Karnataka's Apartment Law: Faster Handovers and Disputes

For more than fifty years, apartment communities in Karnataka have been run under two laws written in 1972, long before gated communities, clubhouses, sewage treatment plants and RERA existed. That gap has cost residents and builders years in court over corpus funds, common areas, maintenance dues and who controls the association.

The Karnataka Apartment (Ownership and Management) Act, 2026 changes that. It received the Governor’s assent on 9 October 2026 and was published in the Gazette on 15 October 2026. It brings ownership, handover, association governance and disputes under one modern framework, aligned with RERA. Two changes stand out for everyone who lives in, builds or manages an apartment project: disputes get a dedicated, faster forum, and associations get fairer voting and regular change at the top.

A law written for how we live now

The new Act reflects the projects actually being built today. Owners hold an undivided share in the land and common areas, and the association manages them rather than owning them. Clubhouses, pools and gyms built on project land count as common areas. Common parking cannot be sold off as private. Buildings older than 30 years need regular structural stability checks, and there is a clear path to redevelopment when an ageing building needs it.

Disputes: a dedicated forum instead of years in civil court

This is the change most RWAs and builders have waited for.

Each area will have a Competent Authority, a senior officer from the local or planning authority, who decides disputes between owners, associations and builders. That covers maintenance dues, how the undivided share is worked out, association formation and finances, use of common areas, and the rights and duties of the builder.

The Authority has the powers of a civil court. It can summon people, call for documents and pass interim orders, including urgent ones. Arrears it orders can be recovered as arrears of land revenue, so an order does not sit unenforced. Civil courts cannot hear the matters this forum is empowered to decide.

Appeals are short and structured. An appeal must be filed within 30 days, and the first appeal has a 90-day target for a decision. A second appeal follows, and only then the High Court.

For a builder, this means a clear, time-bound place to settle a corpus or handover disagreement. For an association, it means a dues dispute or a common-area complaint can be resolved in months rather than years.

Two honest caveats. The authorities must be appointed within three months of the Act coming into force, so the forum will not exist on day one. And disputes already pending before that date continue under the old 1972 laws. The faster route is for new disputes.

Fairer associations: one member, one vote, and fresh leadership

The second big win is in how associations are run.

One member, one vote. A person gets one vote however many apartments they, or an entity they control, own. A large investor or a builder holding unsold flats cannot outvote the rest of the community on ordinary decisions.

Term limits for the committee. Executive committee terms cannot exceed two years. Anyone who has served two consecutive terms must sit out the next one. If elections are not held on time, the Competent Authority can appoint an administrator.

One association per project. Rival bodies in the same project must merge. In phased projects, the association forms on the first phase and owners in later phases join it automatically.

Basic fairness for owners. Penalties for late dues or bye-law breaches are capped at one month’s maintenance for that apartment, and need a written notice and a hearing first. An association can restrict non-essential facilities for persistent defaulters, but it can never cut water, electricity, sanitation, lifts, fire safety or access to the home.

Together, these rules make associations more representative and less likely to end in deadlock or capture by a small group.

Where things stand

Publication is not the same as commencement. The Act comes into force on a date the State notifies separately, and the rules, model bye-laws and the period for transferring management are still to come. Model bye-laws must go out for at least 30 days of public comment before they are notified.

Nobody is in default today. But the handover windows are short, so the useful time to prepare is now.

The Act covers projects with more than eight apartments, including some villa developments. It replaces the two 1972 laws, and rights and pending matters under those laws are saved.

What the builder hands over, and when

Think of the handover as separate packages, each with its own trigger.

The Declaration, within 60 days of the occupancy certificate. The builder submits the project’s Declaration (land, approvals, apartments, common areas and each flat’s undivided share) to the Competent Authority.

Records, within the same 60 days. Land and title documents, encumbrance records, sanctioned plans and approvals, as-built, structural and services drawings, fire, lift and environmental approvals, insurance policies, equipment purchase and commissioning papers, manuals and warranties, maintenance contracts and AMCs with vendor contacts, building-management and security system credentials, and receipts for taxes and dues paid up to handover. The builder files the association’s acknowledgement of receipt with the Competent Authority.

Money, within the same 60 days. Maintenance and security deposits, corpus, advance maintenance and other common-area collections, with the interest earned. These come with audited accounts, project-wise and allottee-wise. A single “net balance” figure is not enough.

Management and physical control, later. Control of the common areas, funds and day-to-day operation passes after the association is registered, within a period the government has yet to notify.

The builder and allottees must form the association within three months of a majority of apartments being allotted. That does not mean waiting until every flat is sold.

Two points are worth stating plainly. The management deed hands over running the building, not ownership of the land or common areas. And handover does not end the builder’s defect liability under RERA, which still runs five years from possession, with 30 days to fix a notified defect.

Missing key steps carries penalties: up to Rs 1 lakh for specified defaults such as the Declaration or association formation, up to Rs 20,000 for each other contravention, and up to Rs 1,000 a day while a default continues.

How to run the handover

Hold it as a signed inventory with exceptions. Do not sign one minute that says everything is satisfactory. Each line should say what was received, what is missing, who is responsible and by when. Builders get a clean record of what they delivered. Committees get a record of what is still open. Both are protected, and if a disagreement does reach the Competent Authority, the inventory is the evidence.

Add the practical items the law does not list one by one: keys, access cards, passwords, asset registers with serial numbers and commissioning dates, spares, meter readings and the open snag list.

Edge cases and how to handle them

Phased projects. Each RERA phase is registered separately, so map the project boundary against both registrations before anyone forms more than one body. Record in writing who runs the shared roads, clubhouse and STP while construction continues.

No association when the 60 days end. The Act does not say who holds the records and funds in that gap. The builder should keep the money in a separate, identified account, keep the inventory ready, and set out the position in writing to the owners and the Competent Authority once one is appointed.

Several associations that must merge. Existing bodies registered as a society, co-operative, company or under the 1972 law are treated as associations under the Act and get six months from commencement to align. Keep every body’s registration, members’ register, accounts and bye-laws until the merger is complete, and agree in writing who signs in the meantime.

Older projects with an occupancy certificate long ago. It is not clear how the 60-day duty applies to them. Prepare the full inventory anyway, because the records and money are owed in any case, and take legal advice on timing.

Mixed-use and villa projects. Agree cost-sharing and representation for commercial units in writing for now. Villa and plotted layouts are excluded only where roads and amenities have gone to the local authority. Where residents manage shared infrastructure together, the Act can apply. Check the deeds, not the brochure.

Corpus shortfall. Reconcile receipts, bank statements, interest, deductions and unpaid vendor bills line by line. Agree the undisputed amount, record the disputed amount separately, and put both in writing. Pre-handover arrears for power, water or tax belong in the builder’s column, not in the association’s opening balance.

Utilities and licences still in the builder’s name. Power and water connections change through separate BESCOM and BWSSB transfer applications. Registering the association does not move them. The lift licence, DG and STP consents and the fire NOC each need a named owner, an expiry date and a renewal plan.

Defects found after handover. Notify the builder promptly in writing with photographs. The five-year RERA period runs from possession, not from handover, and the snag list attached to the inventory is your evidence.

Existing FM, security and AMC contracts. The builder must hand over the contracts and vendor details. The Act does not decide what happens to them. Review each inherited contract on merit: scope, performance, arrears, deposits, assignment and notice terms. Then decide whether to continue, renegotiate or retender, and record the decision. Do not let any service lapse during the review.

Builder insolvency. An insolvency moratorium changes who can act for the builder. Identify the insolvency professional, file the association’s claim with evidence, and get advice before trying to recover funds or take control of assets.

Getting ready

This law gives builders a clear finish line and associations a fair, faster way to resolve what goes wrong. The projects that benefit most will be the ones that prepare before the clock starts. Builders should put their files in order now: the document index, the reconciled fund statement and the utilities schedule. Committees should prepare the matching checklist, review their bye-laws against the new voting and term rules, and decide who signs.

PropSquare runs builder-to-association handovers and facility operations in Hyderabad, Bengaluru and Chennai, and can walk a site with both sides to check readiness.

This article is general information, not legal advice. Confirm your project’s position with a qualified lawyer.

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