A must-watch for builders! K-RERA warns “Insure common areas or pay for damages”

Regulator pulls up developer for failing to submit mandatory insurance documents after clubhouse fire

The Karnataka Real Estate Regulatory Authority (K-RERA) has issued a strong warning to developers, stating that builders must insure common areas or risk paying for damages in the event of accidents. The directive came while hearing a case linked to a fire that destroyed the clubhouse washroom and sauna facility of an apartment complex on Kanakapura Road.

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According to the authority, residents had repeatedly raised concerns that no restoration work was taken up after the incident and that no insurance details were shared, creating uncertainty about whether the clubhouse was insured at all. They also pointed out that the association of allottees had not been formed and that common areas had not been officially transferred, despite the project being completed.

The developers, however, told the tribunal that all amenities, including the clubhouse, were handed over to the owners’ association in November 2019. They argued that after handover, the responsibility for maintenance and safety lies with the association, not with the promoter. They also cited an inquiry report that found the fire was caused by overheating of the sauna heater, ruling out structural or electrical defects.

After reviewing the arguments, the tribunal agreed that the builder cannot be directed to repair damages that occurred years after handover. But the panel made it clear that one critical lapse could not be ignored:

the promoter had failed to provide proof of insurance, premium receipts, or documentation showing transfer of insurance benefits, all of which are mandatory under Section 16 of the RERA Act.

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The authority stated that insurance for common areas is not optional and is essential to prevent residents from bearing unexpected financial losses due to accidents, fires, or structural damage.

K-RERA has now directed the developer to submit all insurance documents for the project within 30 days, reinforcing that compliance is mandatory for all builders across Karnataka.

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