On November 29, 2025, the Chairman Rakesh Singh and Member G.R. Reddy of Karnataka RERA (K-RERA) ruled that if a builder fails to obtain RERA mandated insurance or fails to transfer the same on to the Owers’ Association, any losses that should have been covered by that insurance can’t be blamed on the homeowners.
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K-RERA emphasized that builders can’t dodge their responsibilities since it is their statutory obligation to insure common areas of a housing project.
The K-KERA also said that builders must provide a copy of this insurance even after they hand over maintenance to the apartment owners’ association. Under Section 16 of Real Estate (Regulation and Development) Act (RERA), builders have a binding requirement to insure the building and this isn’t just a formality, as ruled by K-RERA.
This ruling emerged from a dispute between a well-known builder and the homeowners of a Bengaluru housing project on Kanakapura Main Road . The homeowners filed this case on May 4, 2024 under Section 31 of the RERA Act, 2016 after their society’s clubhouse caught fire on January 30, 2024 and incurred substantial damage leading to significant repair costs.
The homeowners requested the builder to give them a copy of the insurance policy mandated by Section 16. Since the builder failed to do so, the homeowners took the matter to K-RERA, asking them to instruct the builder to repair the damage to the clubhouse and to supply and transfer the insurance documents pertaining to their housing society.
The homeowners argued that although their sale deed was executed on September 2, 2022 and possession was handed over on September 3, 2022, the builder failed to complete its statutory obligations relating to formation of the Association of Allottees and transfer of common areas. The builder also failed to repair the Club House which was badly damaged in the fire.
The homeowners asserted that the builder has neither undertaken repairs nor provided any copy of the insurance policy, raising concerns over compliance with Section 16 of RERA Act.
The builder denied all the allegations and contended that the maintenance of the Club House as well as the common facilities was handed over to the Apartment Owners Association as far back as November 2, 2019 and thereafter he (the builder) had no responsibility in day-to-day operations or upkeep.
The builder also relied on an independent investigation initiated by the Apartment Owners’ Association that concluded that the fire was caused by overheating of the sauna electric heater in the ladies washroom of the Club House and not due to any defect in construction or electrical systems attributable to him (the builder).
On November 29, 2025 the homebuyers won the case in Karnataka RERA (K-RERA). Read below to know what led to the homebuyers winning the case. The homeowners represented themselves without any advocate.
Also read: Flat ready but keys not handed over: Karnataka RERA rules landowner are promoters too, orders Rs 6 lakh payout to homebuyers for delayed possession
Karnataka RERA analyses facts of the case
Once a building maintenance’s responsibility is handed over to homeowners builder is not liable for day-to-day upkeep and safety of common amenities
Karnataka RERA in its judgement (00427/2024) dated November 29, 2025 said that upon consideration of the pleadings, documents and submissions by the homeowners and builder, it is not in dispute that the construction of the housing project, including the club house was completed in 2018 and that the occupancy certificate was issued on May 3, 2018.
The materials produced by the promoter (builder) also demonstrate that the maintenance and management of the Club House were handed over to the Association on November 2, 2019 after expiry of the initial maintenance period.
Karnataka RERA said that the investigation report filed by the promoter (the builder), which was commissioned by the Association itself, records that the fire accident was caused due to overheating of the sauna heater.
There is no material on record that establishes any structural, design or electrical defect attributable to the promoter (builder) which could bring the matter within the ambit of Sections 14 or 17 of RERA Act.
Karnataka RERA said that once maintenance stood handed over, the responsibility for day-to-day upkeep and safety of common amenities vested solely with the Association.
Karnataka RERA said: “In these circumstances, K-RERA Authority finds no basis to direct the promoter to undertake repairs of the Club House for an incident that occurred long after handover of maintenance.”
Section 16 RERA insurance is not formality but obligation of builder
The Karnataka RERA said that the homeowners also raised their complaint on the issue of compliance with Section 16 of RERA Act. Section 16 of RERA Act imposes a mandatory statutory duty upon the builder. Section 16 says:
Insurance of real estate project –
(1) The promoter shall obtain all such insurances as may be notified by the appropriate Government, including but not limited to insurance in respect of –
(i) Title of the land and building as a part of the real estate project; and
(ii) construction of the real estate project.
(2) The promoter shall be liable to pay the premium and charges in respect of the insurance specified in sub-section (1) and shall pay the same before transferring the insurance to the association of the allottees.
(3) The insurance as specified under sub-section (1) shall stand transferred to the benefit of the allottee or the association of allottees, as the case may be, at the time of promoter entering into an agreement for sale with the allottee.
(4) On formation of the association of the allottees, all documents relating to the insurance specified under sub-section (1) shall be handed over to the association of the allottees.
Karnataka RERA reviewd the above reproduced Section 16 provisions and said that Section 16 of RERA Act makes it incumbent upon the promoter (builder) to obtain the requisite insurance, pay all premiums and charges up to the stage of handover, and thereafter to hand over all insurance documents to the Association of Allottees.
Karnataka RERA said: “These obligations are mandatory and independent of the question of who maintains the common areas or when any subsequent incident occurs. Compliance with Section 16 must be demonstrated by the promoter through production of insurance policies, premium receipts, and documents showing transfer of the benefit of insurance to the Association.”
In the present case, the builder has not produced any document before the K-RERA authority to show that the mandatory insurance in respect of the Club House or allied amenities had been obtained or that the premium charges were paid prior to handover.
If builder fails to obtain Section 16 mandated insurance, then builder is liable to pay homeowners for the damage
Karnataka RERA said that no policy documents, renewal documents or transfer records have been furnished. The contention that the maintenance was handed over in 2019 does not absolve the promoter (builder) of compliance with Section 16, as statutory duty to obtain and transfer insurance is independent of maintenance responsibilities.
Karnataka RERA said: “Where a promoter fails to obtain such insurance or fails to transfer the same to the Association, any loss that ought to have been covered under such insurance cannot be placed upon the allottees of the Association.”
Karnataka RERA judgement
The Karnataka RERA said that they find that while the promoter (builder) cannot be held liable to repair the Club House on account of the fire accident which occurred after the handover, the promoter remains under a mandatory statutory obligation to furnish to the Association of Allottees all documents relating to the insurance taken in respect of the project amenities, including the Club House , together with proof of payment of premium, as required under Section 16 of the RERA Act.
Judgement: “Accordingly, the point raised above is answered in partly affirmative. In view of the above discussion, this complaint deserves to be partly allowed. The order:
- The promoter (builder) is directed to furnish to the apartment owners’ association all documents relating to the insurance obtained under Section 16 of the RERA Act, 2016 in respect of the entire project including the Club House and common areas/facilities (such as insurance policy copies, premium payment receipts, endorsement/ transfer of benefit of insurance, etc) within 30 days from the date of receipt of this order.
- In the event the promoter fails to produce such insurance documentation within the stipulated period, the promoter shall be held to bear the expenses for repair and restoration of the Club House damaged in the fire incident dated January 31, 2024, as such liability would arise directly from non-compliance with Section 16 of RERA Act.
- Except to the extent indicated above, no other relief can be granted. The complainants (homeowners) are at liberty to approach the Apartment Owners Association for all issues pertaining to maintenance and day-to-day administration of common areas.
- No order as to costs.
As per Section 16 of the RERA Act, 2016, what is the nature of this insurance?
Sudheer Madamaiah, Partner at Khaitan & Co, said to ET Wealth Online: Section 16 of the RERA Act imposes a mandatory statutory obligation on the promoter to obtain insurance for the real estate project. This includes insurance for the title of the land and the construction of the project, and the obligation continues until possession is handed over.
Madamaiah says that Karnataka RERA authorities in its recent rulings, has categorically affirmed that compliance with Section 16 is not optional. The promoter is required to obtain the insurance, pay all premiums up to handover, and thereafter transfer the benefit of such insurance to the Association of Allottees.
Madamaiah says: “Compliance must be demonstrated through production of insurance policies, premium payment receipts, and documents evidencing transfer. Failure to do so constitutes a breach of statutory duty under RERA.”
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