Landowners Having Area or Revenue Share to be Treated as Promoters under Karnataka RERA
Karnataka RERA · Circular No. KRERA / circular / 03 / 2019 · 31/10/2019
What this circular is about
Karnataka RERA issued this circular to clarify the status of landowners who have an area share or revenue share in a real estate project. It clarifies that such landowners fall within the definition of a Promoter and sets out how they should be identified during project registration.
The circular also specifies the responsibilities of the Landowner/Promoter and Developer/Promoter, including disclosure of their respective rights and shares, transaction reporting, designated account requirements and other compliance obligations.
Key Highlights
Karnataka RERA has clarified the status of landowners who are entitled to an area or revenue share in a real estate project. Such landowners fall within the definition of a Promoter and are subject to the corresponding responsibilities and obligations under RERA.
Landowner to be identified as Promoter
If a landowner is entitled to a share of the developed area or the revenue from the project, the landowner falls within the definition of a Promoter under RERA and must be identified accordingly during project registration.
Project registration to include the landowner's share
The Developer must list down the Landowner’s share in detail while registering the project with Karnataka RERA. Transactions carried out by the Landowner must also be monitored and reported as required.
Both parties share RERA responsibilities
However, the circular makes it clear that the RERA obligations and liabilities are to be fulfilled equally by both the Developer and the Landowner.
The agreement must clearly define each party's rights and share
The written agreement between the Landowner and Developer must clearly specify their respective rights and shares. A copy of this agreement must also be uploaded on the Karnataka RERA website for public viewing.
The Landowner is responsible for claims relating to the land title
The Landowner and Developer must submit the prescribed joint affidavit. The Landowner is answerable for claims concerning the title of the land involved in the project and related claims.
All sale proceeds must go to the Designated Account
Whether is is area-sharing or revenue-sharing, 70% of the sale proceeds from the landowners share must be deposited into the project’s Designated Account. The Developer is required to ensure this compliance.
Transactions by both parties must be reported
The Developer must furnish details of transactions carried out both by the Developer and by the Landowner, in accordance with the requirements referred to in the circular.
The development agreement must recognise both as Promoters
The JDA, Joint Venture Agreement or other agreement governing the project must expressly identify both the Developer and Landowner as Promoters and provide for their responsibility to comply with the applicable requirements.
Official Circular
Download Karnataka RERA’s Official Circular No.KRERA / circular / 03 / 2019 dated 31/10/2019.
All your questions answered (FAQs)
Yes. A landowner entitled to an area or revenue share in the project falls within the definition of a Promoter and must be identified accordingly during registration.
The circular states that the obligations and liabilities of the promoters are at par with each other, subject to the written agreement governing the Landowner's rights in the project.
In an area-sharing arrangement, 70% of the sale proceeds realised from allottees of the Landowner's share must be deposited into the project's Designated Account.
Disclaimer:
The information contained in this article is provided for general informational purposes and does not constitute legal advice. Readers should not act or refrain from acting on the basis of any content included herein without seeking appropriate legal or professional advice on the specific facts and circumstances at issue.
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