Builders Can’t Ask For Maintenance Charges In The Absence Of OC: NCDRC

Builders can’t force homebuyers to pay maintenance charges for flats in housing projects that are yet to receive the occupancy certificate from the civic authority concerned, the National Consumer Disputes Redressal Commission (NCDRC) has ruled. The observation by the panel was made on a plea of a batch of 15 buyers from Bengaluru.

Offering major relief to homebuyers who are first forced to take possession of homes in long stuck housing projects and then made to pay maintenance charges, the apex consumer panel held:  "Regarding the issue of maintenance charges, it is a fact that the complainants have taken physical possession of their respective units. It would be logical that there would be an expense on the maintenance of certain common services. It is also a fact that the Occupancy Certificate has not been obtained yet. It means that the project is not yet fully complete and that not all services promised are being provided. No maintenance charge should be levied before obtaining the occupancy certificate.”

CHS Can Levy Maintenance Based On Flat Size: Consumer Forum

Housing societies are free to charge flat owners differently, based on the sizes of the units they own, the Telangana State Consumer Disputes Redressal Commission has ruled. While passing an order in the case V Srikanth versus India Bulls Centrum Owners Welfare Cooperative Society, the state commission set aside an earlier order passed by the district forum in 2018.

The case

Members of the India Bulls Centrum Owners Welfare Cooperative Society, V Srikanth and K Sravani, had raised a complaint under Section 12 of the Consumer Protection Act, 1986, to stop the association from charging maintenance from flat owners on a per sq ft basis. The district forum had ruled in favour of the applicants, asking the society to collect uniform charges from all flat members, irrespective of the size.

The society manages the gated community at lower Tank Bund in Hyderabad, with 154 flats of varying sizes, from 1,281 sq ft to 3,270 sq ft.

In its defence, the association pleaded that since the majority of the members were in favour of its decision, it was justified in charging maintenance based on the size of the flats. While asking the society to levy a uniform charge, the district forum rebutted that argument, saying it could not pass arbitrary rulings only because of having a majority. It also said that owners of bigger flats could not be made to pay higher charges, as if they get higher security, more common road and more passage of light by virtue of being the residents of bigger flats.

Subsequently, the association moved the state commission, seeking justice.

Setting aside the order by the district forum, the state commission bench, headed by president Justice MSK Jaiswal and member Meena Ramanathan, said that since bigger flats accommodate more people and claim higher share in the usage of common amenities, such as water, unlike smaller flats, it would be unfair to make the residents of the two flats pay a uniform maintenance charge. The commission also ruled that the decision of the majority should prevail in cases of housing societies, since all members are the flat owners.

What Are Maintenance Charges For Flats?   

You get annoyed when you see the park in you housing society splattered and littered, in spite of you regularly paying the maintenance charges. It is even more annoying to see that the basement, too, is not properly managed, and the residents park their cars using their whims and fancies. You rush to complain about poor maintenance to the management of your housing society. After all, you pay a substantial amount every month as maintenance charges year after year, and you would like to see it used for the purposes it is collected.

What are maintenance charges?

In gated communities, residents pay a fixed amount every month that is used for the upkeep of the common areas in a housing society.

Why the payment?

Typically, common areas in a housing society are all community and commercial facilities and may include swimming pools, staircases, elevators, lobbies, fire escapes, common entrances and exits, basements, terraces, parks, play areas, water tanks, etc.

Basically, every part of you housing society, be it the park or the lobby, the community centre or the pool, the elevators or the children's playground, is maintained using the money you pay on a month-on-month basis. 

How it is calculated?

In India, real estate developers charge anywhere between Rs 2 to Rs 25 per square foot (psf) as maintenance charge.

Suppose you live in a housing society that is spread across 15,000 square foot and there are 50 residents. If the developer charges Rs 2 psf as maintenance charge, each of the members would have to pay a monthly maintenance charge of Rs 600 every month. Housing societies in national capital Delhi, for instance, levy that kind of maintenance charge since they are smaller and offer only a certain number of amenities.  

Now, if the developer charges Rs 25 psf as maintenance charge in a housing society with similar measurement and the same number of resident, each one will have to pay Rs 7,500 every month.  Housing societies in Gurgaon and Noida typically charge monthly maintenance in that range because of the facilities they offer.

What is the timeline?

Homeowners in a housing society have to pay an amount periodically for the regular maintenance and operations of these common facilities. In most cases, you have to pay maintenance charges on an annual basis. However, these charges may vary from case to case. Home buyers must read their sale agreement carefully so that they know what kind of money they will be expected to pay as maintenance charges in future.

Also Read: GST On Maintenance Charges

Is it legally binding?

Many of us, given a choice, would not be willing to part with money towards maintenance charges, if truth must be told. Is it not the responsibility of the project developer to maintain the housing complex? The fact is as the residents of a housing society and as the users of the common areas, it is our duty to pay these charges—and the law says so.

According to the Real Estate (Regulation and Development) Act, 2016, “every allottee, who has entered into an agreement for sale to take an apartment, plot or building shall be responsible to make necessary payments within the time as specified and shall pay the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges”.

Is it worth the money?

Apart from the fact that it is legally binding on you to pay maintenance charges as specified in your agreement to sale (mostly, the document does not specify the amount), you must contribute to enjoy uninterrupted services provided in a housing society. It would not make any sense if you buy a house in a project that offers a swimming pool, but does not have proper arrangements to allow the residents to use it. What is the point of having a un-manned parking area where nobody is bound to play by the rules?

Also, you can also claim tax benefits on the maintenance charges if you have given your property for rent. Do note here that this facility is not available to self-occupied properties.