Rera to builders in Karnataka: Insure common areas or pay for disaster repairs; tribunal flags mandatory coverage

BENGALURU: Builders must insure common areas or risk footing the bill for disaster repairs - that is the message from Karnataka Real Estate Regulatory Authority (K-Rera).In a recent order, the authority directed the developers of an apartment complex on Kanakapura Road to furnish all insurance documents for the project within 30 days, while partly allowing a complaint linked to a fire that damaged the clubhouse of Block 4.The case arose from a fire on Jan 30, 2024, when resident Dhananjaya noticed smoke coming from the clubhouse. The blaze destroyed the ladies' washroom and sauna facility. He told the tribunal that no repair or restoration work was taken up despite repeated requests.

He further said that although all blocks were ready, the promoter had not formed the association of allottees or transferred the common areas as required under Rera.

They also alleged that the promoter had not shared any insurance details under Section 16, raising concern about whether the clubhouse had any cover at all. Dhananjaya filed a complaint on May 4, 2024, seeking directions to restore the damaged clubhouse and hand over all insurance documents to the association.Insurance must for common areas: PanelThe builders rejected all claims. They said the clubhouse and shared amenities were handed over to the apartment owners' association on Nov 2, 2019.

Once that transfer was completed, responsibility for safety and maintenance rested with the association, not the promoter.The builders relied on an inquiry commissioned by the association, which found that the fire was caused by overheating of the sauna heater and not by any structural or electrical defect. They pointed out that the complainant had not named the association as a party to the case despite its role in day-to-day upkeep.After examining the submissions, the tribunal accepted the findings of the inquiry report and held that the promoter cannot be directed to carry out repairs for an incident that occurred years after handover.However, the panel drew a firm line on the insurance lapse. It noted that the promoter had not submitted any insurance policies, premium receipts, or records showing transfer of insurance benefits to the association, all of which are mandatory under Section 16 of Rera. It observed that "insurance for common areas is mandatory under Rera", adding that residents cannot be left to bear losses that should have been insured against.