A Case Study: Ozone Group and the Importance of Compliance
The Karnataka Real Estate Regulatory Authority (KRERA) has ordered the Ozone Group, a Bengaluru-based developer, to repay a homebuyer’s home loan of ₹65 lakh. This decision came after the developer failed to provide possession of the property as promised.
How Does a Subvention Scheme Work in Real Estate?
The homebuyer, Malarselvan Tamilmani, had booked a flat in Ozone Urbana Aqua II under a buyback scheme in 2015. This scheme guaranteed returns within 24 months. The agreement was signed under a subvention scheme with Indiabulls Housing Finance and the developer. In a subvention scheme, the buyer pays a portion of the cost upfront, and the bank pays the rest as a loan. The developer receives the loan to continue construction and is supposed to pay the pre-EMI (pre-equated monthly installment) for the home loan until the possession of the apartment or the completion of the buyback period.
What Should Homebuyers Do If Their Developer Defaults?
However, the developer stopped paying the pre-EMI and blamed the buyer for defaulting. As a result, the homebuyer approached KRERA to refund the entire amount with interest and to close the home loan. KRERA ruled in favor of the homebuyer, ordering the developer to repay the home loan and clear all liabilities on the buyer
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