In a landmark directive, the Karnataka Real Estate Regulatory Authority (K-Rera) has issued a stern warning to developers, mandating that they must secure insurance for common areas in apartment complexes. Failure to do so will leave builders financially responsible for repairs following disasters, the authority has ruled.
Fire Incident Triggers RERA Complaint
The case that brought this issue to the forefront involved a fire at an apartment complex on Kanakapura Road in Bengaluru. On January 30, 2024, resident Dhananjaya noticed smoke billowing from the clubhouse in Block 4. The blaze ultimately destroyed the ladies' washroom and the sauna facility.
Frustrated by the lack of action, Dhananjaya filed a formal complaint with K-Rera on May 4, 2024. He stated that despite repeated requests, no repair or restoration work had been initiated by the promoter. His complaint also highlighted that the promoter had not formed the association of allottees or transferred the common areas as required under Rera laws. Crucially, he alleged that the builder had not shared any insurance details, raising serious concerns about whether the clubhouse was insured at all.
Builders' Defense and Tribunal's Findings
The builders, in their defense, rejected all claims of liability. They argued that the clubhouse and shared amenities had been formally handed over to the apartment owners' association on November 2, 2019. Following this transfer, they contended, the responsibility for safety and maintenance shifted entirely to the association.
The developers cited an inquiry report commissioned by the association itself, which concluded the fire was caused by the overheating of a sauna heater and not due to any structural or electrical defect in the building. They also pointed out that the complainant had not made the association a party to the case.
After examining all submissions, the K-Rera tribunal accepted the findings of the inquiry report. It held that the promoter could not be directed to carry out repairs for an incident that occurred years after the handover of the property.
The Mandatory Insurance Rule Takes Center Stage
However, the tribunal delivered a firm verdict on the issue of insurance. It noted a significant lapse: the promoter had failed to submit any insurance policies, premium receipts, or records showing the transfer of insurance benefits to the residents' association. The authority emphasized that these actions are mandatory under Section 16 of the Rera Act.
In a clear and powerful observation, the panel stated that "insurance for common areas is mandatory under Rera." It further added that residents cannot be left to bear losses for incidents that should have been covered by adequate insurance policies taken out by the developer.
As a result, K-Rera issued a direct order to the developers of the Kanakapura Road complex. They have been directed to furnish all insurance documents related to the project within 30 days. This order serves as a critical precedent, reinforcing that securing insurance for common areas is a non-negotiable obligation for builders, protecting homebuyers from unforeseen financial burdens after a disaster.
