Best Excess Maintenance Charges & Pre-Handover Disputes Lawyer

For many residents, the monthly maintenance bill is where frustration with the builder becomes a regular, recurring cost. The builder's maintenance agency sets the rate, raises it every year, adds a margin on electricity, charges for services that don't exist, and threatens to cut power or water if anyone disputes the bill. Before possession, some builders also demand "holding charges" for the months a buyer hasn't taken possession, and maintenance from the date of a possession offer made before the building was ready.

The Real Estate (Regulation and Development) Act, 2016 doesn't fix maintenance rates, but it does put limits on what a builder can charge before the residents' association takes over, and it gives buyers a forum to challenge unreasonable charges. This page explains how.

The rule: essential services on reasonable charges

Section 11(4)(d) makes the promoter responsible for providing and maintaining the essential services, on reasonable charges, until the maintenance of the project is taken over by the association of allottees.

That one sentence does three things. It makes maintenance the builder's obligation until handover. It ties the charge to essential services actually provided. And it requires the charges to be reasonable. A builder that runs the society at a profit, charges for services it doesn't provide, or keeps raising rates without explanation is open to challenge under this provision.

Charges before possession

Maintenance from an invalid possession offer

Builders often start charging maintenance from the date of their possession letter, whether or not the buyer has taken the keys. If the possession offer was made before the occupancy certificate, it generally isn't a valid offer, and maintenance charged from that date is open to challenge. Even after a valid offer, the buyer is expected to take possession within two months under Section 19(10), and maintenance charges that start on the day of the letter, rather than after a reasonable period, can be questioned. See our page on possession without OC.

Holding charges

Some builders charge "holding charges", a monthly amount for every month a buyer doesn't take possession after it's offered, on the theory that the builder is holding the unit for the buyer. Where the delay in taking possession is due to the builder's own default, such as an invalid offer or illegal demands, holding charges have no basis. The Supreme Court, in a 2020 decision arising from a dispute in a DLF project in Delhi, upheld the view that a builder couldn't levy holding charges on buyers. Authorities in the NCR have generally treated holding charges with suspicion, and they're frequently set aside.

Advance maintenance for long periods

Possession demands often include 12, 24 or even 36 months of advance maintenance. Where the agreement provides for advance maintenance, a reasonable period may be payable. But a demand for two or three years in advance, before services are fully operational, ties up a large amount of residents' money in the builder's hands. Ask what the advance covers, and what happens to it at handover. Any part relating to the period after the association takes over should be transferred to the association.

Charges after possession, before handover

The rate itself

Maintenance is usually charged per square foot of super area per month. Two questions matter. First, what does the agreement or the maintenance agreement say about the rate and how it can be increased? Second, does the rate reflect the actual cost of services provided? A builder that won't show residents the maintenance account, or the cost breakdown, is in a weak position to defend its rate as "reasonable".

Services that don't exist

Residents are often billed for services that aren't provided: club maintenance for a club that doesn't exist, swimming pool upkeep for a pool that's dry, power backup charges where generators cover only common areas, security for a gate that isn't manned. These charges fail the "essential services actually provided" test.

Common area costs for unsold units

Where the builder still holds unsold flats or commercial units, it's responsible for the maintenance charges on those units, just like any other owner. Sometimes the cost of maintaining the whole society is spread only over sold units, so residents effectively pay for the builder's inventory. Ask whether unsold units are being billed.

Electricity margins

In societies with a single-point bulk electricity connection, the builder's agency often supplies power to flats through sub-meters. Electricity regulators in the NCR states have regulations on how much can be charged in such arrangements. Charges well above the regulated tariff, unexplained fixed charges, and disconnections without due process can be challenged, sometimes before the electricity regulator or the distribution company's grievance forum, and sometimes as part of a RERA complaint about unreasonable charges.

Repair costs that are the builder's responsibility

A subtler form of overcharging is billing residents, through maintenance, for repairs that are really defect rectification. If the basement leaks, the lifts keep failing or the facade plaster is falling off within five years of possession, those may be defects the builder must fix free of cost under Section 14(3). Charging residents for them through the maintenance account shifts the builder's liability onto residents. Associations and residents should look carefully at large repair items in the maintenance account and ask whether they relate to construction defects.

What you can ask RERA for

• A direction that maintenance be charged only from the date of a valid possession offer, or a reasonable period after it.
• Setting aside holding charges.
• Limiting advance maintenance to what the agreement permits and requiring the balance to be transferred to the association at handover.
• Production of maintenance accounts and a direction to charge only reasonable charges for services actually provided.
• Refund of excess charges collected, with interest.
• A direction that the builder bear maintenance on its unsold units.
• A direction that defect rectification costs not be charged to residents.
• Restraint on coercive steps such as disconnection of services over disputed charges, while the complaint is pending.
• Directions for handover of maintenance to the association, where the builder has delayed it.

Disconnection threats

A common pressure tactic is the threat to cut electricity, water or lift access, or to block a resident's access card, over disputed maintenance dues. Essential services can't be used as leverage in a dispute about whether charges are payable. If you receive such a threat:

• record your dispute in writing to the agency and the builder, explaining what you dispute and confirming you'll pay undisputed amounts;
• pay the undisputed portion;
• inform the association, if there is one; and
• if the threat is carried out or imminent, seek urgent interim directions from the authority, and in the case of electricity, approach the distribution company or its grievance forum.

Individual disputes or collective action?

Maintenance overcharging almost always affects every resident, which makes collective action the natural route. An association or a group of residents can ask for accounts, challenge the rate, and seek refunds for everyone. Individual residents can still challenge charges specific to their own unit, such as holding charges or maintenance from an invalid possession date.

Collective action also protects individuals. A builder that might threaten one resident with disconnection is far less likely to do so when the association has a complaint pending before the authority.

How we approach maintenance disputes

1. Read the agreement and any maintenance agreement for the rate, the escalation clause, advance maintenance and IFMS terms.
2. Identify the problem charges: holding charges, charges from invalid possession dates, services not provided, electricity margins, unsold-unit costs, defect repairs.
3. Ask for accounts from the builder's agency, in writing.
4. Pay the undisputed portion, to avoid giving the builder a default argument.
5. File a complaint seeking reasonable charges, accounts, refunds and, where relevant, handover.
6. Seek interim protection against disconnection where needed.

Maintenance after the association takes over

Once maintenance has been handed over to the association, disputes about monthly charges usually become internal matters between residents and the association, governed by the association's bye-laws and the state apartment or cooperative law. RERA's provisions on the builder's maintenance obligations no longer apply to the monthly bill, though the builder's other obligations, such as defect rectification within five years and transfer of funds, continue.

If you're unhappy with the association's maintenance charges, the remedy usually lies within the association's own processes: general body meetings, audits, elections, and, where those fail, the registrar or authority under the applicable state law. It's a different set of rules from those that apply to builders.

GST on maintenance

Residents are sometimes surprised by GST on their maintenance bills. Under the GST rules, maintenance charges collected by a builder's agency are generally subject to GST as a supply of services. For resident welfare associations, there's an exemption up to a threshold of monthly contribution per member, above which GST applies. The rules and thresholds are technical and have been the subject of clarifications, so where large sums are involved, a chartered accountant's view is worth having. The point for RERA purposes is that GST should be charged correctly and only on charges that are themselves payable.

Increases in the maintenance rate

Agreements and maintenance agreements often allow the rate to be increased periodically, sometimes by a fixed percentage and sometimes "as per actual costs". Increases should follow the mechanism in the agreement, be explained, and be supported by the actual costs of providing services. An across-the-board increase of 20% with a one-line notice, in a society where the club and pool still don't work, is very hard to justify as reasonable.

Residents can ask the agency for a budget showing the main heads of cost, such as staff, security, housekeeping, lift and equipment maintenance, common area electricity, water treatment and administration, and compare it with the previous year. Large unexplained jumps under "administration" or "management fees" are worth questioning.

What a reasonable maintenance account looks like

It helps to know what you're asking for when you request accounts. A builder's maintenance agency that is running a society properly should be able to produce, at a minimum:

• a monthly or quarterly statement of income, showing maintenance collected, electricity collected, and any other receipts;
• a statement of expenditure under clear heads: manpower, security, housekeeping, horticulture, lift maintenance, generator fuel and maintenance, common area electricity, water and sewage treatment, repairs, insurance, administration;
• copies of the main contracts, such as security, housekeeping and lift annual maintenance;
• a reconciliation of the electricity account: units purchased from the distribution company, units billed to residents, and the difference;
• a statement of the IFMS and sinking fund held, with bank details; and
• an auditor's certificate, at least annually.

If the agency won't produce these, that refusal is itself a significant point when you ask the authority to find that the charges aren't shown to be reasonable.

Commercial and mixed-use projects

In commercial projects and mixed-use developments, maintenance disputes are often sharper, because common area maintenance charges are higher and cover expensive systems like central air conditioning, escalators and extensive security. Commercial unit owners have the same protection under Section 11(4)(d) until the association takes over. Where residential and commercial owners share facilities, the allocation of costs between them is a frequent dispute, and the original agreements and the declaration under the state apartment law usually govern it.

Where to file

Complaints about pre-handover maintenance and charges go to the RERA authority of the state where the project is: UP RERA, Haryana RERA in Gurugram or Panchkula, or Delhi RERA. Disputes purely about electricity tariffs under a single-point supply may also be taken to the distribution company's consumer grievance forum or the state electricity ombudsman.

Paying under protest: how to do it properly

Many residents pay disputed maintenance to avoid disconnection and plan to claim it back later. That's sensible, but it only works if the protest is clear and contemporaneous. A few practical points:

• Write before or at the time of payment, not months later. An email to the agency saying "I am paying the bill for [month] under protest, without prejudice to my objection to [specific charges], which I dispute for the following reasons" is enough.
• Be specific. Name the charges you dispute: holding charges, club charges, the rate increase, the electricity margin.
• Keep doing it each billing cycle, or send one letter stating that all future payments of the disputed charges will be under protest until the dispute is resolved.
• Keep copies of the bills, the payment proofs and the protest emails together.

A clean record of payments under protest makes a refund claim straightforward. Without it, the builder will argue you accepted the charges by paying them without objection.

Our approach in one paragraph

We start by separating what you genuinely owe from what you don't, so that you can pay the first and challenge the second without being in default. We then ask the builder's agency for accounts, and if they aren't produced, or show overcharging, we file a complaint, individually or for the association, seeking reasonable charges for services actually provided, refunds of excess payments, and protection against coercive steps. Where the real problem is that the builder hasn't handed over maintenance at all, we pursue handover as well.

A word on relationships

Maintenance disputes are different from delay disputes in one important way: you live with the other side every day. The guards, the housekeeping staff and the facility manager aren't the builder's decision-makers, and disputes go better when residents keep their complaints in writing and directed at the right people. A calm, documented, collective approach almost always gets further than confrontation at the maintenance office.

Common builder arguments on maintenance

"The buyer agreed to the maintenance agreement." Many buyers signed a separate maintenance agreement with the builder's agency at possession, often as a condition of getting the keys. That agreement still has to be read with Section 11(4)(d). A clause allowing the agency to charge whatever it decides, or to increase rates without explanation, doesn't override the statutory requirement of reasonable charges for essential services.

"Costs have gone up." Costs do rise, and reasonable increases are fine. The builder should be able to show what went up and by how much.

"Unsold units are exempt until sold." Not unless the agreement clearly says so and the arrangement is fair to buyers. As an owner of those units, the builder should generally contribute.

"Holding charges are in the agreement." Even where a clause exists, holding charges for a period caused by the builder's own default, such as an invalid possession offer, are hard to sustain, and higher courts have looked at them unfavourably.

"Residents must pay first, then complain." Residents should pay what's undisputed. They're not required to pay plainly illegal charges as a condition of being heard.

Maintenance in delayed projects with partial occupation

In projects where only some towers are occupied while others are still under construction, early residents sometimes find themselves paying for the upkeep of a large, mostly empty site, including security for construction areas, lighting for unfinished roads, and running a generator for half-built towers. Charges should relate to the services residents actually receive. Costs relating to the construction site, unsold or unfinished towers, and the builder's own operations are the builder's to bear. This is worth raising early, because the gap between what's charged and what's received is usually largest in exactly these projects.

Checking your own bill: five quick questions

1. From what date has maintenance been charged, and was there a valid offer of possession with an occupancy certificate on that date?
2. Is the rate the one in your agreement, and if it has gone up, has the increase been explained?
3. Does the bill include charges for facilities that don't exist or don't work?
4. Is electricity billed at or near the distribution company's tariff, or at a noticeably higher rate?
5. Has your IFMS been adjusted against anything, and if so, did you agree?

If any answer concerns you, write to the agency the same week, pay what's undisputed, and keep a copy. Then share it with your association, because the chances are your neighbours have the same questions.

An illustration

A simplified, made-up example.

A buyer in Noida received a possession letter in March 2021, but the occupancy certificate for her tower was issued only in January 2022. The builder's agency billed her maintenance at Rs 3 per square foot of super area from March 2021, plus holding charges of Rs 5,000 a month from June 2021 because she hadn't taken the keys. When she took possession in March 2022, the final demand also included 24 months of advance maintenance. The club and pool shown in the brochure weren't operational.

She has strong grounds to challenge maintenance from March 2021 to at least January 2022, because the offer wasn't valid without the certificate; the holding charges entirely; and advance maintenance beyond what the agreement allows. She can also ask that club and pool charges be removed from her monthly bill until those facilities work. If other residents are in the same position, a joint complaint seeking accounts and refunds for everyone is likely to be more effective.

Documents to gather

• Agreement for sale, and any separate maintenance agreement
• Possession letter, occupancy certificate and the date you took possession
• Maintenance bills, receipts and the agency's statement of account
• IFMS and advance maintenance receipts
• Electricity bills from the agency, and the distribution company's tariff for comparison
• Any disconnection notices or threats
• Photographs of facilities that are billed but not provided
• Correspondence disputing the charges

Frequently asked questions

Can the builder charge maintenance before I take possession?

Only from a valid offer of possession, and generally after a reasonable period to take it. Maintenance charged from an offer made before the occupancy certificate is open to challenge.

Are holding charges legal?

They're frequently set aside, and the Supreme Court in a 2020 decision upheld the view that a builder couldn't levy holding charges on buyers. Where the delay in taking possession is the builder's fault, they have no basis.

How much advance maintenance can the builder demand?

What the agreement permits, within reason. Any part relating to the period after handover should go to the association.

The builder's agency charges more for electricity than the government tariff. Is that allowed?

Single-point supply arrangements are governed by state electricity regulations, which limit what can be charged. Excess charges can be challenged before the distribution company, the regulator's grievance mechanism, or as part of a RERA complaint about unreasonable charges.

Can the builder cut my electricity if I dispute the bill?

Essential services shouldn't be used as leverage in a genuine dispute. Pay the undisputed portion, record the dispute in writing, and seek interim protection if disconnection is threatened.

Should unsold flats pay maintenance?

Yes. The builder is responsible for maintenance on units it still holds.

Can our RWA challenge the maintenance rate?

Yes. An association can seek accounts and a direction that only reasonable charges for services actually provided be levied until handover.

Can I get back excess maintenance I've already paid?

Yes, if the charges weren't lawfully payable. Keep receipts, and if possible, pay disputed amounts under written protest.

General information about maintenance and pre-handover charges under the Real Estate (Regulation and Development) Act, 2016. Electricity charges are also governed by state electricity regulations. Not legal advice. The example is an illustration only.