KOCHI: In a landmark decision, the Kerala Real Estate Regulatory Authority (K-RERA) has ruled that landowners cannot escape responsibility if a housing project fails, provided they were actively involved in its finances or profit-sharing. They will be treated as “joint promoters” and held equally responsible alongside the builder to deliver the promised homes.
The case involves a housing project in Kerala developed by Nest Realties on land owned by Marickar Plantations. Homebuyers booked apartments between 2011 and 2022, paying nearly 95% of the total cost. Despite taking their money, the builder left the project incomplete and failed to provide basic amenities like electricity and water.
“Typically, landowners claim they only provided the land and have nothing to do with the construction. The builders registered with RERA will only be liable to allottees for defaults. An apartment buyer can’t legally proceed against the landowner if the builder couldn’t complete the project,” said advocate Sandeep Sreekumar, who appeared for the allottees’ association in the case.
However, K-RERA looked at the evidence and found the landowner was deeply involved in this case. The landowner took a Rs 9-crore construction loan by mortgaging the project land. That loan later defaulted, creating legal trouble for the property.
“…It is evident that the respondents have failed to disclose to the allottees the mortgage created over the project land in favour of Kerala Transport Development Finance Corporation. Such non-disclosure materially affects the rights of the allottees and constitutes a violation of the statutory requirement of transparency..,” K-RERA chairperson Asha Thomas observed in her verdict.
Also, the e-mails and bank statements proved that buyers were told to deposit their money, registration fees and infrastructure charges directly into the landowner’s bank account.
“As the landowner acted as a financial partner rather than a passive onlooker, K-RERA ruled that they must step up,” Sreekumar added.
In its verdict, K-RERA ordered the landowner to officially register as a joint promoter. Both the builder and the landowner are now legally forced to finish the building, provide the promised amenities, and hand over the property papers to the buyers. To protect the buyers, K-RERA has blocked both parties from selling or borrowing money against the remaining 40 unsold flats.
“This ruling is a massive victory for common homebuyers. It means landowners can no longer pocket profits from a real estate deal and walk away when the builder defaults. If they take your money or fund the project, they are legally stuck with you until you get your keys,” Sreekumar said.
