RERA rules for maintenance charges include the buyer being responsible for paying maintenance fees after taking ownership of the property. Keep reading for more info about maintenance charges.
The Real Estate (Regulation and Development) Act of 2016 (RERA) mandates that the developer be responsible for delivering and maintaining basic services at a fair cost until the association of allottees takes over.
Under the RERA rules for maintenance charges, a builder requires the buyer to sign a maintenance agreement that specifies the amount and frequency of maintenance. RERA has mandated that the maintenance expenses be specified in the agreement so that the buyers are not surprised. Later, the social organization can figure it out and bill the buyer for the necessary upkeep.
The term “maintenance fees” refers to an annual charge made by the building’s owners or tenants for maintenance, repairs, operations, and upkeep. RERA serves as a barrier between customers and greedy builders, and it also gives consumers access to a forum called RERA Complaint.
As per RERA rules for maintenance charges in some real estate developments, the builder agrees to maintain the project for a certain number of years and collects a maintenance fee from the purchaser/allottee, which can be paid in one flat payment or installment.
Provisions Under RERA
Section 6 of the RERA Rules also states that: Every allottee who has agreed, to take an apartment, plot, or building as the case may be, under Section 13, shall be responsible for making necessary payments in the manner and within the time specified in the said agreement for sale, and shall pay the share of the registration charges, municipal taxes, charges for water and power, maintenance, ground rent, and other fees must be paid on time and in the proper location.
The buyer is responsible for paying maintenance fees after taking ownership of the property. The owner is responsible for paying the maintenance fees until a tenant is found for the property. After that, the tenant might pay the maintenance fees if they are specified in the owner-tenant agreement.
Points to Keep in Mind Regarding RERA Rules for Maintenance Charges:
- Until the foundation of the Resident Welfare Association, the promoter is responsible for the society’s upkeep and collection of fees from home buyers. The Resident welfare association can then levy fees by its usually included in the allotment letter, which is sent to the customer after the booking fee is paid.
- The RERA Act of 2016 ensures that residents are not required to pay any ad-hoc costs at the builder’s discretion.
- It should be appropriately disclosed by the builder at the time of booking; failure to reveal such charges may cause occupants to suffer subsequently.
- Many state governments have established clear RERA rules for the maximum amount of maintenance fees that a builder can collect if an appropriate contractual arrangement is in place.
- Not all cultures have the same charging structure; instead, it differs. The area of the flat is sometimes used to calculate it.
- The frequency with which maintenance fees are collected is determined by the builder. At the time of possession, he may request 12 or 24 months in advance.
- According to a recent circular from the Finance Ministry, if a flat owner’s monthly contribution to the Resident welfare association exceeds Rs. 7500, they must pay GST at the rate of 18%.
Responsibility on Builder
The rise in demand for residential and commercial property has spawned a slew of new builders and developers who promise or deliver unique amenities to entice potential buyers. The same has resulted in a never-ending battle between homebuyers and builders over the builders’ unscrupulous practices to delays in handing over possession to allottees, in which case the allottee is the ultimate loser, suffering both mentally and financially. Because maintenance fees are regular monthly payments, it’s always advisable to have a good concept of them when leasing an apartment.
According to the RERA apartment maintenance charges law, it is the developer’s responsibility to pay all maintenance charges until the day he turns over control to the buyers. The Builder must hand it over to the association after validating that the building is leak-free. Builders usually demand a one- or two-year maintenance fee upfront as part of the sale agreement, and they must disclose all expected costs to buyers at the time of the sale.
The practices listed above are not in violation of the RERA Act and are thus acceptable, but they must meet the following criteria:
- The builder does not receive any income from the amount charged to the purchaser/allottee as a contribution to a corpus fund or for building maintenance. The builder is unable to deposit the funds into his business account as a result.
- The builder must open separate bank accounts for the building maintenance corpus and the building maintenance costs, and these funds must be deposited into these accounts.
- Any interest earned on these funds will be credited to the same accounts rather than the builder.
- The builder must keep separate accounts, which must be certified by a Chartered Accountant that demonstrates the annual expenses from these bank accounts, ensuring that the money was used solely for the purpose intended.
- If a builder gives possession to allottees without arranging for a domestic electricity connection and then agrees to pay the difference between the higher rate and the normal rate for the domestic connection, the difference cannot be charged to the maintenance account and must be paid out of the builder’s resource.
- The builder must also move over the balance in each of the maintenance bank accounts, as well as a copy of the Income and Expenditure Statement description, officially certified by a Chartered Accountant when the Residents Welfare Association takes over the maintenance.
- The key premise is that the builder manages the maintenance accounts in trust for the Residents Welfare Association for a limited time and that they do not provide a source of income for the builder.
RERA Rules for Maintenance Charges Are Compulsory
Every new apartment comes with a set of maintenance fees. It is an essential component of the builder-buyer agreement. The builder issues an assignment letter after the buyer pays the booking fee for the apartment. Though the precise cost is not disclosed, if questioned during a potential purchase, the builder can provide an average estimate of the maintenance rate. If the builder has not told the homebuyer about the age estimate of the maintenance charges, the homebuyer has the right to demand that the builder inform them.
Calculation of Maintenance Charges
The RERA rules for maintenance charges are structured differently in each society. Depending on the city and location, maintenance fees might range from Rs.2 to Rs.25 or even more. The builder may require you to pay the maintenance charge for 12 or 24 months or until the society is handed over to the RESIDENT WELFARE ASSOCIATION when you take possession. The RESIDENT WELFARE ASSOCIATION selects whether to collect the maintenance levy on a monthly or annual basis after taking over the society. The maintenance fee covers housekeeping and cleaning, as well as the upkeep of communal areas, equipment usage, and other costs.
- An additional price for repair services and upkeep of common utilities such as lobby lighting and lift maintenance is split evenly among the flats. Electricity and water tariffs are based on per-flat usage.
- The maintenance charge is higher in commercial properties than in residential ones. These maintenance costs can be related to any cost of managing and maintaining the commercial property.
- Home buyers who have been forced to take possession of their homes in delayed housing projects that have not gotten an OC from the civic authority concerned cannot be forced to pay monthly maintenance charges, according to a recent judgment by the apex consumer panel.
Types of Maintenance Charges
In India, maintenance charges for housing societies are guided by model bye-laws, which vary by state. However, the structure remains largely similar across regions. Here are the key types of maintenance charges:
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Service Charges
These cover expenses for amenities and services like electricity for common areas, security personnel, lift operators, cleaners, and gardeners. All members share these charges equally.
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Repair and Maintenance Charges
These charges cover the upkeep of building elements such as internal roads, pumps, drainage systems, lifts, tanks, generators, street lights, and security equipment. The society’s governing body sets these rates, which must be at least 0.75% per annum of the construction cost of each flat.
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Parking Charges
Applicable to vehicle owners, these charges vary based on the type of vehicle (two-wheeler or four-wheeler) and the rates set by the society.
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Water Charges
Mandatory for all residents, these charges are based on the number and size of inlets in each flat.
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Non-Occupancy Charges
Even if you are not residing in the flat, you must pay these charges, which cannot exceed 10% of the service charges.
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Sinking Fund
This is an emergency fund for unforeseen situations, determined by the society’s governing body, and must be at least 0.25% per annum of the construction cost of each flat.
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Property Tax
In Maharashtra, the local authority decides this tax, which residents pay directly to the government.
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Interest on Defaulted Payments
Late payments incur interest charges, which vary by society but can be up to 21% per annum on the overdue amount.
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Insurance Charges
These cover insurance costs for the building and its equipment. The charges are based on the flat’s built-up area and exclude commercial units.
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Lease/Rent Charges
Based on the built-up area of each flat or unit.
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Other Charges
Additional charges as decided by the society’s governing body when necessary.
Understanding these categories helps residents know what they are paying for and ensures transparency in maintenance charge calculations.
Importance of Maintenance Charges
1: Property Upkeep:
Maintenance charges play a crucial role in ensuring the proper maintenance of common areas such as gardens, swimming pools, gyms, and security systems. This contributes to a well-kept environment and allows residents to enjoy these amenities without the burden of individual maintenance responsibilities.
2: Safety and Security:
These charges often cover the expenses associated with security services, including personnel and surveillance systems. This investment contributes to creating a secure living environment for homeowners.
3: Aesthetics and Property Value:
Effective maintenance enhances the overall aesthetics of the community, positively influencing property values. This makes it a valuable investment for homeowners.
4: Convenience and Cost Efficiency:
Residents are relieved of the individual responsibility of maintaining common areas, saving them time and potentially high costs. The maintenance charge ensures that residents can enjoy shared facilities without the stress of personal upkeep.
5: Financial Distribution:
Maintenance charges distribute the financial responsibility for common area upkeep among all residents. This shared cost-sharing approach is often more cost-effective and convenient than individual maintenance management.
6: Reserve Funds:
A portion of the maintenance charges is typically allocated to a reserve fund for future repairs and upgrades. This ensures a readily available source of funds for significant repairs or replacements, preventing homeowners from facing large, unexpected expenses.
7: Professional Management:
Many housing societies utilize professional management services to handle administration and maintenance tasks. This can lead to more efficient and effective property management.
8: Legal and Regulatory Compliance:
Maintenance charges contribute to ensuring that the property complies with local regulations and safety standards. This proactive approach helps homeowners avoid legal issues and penalties.
RERA Rules for Apartment/Flat Maintenance Fees
- In Karnataka, builders and developers are obligated to provide clear details of maintenance charges for common areas and facilities in project advertisements and agreements. The equitable distribution of these charges among residents is based on the unit’s carpet area or super built-up area, ensuring fairness and transparency.
- Developers in Karnataka are required to maintain a dedicated bank account exclusively for collecting and managing maintenance charges. This segregated account is established to ensure that the funds collected are solely utilized for the maintenance and upkeep of the project.
- An annual audit of the maintenance account, conducted by a certified chartered accountant, is mandated. The audit findings must be transparently disclosed to the residents, promoting accountability and openness in the utilization of maintenance funds.
- Any proposed changes in maintenance charges must be communicated to the residents and subsequently approved by the Resident Welfare Association (RWA) or a residents’ meeting, aligning with Karnataka’s RERA rules guidelines. This process ensures resident participation and consensus in decision-making.
- Developers bear the responsibility of providing adequate maintenance facilities and services, encompassing aspects such as security, water supply, waste management, and the upkeep of common areas. This commitment ensures the overall well-being of the community.
- Developers are typically accountable for maintenance during a specified period after the project’s completion, as stipulated by Karnataka’s specific RERA rules. Within this timeframe, developers must uphold the proper maintenance of facilities and common areas.
- Once a certain percentage of units are sold, and the Resident Welfare Association (RWA) is formed, the residents’ association becomes eligible to take over maintenance responsibilities from the developer. This transition ensures a smooth transfer of management and maintenance control to the residents.
Final Thoughts
There is a steady increase in the demand for residential and commercial property. It’s always better to know about the maintenance charges under RERA rules at the time of booking an apartment as they are recurring monthly charges. Visit Vakilsearch to explore more about getting licences or registrations for any legal, tax, and compliance matters.
FAQ on RERA Rules
What are the key guidelines under RERA rules for maintenance charges in real estate transactions?
The key guidelines under RERA for maintenance charges in real estate transactions include transparent disclosure of maintenance charges by developers in project advertisements and agreements, as well as equitable distribution among residents based on the unit's carpet area or super built-up area.
How does the Real Estate (Regulation and Development) Act impact the calculation and imposition of maintenance fees?
The Real Estate (Regulation and Development) Act impacts the calculation and imposition of maintenance fees by requiring developers to clearly specify these charges in project communications. RERA ensures fairness and transparency in the distribution of maintenance costs among residents.
Are there specific provisions in RERA addressing the transparency and accountability of maintenance charges in housing projects?
RERA has specific provisions addressing the transparency and accountability of maintenance charges in housing projects. For instance.
- Developers are required to maintain a separate bank account for collecting and utilizing maintenance funds.
- Annual audits by certified chartered accountants are required to enhance accountability.
Can developers still charge maintenance fees after the completion of a project, according to RERA regulations?
According to RERA regulations, developers can charge maintenance fees after the completion of a project. Developers are responsible for maintenance during a specified period, and after a certain percentage of units are sold, residents' associations can take over maintenance responsibilities.
In what ways do RERA rules ensure the fair distribution and utilization of maintenance funds within a housing society or project?
RERA rules ensure fair distribution and utilization of maintenance funds within a housing society by mandating the equitable distribution of charges based on a unit area. Annual audits and communication of proposed changes to residents, along with the formation of residents' associations, contribute to transparency and fairness in fund utilization.
