees. This lack of transparency materially affects the rights of the allottees, violating statutory requirements,” declared K-RERA chairperson Asha Thomas in her verdict.
Further, emails and bank statements revealed that buyers were instructed to deposit their payments, registration fees, and infrastructure charges directly into the landowner’s account.
“Given that the landowner acted as a financial partner rather than a mere bystander, K-RERA mandated their involvement,” added Sreekumar.
In its decision, K-RERA ordered the landowner to be officially registered as a joint promoter. Now both the builder and landowner are legally obliged to complete the construction, provide promised amenities, and deliver property papers to the buyers. To safeguard the buyers’ interests, K-RERA has prohibited both parties from selling or securing loans against the remaining 40 unsold flats.
“This ruling represents a monumental victory for ordinary homebuyers. It ensures that landowners can no longer reap profits from real estate ventures and abandon the project when builders fail. If they accept payment or fund the project, they are legally bound until the buyers receive their keys,” concluded Sreekumar.
