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Supreme Court Verdict on Society Maintenance Charges

Supreme Court Judgement on Society Maintenance Charges

Maintenance charges are the operating charges levied on residents of a housing society. The residents or owners of a particular property in an area are charged for the maintenance of a commonly owned property area. It is collected periodically i.e., monthly, semi-annually, or annually depending upon the project. 

RERA RULES

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The maintenance charges are dependent on the size of the property and the quality of sustenance. If your space is occupied or vacant, the maintenance charges must be paid by the tenant or owner. 

The common areas of the housing society require maintenance. The common areas include

Society Maintenance Charges
Rejuvenation hubs
  • Swimming pool
  • Community facilities
  • Commercial facilities
  • Basements
  • Common entrances
  • Common exits
  • Fire escapes
  • Elevators
  • Staircases
  • Lobbies
  • Water tanks
  • Parks
Society Maintenance Charges
Socializing centres
  • Terraces
  • Play areas
Society Maintenance Charges
Kids zone

All these are kept in good condition using the maintenance charges paid by you on a monthly basis. In gated societies, inhabitants pay a fixed sum of money every month that is utilized for the upkeep of the society premises. 

Calculation of Maintenance Charges as per Society Maintenance Charges Rules

In our country, builders charge between Rs 2 to Rs 25 per square foot depending upon the area and city as maintenance charges. The maintenance charges are directly proportional to the number of facilities offered within the housing society. If the society management charges Rs 2 per square foot, the facilities offered would be minimum. If the management of the housing society charges nearing Rs 25 per square foot for a similar measurement of property, the facilities offered would be many and luxurious. 
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This amount needs to be paid to enjoy the uninterrupted services provided within the society premises. The operations and maintenance of common services and areas are solely dependent on the maintenance charges. Generally, maintenance charges are paid annually which can vary from case to case. 

Supreme Court Judgement on Society Maintenance Charges for Tenants

RERA makes it mandatory under Section (4) (d) for the builder to supply and support the services on reasonable charges, till taken over by RWA or the Residents Welfare Association of the housing society. Some of the things that need to be kept are as follows:

  • Till the RWA comes into existence, the builder must take care of the maintenance of the society. The builder collects the amount from the homebuyers. Later, RWA can charge as per their rules and regulations.
  • The charges are mentioned in the allotment letter, which is issued to the buyer. This letter is issued after the booking amount is paid.
  • RERA Act 2016 ensures that homebuyers need not pay any ad-hoc charges to the builder.
  • These charges should be shown by the builder at the time of booking.
  • Non-disclosure of such charges creates confusion at a later stage 
  • Many State governments have given clear guidelines on setting the maximum amount of maintenance charges
  • No builder can charge more amount as prescribed in the guidelines set by the State government.
  • Mostly the charges or amounts are calculated based on the area of the flat. So, it may vary for residents depending upon the area of their property.
  • The frequency of collection of maintenance charges depends solely on the builder. 
  • As per the latest circular of the Ministry of Finance, the homebuyers have to pay GST @ 18%. The GST charge is levied if the monthly maintenance charges exceed Rs 7500. 

RERA Rules for Maintenance Charges

A builder can collect the maintenance charges in the following two ways:
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  • For a certain period initially, the builder looks after the maintenance of the project. For this, he takes maintenance charges for this, which has to be paid by the owner/ allottee in instalments or lump sum. 
  • The owner or buyer must pay a certain amount for the maintenance of the building. 

These two ways are acceptable to the provisions of the RERA Act but are subject to the following conditions:

  • The amount collected as maintenance charge or corpus fund is not entitled to be the income of the builder. 
  • The builder needs to open separate bank accounts for depositing corpus funds and maintenance charges. 
  • The builder cannot transfer the interest earned on these amounts to his account. It would be accumulated on the same account. 
  • Separate ledger or accounts to be kept which have to be certified or audited by a Chartered Account
  • At the time of handover of responsibility for maintenance of premises to RWA, the builder should hand over the balance amount. 
  • The builder must hand over the accounts statement to RWA. The statement should be duly certified by the Chartered Accountant. 
  • The maintenance charge does not form a source of income for the builder. He is just a managing entity who handles the upkeep of the project till the formation of RWA. 

Flat Maintenance Charges Law

You should know when a builder takes a high amount toward maintenance charges, there are certain rules and regulations. Here we would discuss them:
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  • In our country, each state government has its own set of laws that regulate housing complexes and apartments.
  • Every owner can check the Income Expenditure statement of the project. This is to see whether the amount collected is reasonable or not. 
  • The residents should realise the amount they pay as maintenance charges should be similar for all other residents as well
  • If there is any law or bylaw introduced, it can be imposed with only 100 per cent of inhabitants agreeing to it. 
  • The essential services provided within the premises should only be charged. The maintenance charges should include expenses only for the essential services. For example, if you do not use a swimming pool, it cannot form a part of your maintenance.
  • As per RERA laws, the builder needs OC to supply possession of its units to the purchasers. Without OC, the builder cannot handover the units to the purchasers
  • The owners can also approach the consumer forum if they are not satisfied with the services provided by the builder. They can get their grievances solved if those are unaddressed due to certain reasons. 

Maintenance Charges on Flats

Normally residential societies collect maintenance charges as per the carpet area of the flat. Sometimes other variables are also considered if the units are of the same size.  A purchaser should be aware of the facilities to be provided.  The builders collect maintenance costs in advance for six months or one year. 
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RERA Guidelines

The following provisions are laid down by the RERA:

  • RERA act mandates all housing societies larger than 500 sq. m., or eight units should be registered with their State’s RERA before launching
  • Ongoing projects without Completion Certificates(CC), as on the date of commencement of the Act, can have to be compelled to file for registration within 3 months. The authority can either settle for or reject the application within thirty days. Post acceptance of the registration request, the promoters need to supply mandatory details about the project on the website of RERA
  • The failure to register with a housing society would involve a penalty of ten per cent of the overall project value or imprisonment of up to 3 years.
  • Real estate agents helping withthe sale or purchase of properties are needed to register themselves with RERA. 

Supreme Court Ruling on Society Maintenance Charges

The maintenance charges should be paid by all purchasers of the units. Irrespective of their occupancy they must pay the amount. The maintenance charges for unsold flats must be borne by the developer till they are sold. A system needs to be chosen to pose maintenance charges from the home purchasers. There is no prescribed or recommended formula for charging the same.   According to the Real estate act of 2016, every homeowner is liable to pay the maintenance charges for their unit in the housing society. 

Maintenance Charges

There are different aspects of Maintenance charges are as follows:

  • Service charges include shared area electricity charges, power backup charges, security, housekeeping, equipment
  • Expenses which include upkeep of the premises, elevators etc.

Apartment Maintenance Charges Rules and Regulations

As per RERA, the developer or promoter handles the maintenance of the housing society till RWA is formed. The home purchaser must pay the charges. The amount being collected by the builder as a maintenance charge should be reasonable. RERA has mandated the signing of an agreement between the promoter and purchaser. This agreement shows the amount that would be charged for maintenance. The cost breakdown and the frequency of collection should be mentioned. It becomes very transparent; nothing is hidden from the customer. RERA is the authority responsible for taking care of the rights of home buyers.  

How are Maintenance Charges for Flats Calculated?

There are many methods to calculate the maintenance charges for a unit of a housing society. Here are the ways: 

  • Per square feet charge: This is the most common method used by the builders to calculate the maintenance charges. The amount varies concerning the area of the unit of the project. 
  • Equal maintenance fees: Equal maintenance for all flats is the simplest and most convenient method of collecting maintenance fees. The same amount is charged from all the house owners of the project or society. Hybrid method: The maintenance charges are split into two. One part includes common expenses, and the other part includes area-based charges. 

There is no recommended method which is foolproof to calculate maintenance charges. It varies from society to society and state to state. Supreme Court judgement Society Maintenance charges have provisioned rules to safeguard the rights of homeowners. RERA act comes in very handy in regularising the process. No broker website lists the rules and regulations to be followed by the builders from the launching of the project till the formation of RWA. The homeowners can always approach the RERA of their state for any information related to the project and its builders

FAQs

Q. Are the maintenance charges mandatory?

A. Yes, maintenance charges are mandatory in every apartment or housing society. It varies from society to society and the number of amenities offered.

Q. Can I know the maintenance charges for a housing society before booking a property?

A. Yes, you can know the maintenance charges. The builder needs to show the amount to be collected as maintenance charges before you pay the booking amount.

Q. Is paying maintenance charges legally binding?

A. Yes, it is legally binding to pay the maintenance charges. As the residents of the society are the users of these common areas and amenities. The residents must pay the charges according to the law.

Q. Is GST charged on the maintenance charges?

A. Yes, GST is charged. The residents must pay GST @ 18% if the monthly maintenance charges exceed Rs 7500.

Q. What is OC?

A. OC or occupancy certificate shows that the project or apartment is developed according to the plan. It is ready to live in and can be inhabited by people.

Q. Can builders sell common areas?

A. The Apartment Owners Association (AOA) must receive these amenities for free once the project receives a completion certificate. Builders are prohibited from selling common areas and facilities separately under a number of apartment and urban area acts, including the Apartment Ownership Act of 1989.

Q. Can society charge more maintenance from a tenant?

A. As per the Bombay high court judgement on society maintenance charges The Housing Society cannot arbitrarily increase the Maintenance Charges (MC) at their will.

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Vivek Mishra

With over 23 years of experience in Real Estate, and an architecture degree, Vivek is here to help others buy/sell or rent the right way. Through his writing you will find out what people look for, and what you can do to get the best out of your home, and also how to get the best for your home.

7 thoughts on “Supreme Court Verdict on Society Maintenance Charges”
    1. Maintenance charges are the operating charges levied on residents of a housing society. The residents or owners of a particular property in an area are charged for the maintenance of a commonly owned property area

  1. per RERA, The cost of such maintenance for 1 year from the date of completion certificate has been included in the total price of the apartment.
    what does that mean by? allottee does need to pay anything for 1 year?

  2. 1. Is it fair for all residents where flats sizes are between 500 sqft – 4000 sqft to opt for Equal maintenance fees??

    2. Hybrid method: The maintenance charges are split into two. One part includes common expenses, and the other part includes area-based charges

    What all line items can be split here in two different categories?

  3. Hello,
    The Title of the article states that it has been derived from Supreme Court Verdict. Please mention which SCC (Supreme Court Cases) it is ?
    Citation, Year, Name of the Party, Act involved,etc Mention the case detail in short.
    Thank You.

  4. Can one time maintainanc charges for 2 years be made compulsory! Can Society charge heavy late fee on onetime maintain charges not paid for 2 years in advance
    , if so, how much late fee the member is liable to pay?

  5. If association is following 1963 apartment act,
    Can they raised any thing other than maintenance?
    Is painting of common area or whole building be raised as separate invoice?

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