Exploring Advance Maintenance in Real Estate: Fund Collection and Refund Process Demystified
Introduction: In under-construction real estate projects, developers often collect advance maintenance funds from buyers. This practice, known as advance maintenance, serves a crucial purpose during the initial phases of possession when no one is present to take care of the society. In this article, we will explore what advance maintenance is, why it is collected, where the funds are held, and the process for refunding unused funds after the formation and handing over of the society as per applicable laws.
What is Advance Maintenance? Advance maintenance refers to the funds collected by real estate developers from buyers of under-construction projects. These funds are meant to cover the expenses of maintaining common areas and facilities before the society is formally handed over to the residents. It ensures that necessary services such as security, cleaning, landscaping, and maintenance of amenities are provided during the initial period.
Purpose and Collection: The primary purpose of collecting advance maintenance is to ensure the smooth functioning and upkeep of the project during the construction and possession phases. It enables the developer to manage and maintain the common areas and services until the society is formed and residents take charge. The funds are usually collected in an escrow account, which acts as a safeguard to ensure their proper utilization for maintenance purposes.
Refund Process: Once the society is formed and possession is handed over to the residents, any unused funds from the advance maintenance account are refunded to the actual society as per the prevailing laws and regulations. The developer is responsible for reconciling the accounts, determining the amount to be refunded, and initiating the refund process. This ensures transparency and accountability in the financial transactions related to advance maintenance.
Conclusion: Advance maintenance is a crucial aspect of under-construction projects, ensuring the maintenance and upkeep of common areas and services before the society is formed. It provides a temporary mechanism to meet the maintenance expenses during the initial phase when the society is not yet functional. The collection and utilization of these funds are governed by applicable laws and regulations, and any unused funds are refunded to the actual society formed. This practice promotes transparency and accountability, benefiting both developers and homebuyers in ensuring the smooth functioning and maintenance of the project.
