Can Society Charge Interest on Maintenance?

Housing societies in India can charge interest when members pay their monthly maintenance late. 

1. This rule is allowed only when the society’s registered bye-laws clearly mention that interest can be charged and also mention the exact rate. 

2. If the bye-laws do not have this rule, then the society cannot charge interest. So, bye-laws play a very important role in this matter. The society must also inform all members about the interest rule so that everyone knows what will happen if they delay payment.

3. Most housing societies use simple interest to calculate the extra amount for late payment. Many societies choose a rate like 21% per year, but the rate depends on what the general body has approved. Simple interest is easy to understand because it is calculated only on the overdue amount, not on any additional charges.

The formula for simple interest is: Interest = Principal Amount × Interest Rate × (Delay Days / 365)

Here,

1. The principal amount is the pending maintenance amount.

2. The interest rate is the yearly rate mentioned in the bye-laws.

3. Delay days are the number of days the payment is late.

For example, if a member has to pay Rs. 1,000 as monthly maintenance, with a due date of 10 April 2024, but the member pays on 25 April 2024; the payment is therefore 15 days late. Using the formula, the interest comes to around Rs. 9. This means the member has to pay a total of Rs. 1,009.

If a society charges interest wrongly or without following its bye-laws, the member can complain to the Cooperative Societies Registrar. Hope this helps you.

Manage Your Society Maintenance Payments Smoothly with NoBrokerHood

When I first took a flat in a gated society, I had the same query: can society charge interest on maintenance? I hence went to my maintenance office and asked the same. They said, yes, housing societies in India have the authority to impose interest. It is in case of overdue maintenance payments, with a cap set at 21% per annum. However, the specific rate applied is typically determined by the society’s bye-laws. Let me share more details I came to know about society maintenance charges.

How to Calculate Interest on Society Maintenance Charges?

According to what my society in charge told me, they typically compute the interest on maintenance fees as simple interest, which amounts to 21% annually on the unpaid balance. Until the member has made a complete and final payment, this interest is due from the date the amount was due. I also came to know:

1. If a member delays payment of maintenance charges, the society must usually issue a written notice informing them of the outstanding amount and any interest that will apply if it remains unpaid within a specified timeframe.

2. The interest rate and conditions for collecting interest on past-due payments are determined by the managing committee or the general body of society.

The managing committee or the general body of the society decides the exact rate. I hope you found this answer helpful.

Read More

When I first took a flat in a gated society, I had the same query: can society charge interest on maintenance? I hence went to my maintenance office and asked the same. They said, yes, housing societies in India have the authority to impose interest. It is in case of overdue maintenance payments, with a cap set at 21% per annum. However, the specific rate applied is typically determined by the society’s bye-laws. Let me share more details I came to know about society maintenance charges.

How to Calculate Interest on Society Maintenance Charges?

According to what my society in charge told me, they typically compute the interest on maintenance fees as simple interest, which amounts to 21% annually on the unpaid balance. Until the member has made a complete and final payment, this interest is due from the date the amount was due. I also came to know:

1. If a member delays payment of maintenance charges, the society must usually issue a written notice informing them of the outstanding amount and any interest that will apply if it remains unpaid within a specified timeframe.

2. The interest rate and conditions for collecting interest on past-due payments are determined by the managing committee or the general body of society.

The managing committee or the general body of the society decides the exact rate. I hope you found this answer helpful.

Read More