Can a Builder Recover Maintenance Charges Before Handing Over Maintenance to the RWA?
A recent Punjab RERA decision in Fortune Multitech case has addressed an important issue affecting apartment owners and developers alike—whether a promoter can recover maintenance charges from an allottee before maintenance is formally handed over to a Residents Welfare Association (RWA).
If you are dealing with a property dispute regarding Fortune Multitech Pvt. Ltd. (primarily for their Victoria Heights project in Mohali/Zirakpur), the best actionable path is to file a formal case with the Punjab Real Estate Regulatory Authority (RERA) RERA Punjab. [1, 2]
Before the Resident Welfare Association (RWA) takes over, builders are legally permitted to collect advance maintenance fees (usually for 12 to 24 months) at the time of possession. However, under RERA, this money must be kept in a separate account and strictly used for the upkeep of the property and essential services. [1, 2, 3, 4, 5]
Fortune Multitech Complaint Background
The dispute arose when a developer sought recovery of outstanding maintenance charges from an apartment owner who had been residing in the project and availing common facilities for several years.
The allottee resisted the claim, alleging deficiencies in maintenance services, lack of transparency in accounts, and absence of a separate maintenance agreement.
Key Issue
The central question before Punjab RERA was whether an allottee can withhold maintenance charges on the ground that maintenance services are deficient or that no separate maintenance agreement exists.
Findings of Punjab RERA
Punjab RERA examined the Buyer’s Agreement and noted that the allottee had expressly agreed to pay maintenance charges from the date of possession.
The Authority observed that:
- The allottee had taken possession and continued to enjoy common facilities.
- Liability to pay maintenance charges flowed directly from the Buyer’s Agreement.
- Maintenance charges remain payable until lawful handover of maintenance to a duly constituted association.
- Mere allegations regarding service deficiencies do not automatically extinguish the obligation to pay maintenance charges.
The Authority also emphasized that residents cannot enjoy common services while refusing to contribute towards their cost.
Significance of the Decision
The ruling reinforces an important principle in real estate law: payment of maintenance charges and grievances regarding maintenance quality are separate issues.
While allottees retain the right to challenge poor maintenance services, they cannot unilaterally stop payment of maintenance charges that are contractually payable.
Specific factors and details concerning local cases:
- Maintenance & Dues Disputes: RERA Punjab has previously handled cases involving unpaid maintenance charges between the developer and flat owners Mohali: RERA directs flat owner to pay ₹4 lakh maintenance …. [1]
- Prior Complaints: Many prior complaints involved association formation delays, possession issues, and delayed payments, many of which were dismissed upon mutual settlement u/s 31 (GC No. 0130/2024) – RERA Punjab. [1, 2]
- Consumer Disputes: While RERA handles the bulk of builder-buyer disputes, allottees have also been permitted to seek relief through the District Consumer Disputes Redressal Commission Untitled – RERA Punjab. [1]
- No Profit-Making: The builder cannot treat maintenance collection as a profit-making business. The charges must reflect the actual operational costs of shared amenities, security, and common areas. [1, 2, 3, 4]
- Unsold Units: The Supreme Court has ruled that builders must pay maintenance charges for all unsold flats themselves. They cannot inflate your dues to make up for vacant units. [1, 2, 3]
- Handover of Funds: Once the RWA is formally constituted, the builder is legally obligated to transfer all maintenance responsibilities along with the balance of the maintenance funds. [1, 2]
- Transparency: The builder must provide a detailed breakdown of expenses and an audited statement of accounts at the time of the handover. [1, 2]
- Dispute Resolution: If the builder demands ad-hoc, unreasonable charges or fails to maintain essential services, you can file a formal complaint with your state’s RERA Authority. [1, 2]
Conclusion
The decision provides clarity on the rights and obligations of both developers and residents. Until maintenance is legally transferred to an RWA or competent association, promoters may continue to recover maintenance charges in accordance with the terms of the Buyer’s Agreement.
By Satish Mishra, Advocate. More on 99888-17966
