Quick Answer
By the Property Law Team | Legal Brigade | Bar Council of Karnataka When a Bangalore developer who registered a RERA project in Company A's name subsequently transferred the project -- the land, the construction contracts and the RERA registration -- to Company B (a related entity in the same group, a subsidiary, an associate…
By the Property Law Team | Legal Brigade | Bar Council of Karnataka
When a Bangalore developer who registered a RERA project in Company A's name subsequently transferred the project -- the land, the construction contracts and the RERA registration -- to Company B (a related entity in the same group, a subsidiary, an associate company or a company with common directors) without first obtaining the prior written consent of at least two-thirds of the allottees as required under RERA Section 15, the transfer is an unauthorized RERA project transfer that the allottees can challenge, and each allottee may exercise their right to exit the project and claim a full refund with interest from the date of the unauthorized transfer.
What Does RERA Section 15 Require for a Project Transfer?
RERA Section 15 permits a promoter to transfer or assign their majority rights and liabilities in a RERA-registered project to a third party only if: the prior written consent of two-thirds of the allottees is obtained; and the prior approval of the Authority (K-RERA) is obtained for the transfer. Both conditions are mandatory -- the two-thirds allottee consent and the K-RERA approval. A transfer without either condition is an unauthorized transfer.
The "related company" aspect of many project transfers creates an additional complication: the developer may argue that transferring a project to a related entity (a subsidiary or an associate) is an internal restructuring rather than a "transfer" to a third party under Section 15. K-RERA and the courts have generally rejected this argument -- a transfer to a related entity is still a transfer that changes the contractual party the allottees deal with, and the allottees' consent is required regardless of the relationship between the transferring entities.
Project Transfer Scenario | RERA Section 15 Compliance | Allottee's Risk | Remedy |
|---|---|---|---|
Developer transferred project to a wholly-owned subsidiary -- no allottee consent obtained | RERA Section 15 violation -- a wholly-owned subsidiary is still a separate legal entity -- the transfer requires two-thirds consent | The allottees now have contractual relations with a subsidiary they did not agree to deal with -- and the subsidiary may have fewer assets | File K-RERA complaint -- each allottee may exit and claim full refund with interest from the unauthorized transfer date |
Developer transferred project to an unrelated third party -- two-thirds consent obtained -- K-RERA approval obtained | RERA compliant -- the Section 15 conditions were satisfied | The allottees consented to the new promoter -- the new promoter assumes all obligations | No RERA remedy needed -- the transfer was authorized |
Developer restructured the holding company -- project technically moved from one company to another as part of a merger | The merger may be treated as a succession (not a transfer) if done under the Companies Act scheme of arrangement with NCLT approval -- a different analysis from a voluntary transfer | Depends on the merger's legal structure -- if the merger was through a proper NCLT scheme, the obligations transfer automatically | Confirm with a RERA lawyer whether the specific merger triggers Section 15 consent requirements |
Developer transferred the land to a related entity but retained the RERA registration -- split the project structure | Unusual structure -- technically the RERA registration is in the original company's name but the land (the underlying asset) has moved | The allottees have a contractual right against the RERA-registered entity but the land is now in a different company | K-RERA complaint for the structural split as a violation of the project's RERA registration integrity |
How Should the Allottee Respond to an Unauthorized Project Transfer?
- Confirm the transfer by obtaining the details from K-RERA's project registration -- K-RERA should show the promoter's name and any amendments. A changed promoter name without a Section 15 amendment filing is evidence of an unauthorized transfer.
- Confirm that the two-thirds allottee consent was never obtained -- specifically, the developer must have sent a formal consent request to each allottee and obtained written consent from at least two-thirds.
- Send a formal notice to the developer (original entity) and the transferee (new entity) -- stating that the transfer was unauthorized and that the allottee may exercise their Section 15 exit right.
- File a K-RERA complaint citing Section 15's violation -- K-RERA can set aside the unauthorized transfer or direct a refund to allottees who elect to exit.
- Have a property lawyer advise on whether to exit and claim a refund or to remain in the project with the new entity (if the new entity has better financial strength than the original developer).
Q1. What is the two-thirds allottee consent and how is it obtained?
Two-thirds of the total number of allottees in the project must provide prior written consent to the project transfer. The developer must send each allottee a formal notice describing the proposed transfer -- the identity of the transferee, the reasons for the transfer and the impact on the project timeline and specifications. Each allottee must provide individual written consent. Two-thirds of the allottees (by count, not by value) must consent before the transfer can proceed.
Q2. Can a single allottee challenge a project transfer that was approved by two-thirds of the others?
A minority allottee who did not consent cannot typically block a transfer that was approved by the required two-thirds majority -- the majority consent binds the minority. However, a dissenting minority allottee who objects to the new promoter's financial capacity or track record can exercise the right to exit under Section 18 (exit for material RERA violation) if the transfer materially impairs the project's delivery prospects.
Q3. What does K-RERA approval for a project transfer involve?
After obtaining the two-thirds allottee consent, the developer must apply to K-RERA for approval of the transfer. K-RERA assesses: the transferee's financial capacity to complete the project; the transferee's track record in RERA-registered projects; the transfer's terms (are the allottees' specifications and timelines maintained?); and whether the K-RERA escrow account balance is being transferred with the project. K-RERA can refuse approval if the transferee does not meet the required standards.
Q4. Does the unauthorized transfer relieve the original developer of their RERA obligations?
No -- the original developer's RERA obligations (specification delivery, timeline, defect liability) remain their responsibility regardless of an unauthorized transfer. An unauthorized transfer does not extinguish the original developer's liability -- the allottees can pursue the original developer for all RERA violations regardless of the transfer. The original developer cannot use the unauthorized transfer as a shield against K-RERA claims.
Q5. What if the transferee (new entity) is financially stronger than the original developer?
If the transferee is a better-capitalized entity than the original developer, some allottees may prefer to continue with the project under the new entity rather than exit and claim a refund. The decision to exit or remain depends on the specific circumstances -- the project's completion status, the new entity's track record and the refund's market value relative to the project's completion prospects.
Q6. Does the unauthorized transfer appear in the K-RERA project registration?
K-RERA's project registration shows the registered promoter's details. An unauthorized transfer may not be reflected in the K-RERA registration if the developer did not file a Section 15 amendment. The allottees may discover the transfer through changed letterheads on demand notices, a changed company name on receipts or through news about the developer group's restructuring.
Q7. Can the allottees demand the transfer be reversed?
K-RERA can direct the reversal of an unauthorized transfer -- requiring the project to be returned to the original developer's responsibility. However, if the project's assets have already moved to the new entity and the original developer is insolvent, reversal may not be practically possible. In such cases, K-RERA focuses on the allottees' refund rights rather than project reversal.
Q8. What is the refund amount for an allottee who exits after an unauthorized project transfer?
An allottee who exits under Section 15 after an unauthorized transfer is entitled to a full refund of all amounts paid (principal) plus interest at the MCLR plus 2% from the date of each payment. The Section 15 exit right gives the allottee the same refund entitlement as a Section 18 exit for delayed possession.
Q9. Can the new entity (transferee) be added to the K-RERA registration as a co-promoter?
If the two-thirds consent and K-RERA approval are subsequently obtained (after the unauthorized transfer), the new entity can be added to the K-RERA registration as the new promoter. A retrospective authorization may partially cure the Section 15 violation -- but allottees who elected to exit before the retrospective authorization retain their refund rights.
Q10. How does Legal Brigade assist allottees after an unauthorized RERA project transfer?
Legal Brigade confirms the transfer's unauthorized nature from the K-RERA registration and the absence of consent documentation, files the K-RERA complaint under Section 15, advises each allottee on the exit-and-refund vs continue-with-new-entity decision, calculates the full refund amount with interest for exiting allottees and manages the collective K-RERA complaint process for maximum efficiency.
Your Bangalore developer transferred the RERA project to a related company without asking for your consent and without K-RERA approval -- and you are now dealing with a company you never agreed to? Legal Brigade files the Section 15 K-RERA complaint and advises on your exit and refund rights.
WhatsApp → wa.me/8497029999
Frequently Asked Questions
What is the two-thirds allottee consent rule under RERA Section 15? ▾
A developer must obtain prior written consent from at least two-thirds of the allottees before transferring a project to a third party. This process requires formal notice to each allottee detailing the new promoter's identity and the impact on project timelines.
Can a developer transfer a project to a subsidiary without consent? ▾
No, even a transfer to a related entity like a subsidiary or associate company is considered a transfer to a separate legal entity. K-RERA and the courts require two-thirds allottee consent regardless of the relationship between the two companies.
What happens to the original developer's liability after an unauthorized transfer? ▾
An unauthorized transfer does not relieve the original developer of their RERA obligations. They remain responsible for delivery timelines, specifications, and defect liabilities, and cannot use the transfer as a shield against legal claims.
What remedies are available if a Bangalore project is transferred illegally? ▾
Allottees can file a complaint with K-RERA to challenge the transfer. If the transfer is found to be unauthorized, each allottee has the right to exit the project and claim a full refund with interest from the date the unauthorized transfer occurred.
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