Status as on- 15/01/2022
When buyers pay for their home/unit several charges, some hidden and some unhidden are levied on them. Among some hidden charges one is the Interest Free Maintenance Security Charges. Let’s understand what we buyers are being charged with.
Meaning of IFMS (Interest Free Maintenance Security Charges)
IFMS is an additional amount given by the buyers to the developer/builder till the time resident’s welfare association (RWA) is formed. The purpose of forming RWA is maintenance purpose, security purpose and projects for developments. As soon as the RWA is formed it is the obligation of the builder/developer to handover the security amount to the association. It is payment made only once which includes the taxes and 18% GST is levied at the time of payment.
Remedies for misappropriation of Interest Free Maintenance Security Charges
- As per Section 61 of the RERA Act, 2016, If any promoter violates any other provision of this Act, other than those provided under section 3 or section 4, or the rules or regulations made there under, he shall be liable to a penalty of up to 5% of the estimated cost of the real estate project as determined by the Authority, which means that if the builder or contractor fails to deliver physical possession of the flat to the allottee, he will be liable to a penalty of up to 5% of the estimated cost of the real estate project as determined by.
- Under Section 14 of the RERA Act, 2016, if any structural defect or other defect in workmanship, quality, or provision of services, or any other obligation of the promoter under the agreement for sale relating to such development is brought to the promoter’s attention within a period of five years from the date of handing over possession by the allottee, it shall be the promoter’s duty to rectify such defects without further charge, within thirty days of the allottee’s notification.
- In addition to that as per Section 18 of the RERA Act, 2016
(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,—
(a) in accordance with the terms of the agreement for sale or as the case may be, duly completed by the date specified therein; or
(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason;
he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:
Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.
(2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force.
(3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.
- Section 88 of the RERA Act, 2016 says that “The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force” which means that the home-buyer can also file a consumer complaint under the Consumer Protection Act, 1986 for the deficiency of service on the part of promoter or builder in not giving the delivery of possession of flat or plot in question in time or for some structural defects in the building after the plot or building is delivered.
IFMC is a non refundable charge levied upon the buyers. There are instances where the promoters do not transfer the amount to the RWA which therefore leads to misappropriation of funds which do one remembers about. The buyers must make sure that the association is formed in time and the money is allotted to the right place.
Disclaimer: The above article is based on the interpretation of the related laws and judicial pronouncements. The readers are expected to take legal advice before relying on this article. The author can be reached at firstname.lastname@example.org or call the IP expert at 8383011629.