Legal audit of advance maintenance, sinking funds, and corpus deposits collected by builders before housing society handover in Maharashtra.
Can a builder keep advance maintenance and corpus funds after handing over the building?
No. Under Section 11(4)(g) and Section 17 of RERA, developers must maintain advance maintenance and sinking funds in a separate escrow account and legally transfer all unspent balances along with interest and audited accounts to the registered society within three months of formation.
Overview & Statutory Analysis
The Advance Maintenance Dilemma in New Developments
A standard clause in builder purchase agreements demands that homebuyers pay 12 to 24 months of advance maintenance (₹1.5 Lakh to ₹4 Lakh) alongside a 'Non-Refundable Corpus Deposit' prior to handing over flat keys.
In thousands of projects, developers continue operating the building for years without forming a society, utilizing homebuyer maintenance funds for their marketing offices or construction power lines.
What Section 11(4) of the RERA Act Mandates<
What Section 11(4) of the RERA Act Mandates
The promoter is responsible for providing and maintaining essential services on reasonable charges until the maintenance of the project is taken over by the association of allottees.
Key obligations include:
1. Separate Bank Account: Maintenance collections must not be mingled with the promoter's corporate funds.
2. Duty to Form Society: In Maharashtra, under Rule 9 of MahaRERA, the promoter must apply to register the Co-operative Housing Society within three months of 51% of allottees booking their flats.
3. Mandatory Transfer of Balances: Upon society registration, all unutilized maintenance funds, corpus funds, and sinking fund deposits must be transferred via cheque to the society along with a chartered accountant's audit statement.
How Newly Formed Societies Can Recover Unaccounted Funds<
How Newly Formed Societies Can Recover Unaccounted Funds
If a developer refuses to provide audited maintenance statements or transfer the corpus fund, the society can file a formal complaint under Section 31 of RERA.
MahaRERA has repeatedly ordered developers to refund unverified maintenance deductions with statutory interest.
