Maintenance Funds, IFMS & Statutory Audit Rights
Understanding common expenses, Interest-Free Maintenance Security (IFMS), Sinking/Corpus funds, builder obligations on unsold flats, and resident audit rights.
Plain-Language Summary
Builders in Gautam Buddh Nagar collect substantial sums at the time of possession under the heads of Interest-Free Maintenance Security (IFMS), Sinking Fund / Corpus Fund, and advance common area maintenance (CAM) charges. Under the UP Apartment Act 2010 and RERA, these funds are held strictly in a fiduciary trust on behalf of apartment owners — they are NOT builder revenue. The builder must maintain separate accounts, have them audited annually, pay maintenance for all unsold apartments, and transfer the entire balance to the AOA upon registration.
1. Who Does This Guide Apply To?
- Residents paying monthly CAM / electricity backup charges either to a builder agency or an elected AOA.
- AOA Treasurers and Finance Committees demanding IFMS/Sinking fund transfer and historical audit reports.
- Apartment owners verifying whether the builder is paying maintenance charges on unsold inventory.
2. Statutory Rules Governing Society Funds & Maintenance
Mandatory Transfer of IFMS / Corpus & Sinking Fund with Interest
IFMS & Sinking FundUnder Section 14(5) of the UP Apartment Act 2010, all amounts collected toward Corpus/IFMS or Sinking Fund for major structural/equipment replacement must be kept in a separate bank account and transferred in full to the AOA immediately upon its registration.
Builder Must Pay Full Maintenance for All Unsold Flats
Unsold Inventory LiabilityBoth RERA (Section 11(4)(g)) and the UP Apartment Act mandate that the promoter stands in the shoes of an allottee for all unsold apartments and is legally liable to pay monthly common expense contributions for every unsold unit into the society maintenance account.
Grid Electricity & DG Backup Cannot Be Marked Up for Profit
No Profit on UtilitiesUnder UPERC (Uttar Pradesh Electricity Regulatory Commission) multi-point / single-point supply regulations, neither the builder nor the AOA can charge above the regulatory tariff for grid power, nor arbitrarily deduct unrelated penalties from prepaid electricity meters without due process.
Unpaid Common Expenses Constitute a Statutory First Charge
Section 20 ChargeUnder Section 19 & 20, no apartment owner can exempt themselves from common expense contributions by waiving use of common areas, and unpaid dues constitute a statutory charge on the apartment recoverable by the AOA.
3. Action Plan to Audit & Recover Society Funds
Need Standardized Legal & RTI Drafts?
Access ready-to-use RTI applications, 14-day GBM notices, and statutory builder handover demand letters.
Related References & Official Links
Help Improve This Guide
Found an outdated rule, new authority circular, or typo? Submit your feedback or citation to help keep civic information accurate.