KRERA Action Over CC Delay in Mysuru Project

The Karnataka Real Estate Regulatory Authority (KRERA) has issued a stern warning to a prominent developer in Mysuru for failing to obtain a mandatory Completion Certificate (CC), leaving residents to bear the brunt of a 100% property tax penalty. Local authorities in Mysuru impose this steep financial burden on apartment owners when a building lacks the necessary statutory clearances, effectively doubling their annual tax liability. KRERA has now directed the developer to submit a time-bound action plan and compliance report, emphasizing that possession without a CC does not constitute legal project completion.

Latest Update

• The Karnataka Real Estate Regulatory Authority recently clarified that handing over possession to homebuyers does not absolve a developer of their statutory duties to secure all necessary completion reports.
• Local municipal bodies in Mysuru have intensified their audit of residential high-rises, identifying several projects where owners are being charged double property tax due to missing occupancy and completion documents.
• Regulatory officials have warned that continued non-compliance with these recent directives will trigger Section 63 of the RERA Act, which could lead to penalties amounting to 5% of the total project cost.
• Legal experts noted that this specific order sets a precedent for other delayed projects in Karnataka, ensuring that “phased development” is no longer used as a loophole to delay common amenities.

Why is the Absence of a Completion Certificate Leading to 100% Penalties?

The absence of a Completion Certificate (CC) signifies that a building may not have been constructed according to the sanctioned plans or has failed to meet safety and infrastructure standards. In Mysuru, the City Corporation (MCC) treats such buildings as “unauthorized” or “incomplete” for tax assessment purposes. Consequently, instead of a standard residential tax rate, owners are levied with a 100% penalty on their property tax, which is essentially a punitive measure to discourage habitation in non-compliant structures.

Homebuyers often find themselves in a difficult position where they have paid the full sale consideration and taken possession, yet continue to face these recurring financial penalties. The regulatory authority observed that the developer in the Mysuru project failed to obtain the CC even years after handing over the keys. This lapse has not only caused financial strain through taxes but has also blocked the legal transfer of common areas to the association of allottees.

The Financial Impact of Missing CC in Mysuru

What Did the KRERA Order Specify for the Astrum Grandview Project?

In its recent findings, KRERA rejected the developer’s excuse that the project was being developed in independent phases to justify the delay in amenities. The authority noted that Section 11(4)(a) of the RERA Act mandates the promoter to be responsible for all obligations until the formal conveyance of common areas. The developer has been ordered to provide a detailed list of all completed and pending infrastructure works, alongside a clear, time-bound schedule for their completion.

The regulator was particularly critical of the fact that nine years have passed since the project’s launch, yet several common facilities remain on paper. The order specifies that if the developer fails to comply with these directions, the Authority will initiate recovery and penal actions under Section 63 of the RERA Act without further notice. This reflects a zero-tolerance policy toward developers who disregard previous regulatory directions.

How Does the 100% Property Tax Penalty Work in Mysuru?

Property tax in Mysuru is generally calculated based on the Annual Rental Value (ARV) or a unit-area-based method. However, when a developer fails to secure a Completion Certificate, the municipal authorities view the habitation as a violation of building bylaws. The 100% penalty is applied on top of the calculated tax, meaning if an owner’s standard tax is ₹10,000, they are required to pay an additional ₹10,000 as a penalty, bringing the total to ₹20,000.

This penalty remains in effect for every financial year until the developer submits the CC and the building is regularized. For many residents in Mysuru projects, this has led to a cumulative financial loss running into lakhs of rupees over several years. Furthermore, without a CC, owners often struggle to secure permanent water and electricity connections, often relying on more expensive temporary or commercial-rate utilities.

Comparison: Project Progress vs. Legal Compliance

What Are the Legal Obligations of Developers Under RERA Section 17?

Section 17 of the Real Estate (Regulation and Development) Act, 2016, places a statutory obligation on the promoter to execute a registered conveyance deed in favor of the association of allottees. This transfer includes not just the individual apartments but all common areas and facilities within a prescribed timeframe. In the Mysuru case, the developer’s failure to form an association and hand over the common areas was flagged as a major violation of these rights.

By failing to secure a CC, the developer also prevents the “Deed of Declaration” from being executed. This document is essential as it defines the undivided share of land for each owner. KRERA clarified that phased development cannot be used as a “tool” to postpone these legal requirements. Developers are required to fulfill these promises regardless of whether they are moving on to a second or third phase of the same project.

What Recourse Do Homebuyers Have Against Non-Compliant Developers?

Homebuyers who are facing tax penalties due to a developer’s negligence can approach RERA for both directions and compensation. Under Section 63, the regulator can impose a daily fine on the developer for every day the default continues. In extreme cases of non-compliance, the promoter can face imprisonment or a fine that extends up to 5% of the estimated cost of the real estate project.

In the Astrum Grandview case, the buyers informed KRERA that they had paid all considerations, including:

1. Advance maintenance charges.
2. Club membership fees.
3. A corpus deposit of ₹1 lakh per allottee.

Despite these payments, the promised lifestyle remains incomplete. Buyers are encouraged to document all penalty notices from municipal authorities, as these serve as evidence of “actual loss” caused by the developer’s failure to provide the Completion Certificate.

Key Takeaways

• The Issue: Developers failing to obtain Completion Certificates (CC) in Mysuru are causing homeowners to pay double property tax.
• The Penalty: Mysuru local authorities levy a 100% property tax penalty on buildings without a CC.
• KRERA’s Stand: Possession does not equal completion; developers must provide a time-bound plan for all pending amenities.
• Legal Risk: Non-compliance with KRERA orders can lead to penalties of up to 5% of the total project cost under Section 63.
• Buyer’s Burden: Residents have paid advance maintenance and corpus funds but are still missing promised facilities nine years after launch.

Conclusion

The KRERA intervention in Mysuru highlights a critical gap in the real estate sector where physical possession often precedes legal compliance. For homebuyers, the lack of a Completion Certificate is not just a paperwork issue but a significant financial burden that manifests as doubled property taxes and reduced property value. This order serves as a reminder that developers are legally bound to deliver every amenity and statutory document promised at the time of booking. As the regulator moves toward stricter enforcement under Section 63, it is expected that more developers will prioritize these final clearances to protect their customers from unnecessary penalties. For those navigating the complexities of the Karnataka property market, staying informed through resources like Housivity.com is essential to ensure your investment is both physically and legally secure.