Three Years After Possession the Builder Still Runs Our Building: Forcing Handover of the Association, Common Areas and Corpus

If the occupancy certificate came three years ago and the builder's own agency is still collecting maintenance, the law is on the committee's side on every count. A builder not handing over the apartment association, the common areas or the corpus is in breach of Section 11(4)(e), Section 17 and Section 11(4)(g) of the Real Estate (Regulation and Development) Act, 2016, and in Karnataka the vehicle for the handover of a purely residential project is a registered Declaration under the Karnataka Apartment Ownership Act, 1972. The promoter must enable the association, convey the common areas within three months of the occupancy certificate, hand over the plans and documents within thirty days of the completion certificate, account for every rupee it collected for outgoings, and maintain the building on reasonable charges until the association takes over. K-RERA can direct each of these under Section 37 and penalise non-compliance under Section 63.

Part of the RERA and homebuyer disputes practice at S Jain & Attorneys, Bangalore.

This page is for an owners' committee in a Bengaluru project with an old occupancy certificate, no registered association, no audited maintenance accounts and no corpus in hand. It covers formation, conveyance, corpus and accounts. Delay interest, defects, extra charges and a missing occupancy certificate have their own pages, linked where they arise.

What exactly must the builder hand over, and by when?

Seven things, each with its own statutory clock. The table is the checklist for the committee's first formal letter, and the words in quotation marks are the Act's own.

Add Section 19(3), under which the association "shall be entitled to claim the possession of the common areas", and Section 11(4)(a), which keeps the promoter answerable for every obligation until the common areas are conveyed to the association. The Karnataka Real Estate (Regulation and Development) Rules, 2017 add little: Rule 2(1)(b) defines an association of allottees as a collective of the allottees "by whatever name called registered under any law for the time being in force", and nothing in the Rules fixes a period or names a registering law. The local law for a residential building is the 1972 Act, which fixes no period either, so the three-month proviso in Section 17 is the working deadline.

Key takeaway. Section 17 requires two conveyances, not one. Each sale deed carries the flat and its undivided share, and a separate registered deed carries the common areas to the association. Registered sale deeds without a common-area conveyance leave the promoter in default.

Which association is correct in Karnataka: the Apartment Ownership Act, the Societies Act or a co-operative?

For a project made up only of residential apartments, the Karnataka High Court has held repeatedly since 2024 that the association must be formed under the Karnataka Apartment Ownership Act, 1972 through a registered Deed of Declaration, and that a co-operative society under the Karnataka Co-operative Societies Act, 1959 cannot be registered to manage such a building. The latest ruling is Sobha Limited v Deputy Registrar of Co-operative Societies, W.P. No. 5934 of 2024, decided on 3 March 2026 by Justice M G Uma, which cancelled a co-operative society's registration in a completed residential project. The court held that "there cannot be two parallel associations in a residential apartment", that "the Co-operative Society is not a good vehicle to fulfill the objectives of maintaining, administering, managing the residential apartments or the common areas on behalf of the owners", and that there is "no repugnancy between RERA and KAOA".

It follows a line of cases it quotes. In Proposed Starnest Apartment Owners Co-operative Society v State of Karnataka, W.A. No. 564 of 2024 decided on 18 June 2024, the Division Bench said of Section 11(4)(e): "As the project under consideration consists only residential units, the said provisions only mandate formation of association of the allottees under the applicable laws. The law applicable in the present case is the Karnataka Apartment Ownership Act, 1972." In Saraswathi Prakash v State of Karnataka, W.P. No. 3779 of 2023 decided on 28 February 2025, the court held that "there cannot be any association registered under the Act, 1959, to form a society to manage and maintain the property comprising of only residential flats" and that the Karnataka Ownership Flats Act, 1972 applies "if the property has both commercial and residential units". In Arunkumar R v State of Karnataka, W.P. No. 25528 of 2023 decided on 23 February 2024, the judge quashed the Registrar's permission for a co-operative society and directed the builder "to comply all the requirements under law and cooperate with the petitioners" to form an association under the 1972 Act.

The Societies Act question has the same answer with a thinner paper trail. Many older Bengaluru associations sit under the Karnataka Societies Registration Act, 1960. The Sobha judgment traces the modern cases to VDB Celadon Apartment Owners Association, W.A. No. 974 of 2019 decided on 6 November 2019, and secondary reports say that case set aside a Societies Act registration and that the Registrar of Co-operative Societies issued a notification in November 2018 against such registrations. We have not read either document, so treat both as reported rather than verified.

Three things remain unsettled. First, Akhilesh Anand v State of Karnataka, W.P. No. 27341 of 2024 decided on 30 June 2025, allowed allottees of an incomplete project to form a co-operative society, and the Sobha court distinguished it as a case of unfinished construction, so the answer holds for a completed project and is arguable for a stalled one. Second, the 1972 Act has no step called registration of the association: the Declaration and bye-laws are registered with the Sub-Registrar under Section 13 and a copy is filed under Section 11(2) with the Registrar of Co-operative Societies as competent authority under Section 3(i). The Sobha court treated a body formed on a registered Declaration as a registered association for RERA purposes, which answers the builder's stock objection that it is not "registered under any law". Third, the Karnataka Apartment (Ownership and Management) Bill, 2026 passed the Legislative Assembly on 21 August 2026 and, on published reports, the Legislative Council on 24 August 2026, with a reported sixty-day duty to transfer every deposit and corpus with audited accounts and a clause repealing the 1972 Act. As at the time of writing we have seen no report of the Governor's assent or a commencement notification, so the 1972 Act still governs. Check on the day you file.

How do we form the association when the builder will not sign the deed of declaration?

The owners can start themselves, because Section 5(2) of the 1972 Act places the duty of submission on each owner: "Each apartment owner shall execute a Declaration that he submits his apartment to the provisions of this Act and a Deed of Apartment in relation to his apartment in the manner prescribed for the purpose." In the Sobha record a Declaration in Form A with bye-laws was registered and owners then executed Form B for their units, both forms coming from the Karnataka Apartment Ownership Rules, 1974.

The obstacle is Section 2, which applies the Act "only to property the sole owner or all of the owners of which submit the same to the provisions of this Act by duly executing and registering a Declaration", and a builder that still holds unsold flats is one of those owners. So the owners' Form B declarations alone do not finish the job, and Section 11(4)(e) matters: the promoter's duty is to "enable the formation" of the association, and a promoter that refuses to execute or join the Declaration is defeating that duty. The remedy is a complaint under Section 31 for a direction under Section 37, which "shall be binding on all concerned", that the promoter execute and register the Declaration and convey the common areas under Section 17. Section 63 then exposes a promoter who ignores the direction to a daily penalty "which may cumulatively extend up to five per cent" of the estimated project cost, and the post on executing a K-RERA order covers enforcement.

Who files? Section 31 lets "any aggrieved person" complain and its Explanation includes "the association of allottees", which Rule 2(1)(b) extends to "the authorized representatives of the allottees", so a committee holding written authorisations from a majority of owners can file in its own name, annexing the authorisations in original under Rule 29(4). The safer course is a set of individual complaints by named owners with a request to club them, as the six Ozone Urbana complaints below were. Section 19(9) obliges every allottee to "participate towards the formation of an association".

The cards restate the formation route.

How do we get the corpus fund, sinking fund and maintenance accounts?

Start with the agreement for sale and the sale deed, because the corpus and sinking fund exist only as contract terms and the clause tells you what was collected, who holds it and when it passes. RERA does not use those words. What Section 11(4)(g) does say is that the promoter must pay outgoings from the amounts it "has collected from the allottees, for the payment of outgoings", and its proviso keeps the promoter liable after transfer for anything collected and not applied.

The demand letter should ask for four documents: a flat-wise statement of corpus, sinking fund and advance maintenance received, with the bank account holding it, a year-wise income and expenditure account since the occupancy certificate, the audited accounts for those years, and a transfer schedule. If the builder will not produce them, the Authority can: Section 35(2) gives it the powers of a civil court for "the discovery and production of books of account and other documents", and Rule 24(1)(a) lets it require the promoter to produce documents within a reasonable time.

The Appellate Tribunal has said what a maintenance deposit is for. In Verghese Stephen v Total Environment Building Systems, Appeal (K-REAT) No. 104 of 2020 decided on 23 April 2021, the promoter had collected a maintenance deposit of Rs 20,48,000 in March 2015 on a villa that was still not ready. The Tribunal held: "It is true that maintenance deposit shall be collected only after taking possession of the premises on execution of sale deed and question of such deposit before occupation of the premises by the allottee does not arise at all." It refused a refund, since the buyer stayed in the project under a non-refundable clause, but directed interest at nine per cent a year on the deposit from the date of collection until actual possession.

The Authority treats corpus transfer as part of the Section 11 and Section 17 handover. In its common judgment of 14 July 2026 in Docca V Phanikumar v Ozone Urbana Infra Developers, CMP/220114/0008793 with five connected complaints, the Full Bench recorded that "though the Association of Allottees has been constituted pursuant to directions issued by this Authority, the Respondent has failed to transfer the corpus fund, statutory approvals, design documents, No Objection Certificates, insurance documents, utility connections and other records, required under Sections 11 and 17 of the Act". Copy that list into the complaint. After handover, Section 16(2)(e) of the 1972 Act requires a Treasurer "who shall keep the financial records and books of accounts".

The criminal route is real but last. Section 316(1) of the Bharatiya Nyaya Sanhita, 2023 defines criminal breach of trust as being "in any manner entrusted with property" and dishonestly using it "in violation of any legal contract, express or implied, which he has made touching the discharge of such trust", with imprisonment up to five years under Section 316(2). A corpus held under a clause that says it belongs to the association fits the entrustment limb, but dishonest use has to be shown, not mere delay. Get the accounts or the refusal on record first.

Can we stop paying the builder's facility-management agency?

Not unilaterally, because Section 19(6) makes every allottee liable to pay "maintenance charges, ground rent, and other charges" at the proper time, Section 19(7) adds interest for delay, and a promoter still maintaining the project under Section 11(4)(d) is entitled to reasonable charges until the association takes over. A blanket stop hands the builder an arrears defence, a reason to say the association is not ready, and an excuse for the agency to cut services.

What the section does allow is a challenge to the amount, because Section 11(4)(d) limits the promoter to "reasonable charges" and a charge never supported by an income and expenditure statement is not shown to be reasonable. Pay the undisputed portion under a covering letter reserving rights, propose that all maintenance go into an escrow operated with the committee until handover, and ask the Authority for an interim order under Section 36 fixing the account and the handover date. A threat to disconnect water, power or lift access goes into the complaint as a breach of the essential services duty. Do not rely on Section 13 of the Karnataka Ownership Flats Act, 1972, which bars cutting off essential supply, because the High Court confines that Act to projects with commercial units.

Conveyance of the common areas and the deed of declaration: what the documents must say

Three registered instruments complete a Karnataka handover: the Declaration with its bye-laws and floor plans, a Deed of Apartment for every flat, and the conveyance of the common areas to the association. Section 11(1) of the 1972 Act lists what the Declaration must contain, including a "description of the common areas and facilities", the limited common areas reserved to particular flats, and "the percentage of undivided interest in the common areas and facilities appurtaining to each apartment and its owner for all purposes, including voting". Section 13 requires the Declaration, every Deed of Apartment and the floor plans to be registered under the Registration Act, 1908, the plans bearing "the verified statement of an architect certifying that it is an accurate copy" of the approved plans, in a "Register of Declarations and Deeds of Apartments under the Karnataka Apartment Ownership Act, 1972" kept by the Sub-Registrar. Section 17(1)(b) of the Registration Act independently requires registration of any instrument declaring a right in immovable property worth one hundred rupees or more.

Section 6(2) does the committee's most useful work: the percentage of undivided interest "shall have permanent character", cannot be altered without every owner's consent in a registered amended Declaration, and "shall be deemed to be conveyed or encumbered with the apartment even though such interest is not expressly mentioned in the conveyance". A sale deed that forgot the undivided share is cured by the registered Declaration. The schedule of common areas should match the sanctioned plan and Section 2(n) of RERA, which includes the entire project land, open parking and "all community and commercial facilities as provided in the real estate project", so a club house the builder wants to keep must be argued out in the open, not dropped from the schedule. On stamping, Article 20(2) of the Schedule to the Karnataka Stamp Act, 1957 treats a promoter's conveyance of an apartment under the 1972 Act as a conveyance on the market value of the fully constructed unit, premises including the undivided interest in land and common areas, so confirm the stamping of the separate common-area deed with the Sub-Registrar in writing first. The Ask Me answer on converting common areas to commercial use covers what the association may do with them afterwards.

What if the occupancy certificate was never issued?

Then the three-month conveyance clock has never started, but the promoter's duties have not gone anywhere: Section 11(4)(b) makes it "responsible to obtain the completion certificate or the occupancy certificate, or both", Section 11(4)(a) keeps every obligation alive until conveyance, and the Tribunal in Verghese Stephen held that under Section 17 "the sale should be coupled with actual delivery of possession of the property after obtaining Occupancy Certificate" and that the "concept of partial OC is not known to RERA statute". Seek a direction to obtain the certificate and, in the same complaint, formation and handover. The remedies for the certificate itself are in the occupancy certificate post and the Ask Me answers on a project that never got its certificate and a flat handed over without the khata.

Which forum and which form: the Authority, the adjudicating officer, the consumer commission or a civil suit?

For formation, conveyance, documents and corpus transfer, file with the Regulatory Authority under Section 31 in Form N with the fee of one thousand rupees prescribed by Rule 29, because those are directions under Section 37 and the Authority's function under Section 34(f) is "to ensure compliance of the obligations cast upon the promoters". Compensation for loss goes to the adjudicating officer under Section 71 in Form O with the same fee under Rule 30, with a sixty-day disposal target under Section 71(2).

Builders raise one objection here. The Supreme Court in Sobha Hibiscus Condominium held that an association born of a mandatory 1972 Act Declaration is not a "voluntary consumer association" under the old 1986 Act, and the High Court in the 2026 Sobha judgment answered that the 2019 Act separately allows consumers with the same interest to complain on behalf of all with the Commission's permission. For handover reliefs the Authority remains the right forum, because a consumer commission cannot register a Declaration or compel a conveyance to a body that does not yet exist.

What the Authority and the tribunal have ordered in handover disputes

The Ozone Urbana judgment of 14 July 2026 shows the risk of waiting. Six complaints against Ozone Urbana Infra Developers Pvt Ltd, filed between 2022 and 2025 by individual buyers and by the Urbana Attra Apartment Owners Association, sought directions on the occupancy certificate, "Association formation, transfer of corpus fund, common area maintenance, reimbursement of maintenance charges, club house facilities, compensation, delay interest". The Full Bench recorded that the association had been "constituted pursuant to directions issued by this Authority" and that the corpus and records had still not been transferred, then disposed of all six without deciding any of them, because the National Company Law Tribunal, Bengaluru had admitted the promoter into insolvency on 10 June 2026 and the Section 14 moratorium under the Insolvency and Bankruptcy Code barred the Authority from proceeding. The oldest complaint had been on file for four years.

The Verghese Stephen appeal of 23 April 2021 gave interest at nine per cent from the date the maintenance deposit was taken until actual possession. The Arunkumar writ of 23 February 2024, as quoted in the Sobha judgment, shows the High Court directing a builder to cooperate in forming the 1972 Act association and prohibiting the Registrar from registering a rival co-operative.

Deadline warning. A promoter that enters insolvency takes the K-RERA handover complaint down with it. The moment the committee hears of a Section 7 petition against the builder, the corpus claim has to be filed with the resolution professional as well, and the post on homebuyers' rights in a builder's insolvency explains the forms and the class vote.

Step by step for an owners' committee

1. Collect the record: the occupancy certificate, the sanctioned plan, every sale deed, the agreement clauses on corpus and maintenance, and the builder's maintenance invoices since possession.
2. Count the owners. Under Section 3(n) of the 1972 Act a majority means owners holding fifty-one per cent or more of the votes, and the committee needs signed authorisations from at least that many.
3. Send one formal letter listing the seven obligations in the table above, demanding the four accounting documents, a date for the Declaration and the common-area conveyance, and handover of documents, plans, insurance and corpus, with fourteen days to reply.
4. Obtain Forms A and B under the 1974 Rules, have an architect prepare the verified floor plans required by Section 13(2), and have the Declaration and bye-laws drafted and ready.
5. Open the association's bank account the day the Declaration is registered, route the corpus and every maintenance rupee through it, and write an annual audit into the bye-laws.
6. If the reply is silence or a promise, file Form N complaints by named owners with a request to club them, seeking Section 37 directions to register the Declaration, convey the common areas, hand over documents, transfer the corpus with accounts and produce books under Section 35(2), plus a Section 36 interim order on the maintenance account.
7. File Form O before the adjudicating officer for compensation: interest on the corpus, reimbursement of maintenance paid for services not provided, and defect costs, each supported by receipts.
8. Keep paying the undisputed maintenance under protest until the handover date in the order, and stop any owner from withholding on their own.
9. Once the order is passed, execute it under Rule 26 and report non-compliance for a Section 63 penalty.
10. On handover day take a signed inventory of keys, drawings, approvals, contracts, utility accounts, insurance and corpus bank statements, and record every defect for the Section 14(3) notice.

Deadlines and indicative timelines

The statutory clocks are short and most have already expired in a three-year-old building. Formation: three months from a majority of bookings under the Section 11(4)(e) proviso. Conveyance: three months from the occupancy certificate under the Section 17(1) proviso. Documents and plans: thirty days from the completion certificate under the Section 17(2) proviso. Possession: the allottee's own duty to take it within two months of the occupancy certificate under Section 19(10). Defects: five years from possession under Section 14(3). Consumer complaints: two years under Section 69 of the 2019 Act, extendable only for sufficient cause recorded in writing.

Indicative, not promised: a Form N complaint with clubbed owners in Bengaluru has been taking between six months and a year and a half to a final order, longer where the promoter seeks adjournments, the reason the Ozone Urbana judgment gives for its own delay beyond the period in Section 29(4). Registering a Declaration once the parties are ready takes weeks. A promoter's appeal comes with the pre-deposit rules in the post on builder appeals and pre-deposit.

Mistakes owner committees make

Where these cases actually turn is on the paper the committee has before the first hearing. What I tell committees is to treat the accounts, not the corpus, as the headline: a promoter ordered to produce three years of maintenance books under Section 35(2) usually finds the corpus rather than explain in writing where it went. The second thing is to stop paying for years without a single written demand for accounts, because every silent payment reads as acceptance of the charge. Third, many complainants, one association. A committee that registers a society under the 1960 Act because it is quick, or a faction that registers a co-operative because it is angry, gives the promoter a locus argument and, on the current High Court decisions, a body that may be cancelled.

Common mistake. Letting one owner file alone for the whole building. Formation, conveyance and corpus are project-wide reliefs, and an order in one person's complaint is easy for the promoter to treat as a private settlement. File in numbers, ask for clubbing, and put the Section 37 directions in every complaint.

The last cards are the handover inventory the committee should not leave the room without.

Frequently Asked Questions

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

Our RERA and homebuyer disputes practice handles handover, conveyance and corpus complaints before K-RERA and the Appellate Tribunal, and our property and real estate practice drafts and registers the Declaration, bye-laws and common-area conveyance under the 1972 Act.

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