Q: It is common knowledge that builders invariably insist on payment of advance maintenance charges for one or two years at the time of giving possession of new flats to buyers. This amount, in most cases, runs into a couple of lakhs per homebuyer, and in a project with 100 or more flats, this total collection goes into crores. Many such housing projects are redevelopment projects where cooperative housing societies pre-exist even before the new buildings are constructed. Then why should builders demand and collect such huge amounts from homebuyers? Is maintenance of the buildings the responsibility of builders? Are there any provisions in RERA that permit such collections in the name of advance maintenance charges? And even when the project is not a redevelopment project, why should builders be allowed to collect one or two years’ advance maintenance? Is the builder not supposed to form the society of buyers within a specified time? — Professor Alok Hardikar, Vile Parle (West)
Ans: It is a common practice adopted by many builders to collect one or two years’ advance maintenance charges at the time of giving possession. The existence of a cooperative housing society or any other entity of allottees (homebuyers) is a prerequisite for maintenance of any newly constructed building. With the enactment of RERA, strict timelines have been laid down for the formation of such a society or entity. A combined reading of Section 11(4)(e) of the RERA Act and Rule 9 of the MahaRERA Rules makes the formation of a cooperative society or any other legal entity of allottees mandatory within three months from the date on which 51% of the total number of allottees have booked their flats. Not taking such steps is a violation of the RERA Act and Rules and constitutes an offence punishable under Section 61 of RERA.
Thus, when the occupation certificate (OC) is received for any new building, RERA expects a duly registered society or entity to be in place to take over regular maintenance. Even if a project involves multiple buildings, multiple societies, and an apex body like a federation, the builder is required to form and register such a federation within three months from the date of the OC of the last building.
The intent and spirit of RERA is clear: the builder must hand over possession and maintenance of newly constructed buildings to the housing societies within the prescribed time frame. In redevelopment projects, the matter is even simpler since the society already exists and new buyers merely have to become members. Against this backdrop, the collection of one or two years’ advance maintenance from homebuyers is not justified. Section 11(4)(d) of RERA specifically states that “the promoter is responsible for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of allottees.”
In light of these provisions, no builder is legally justified in demanding or collecting advance maintenance charges at the time of possession. Such a practice amounts to an unfair trade practice aimed at collecting crores from homebuyers and using it interest-free for business. It is nothing short of unjust enrichment at the cost of homebuyers. Helpless buyers often have no choice but to succumb to such illegal and unfair demands. While an aggrieved homebuyer can file a complaint before MahaRERA, very few would risk delaying possession of a ready home.
Therefore, in my view, MahaRERA should suo motu take cognisance of this widespread unfair practice, which is leading to unjust enrichment on a large scale, and issue appropriate directions under Section 37 of RERA directing all promoters to desist from it.
(Advocate Shirish V Deshpande is chairman, Mumbai Grahak Panchayat. Queries can be sent to him on email: shirish50@yahoo.com)
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