What Happens if the Operator Company Goes Bankrupt or Changes Ownership?

The RERA framework's 70% construction-escrow requirement protects money paid toward buying a unit in a registered real-estate project during construction — it exists specifically to stop developers diverting one project's buyer funds elsewhere. It does not apply to money paid as a Pay Home's advance maintenance fee or ongoing service charges, which is a different kind of payment for a different kind of contract. This research did not find an equivalent ring-fencing mechanism for Pay Home deposits under Kerala's Social Justice Department framework. The guidelines require refund on exit and on closure, but a legal entitlement to a refund is only as good as the company's ability to actually pay it.

If Entity A (who you signed with) sells the operating business to Entity B, whether your contract terms survive depends on ordinary contract and corporate law principles — generally, a business sale can be structured so the new owner takes on existing contracts (a common approach), but it can also be structured to avoid inheriting them, depending on how the transaction is done. This isn't something Kerala's guidelines specifically address for care homes, so it comes down to your own contract's terms on assignment and change of control, if it has any — many don't.

Ask directly whether your deposit is held in any separate, ring-fenced account, or whether it goes into the operator's general working capital — the honest answer for most Pay Home arrangements is likely the latter, since no rule requires otherwise. If the amount involved is large, consider asking a lawyer whether a specific escrow or bank-guarantee arrangement could be negotiated into your contract, even though it isn't legally required — this is exactly the kind of protection that only exists if you ask for it specifically.

If you're instead buying an ownership-model unit (freehold or registered lease), your protection is different and generally stronger, since you hold a real, registered interest in the property itself rather than a contractual claim against an operating company — see 99-year lease vs. freehold vs. deposit model for how these compare.