Builder demanding maintenance charges before possession?

Reviewed on: 2026-07-03.

Ramesh booked a flat in a Chennai tower in 2022. In May 2026 the builder called him to “collect the keys” but first handed him a demand note for Rs 2.92 lakh: one year's maintenance, a corpus fund, society formation charges, property tax, and GST. The building had no occupancy certificate (OC) yet. The lift had not been inspected. The water connection was temporary. Ramesh asked a simple question: “If you have not handed over the flat, why am I paying to maintain it?”

That question is the whole point of this guide. A builder cannot lawfully collect maintenance, corpus, or municipal outgoings before possession is transferred. This page explains, in plain words, what you must pay, what you can refuse, and the exact steps to push back - with the RERA sections that back you up.

For the full stage-wise table of what is chargeable before and after the OC, see our companion guide: builder demanding maintenance before possession and OC.

## The core rule: who pays what, and when

Under the Real Estate (Regulation and Development) Act, 2016 (RERA), the promoter (the builder) must pay all outgoings for the project until physical possession of your flat is transferred to you or to the residents' association. This is Section 11(4)(g) of RERA.

“Outgoings” means the land cost, ground rent, municipal and local taxes, water and electricity charges, maintenance charges, any mortgage loan and interest on the project, and other project-related liabilities. In plain terms: while the building still belongs to the builder, the builder pays the bills.

Two important features of this rule:

1. Until possession is transferred. If the OC is not issued, or the keys are not handed to you, the builder - not you - bears these costs.
2. Liability survives after transfer. If the builder left unpaid property tax or electricity dues while it held the building, that liability does not jump to the flat owners. It stays with the builder even after the society takes over.

So a demand for “one year maintenance in advance” before you have taken possession is asking you to pay a bill that the law places on the builder.

## The possession timeline the builder must follow

RERA sets a clear sequence, and knowing it tells you exactly when your responsibility begins.

1. Occupancy certificate (OC) is issued by the local authority. This is the official signal that the building is safe and fit to live in.
2. You must take possession within two months of the OC being issued for your unit. This is Section 19(10) of RERA. After two months, the builder can treat you as having taken possession, and maintenance risk can pass to you.
3. The builder must execute a registered conveyance deed within three months of the OC, transferring title (including your share of common areas) to the association. This is Section 17 of RERA, and it applies as a default wherever no local law fixes a different period.

Read together: the builder gets the OC, hands you the flat, and within three months transfers the land and common areas to your society. Maintenance is the society's job only after that handover. Before it, the builder is running the building and the builder pays.

If the builder has the OC but is withholding the handover documents to force you to pay first, see builder has the OC but refuses possession handover.

## The five-year safety net after you take possession

Once you do take possession, the builder is not free to walk away. Under Section 14(3) of RERA, the promoter has a five-year statutory defect liability from the date of handing over possession. This covers structural defects, poor workmanship, quality problems, or defects in service provision (like plumbing, wiring, or waterproofing failures).

If you find such a defect within five years, the builder must rectify it within thirty days, at no further charge. If the builder fails to rectify within thirty days, you are entitled to compensation. This is a statutory right - it does not depend on what the sale agreement says, and the builder cannot contract out of it.

This matters for maintenance charges too: if you are being asked to pay maintenance for a building with known defects, the builder's own repair duty under Section 14(3) is still alive. You do not “buy” your way out of defects by paying maintenance.

## What about GST on maintenance?

Maintenance charges attract 18% GST - but only when both of these are true:

1. The monthly maintenance charge per member, per apartment, exceeds Rs 7,500; and
2. The supplier (the residents' welfare association, or RWA) has a turnover exceeding Rs 20 lakh.

When the threshold is crossed, GST is payable on the entire maintenance amount, not just the portion above Rs 7,500.

These rules come from Notification 12/2017-Central Tax (Rate) dated 28 June 2017 (entry Sl. No. 77), as amended by Notification 02/2018-Central Tax (Rate) dated 25 January 2018 - which raised the exemption limit from Rs 5,000 to Rs 7,500 - and are explained in CBIC Circular No. 109/28/2019-GST dated 22 July 2019.

One point worth stating plainly. The Rs 7,500 threshold and the 18% rate are framed for resident welfare associations and unincorporated non-profit bodies supplying to their own members. A builder collecting maintenance before the association is formed is a different kind of supplier, so the precise legal hook for GST on a builder's pre-possession maintenance demand may differ - but the figures themselves (Rs 7,500 and 18%) are the standard ones invoked in disputes, so they are the right reference points when you question a builder's GST load.

Also, amounts the RWA collects on behalf of the municipal authority - property tax, water tax - are excluded both from the Rs 7,500 threshold calculation and from the taxable value. They are not “maintenance” for GST purposes; they are pass-through collections.

## Step-by-step: what to do when the demand arrives

Step 1 - Do not pay the disputed portion blindly. Pay only what is lawfully due at this stage (typically your agreed sale-price instalment linked to construction stage, if any). Ask the builder for an itemised breakup of the maintenance, corpus, and tax demand, with the OC number and the date possession is being offered.

Step 2 - Send a written objection. Quote Section 11(4)(g) of RERA: outgoings are the promoter's burden until possession is transferred. State that maintenance, corpus, and municipal taxes for the pre-possession period are not your liability. Ask the builder to either waive those items or adjust them against the final amount due. Keep a dated copy; email is fine.

Step 3 - Insist on the OC and the conveyance. No maintenance demand is valid without an OC. If the builder cannot produce one, the demand is premature. If the OC exists but the conveyance deed has not been executed within three months, that is a separate violation of Section 17 - see builder delayed conveyance deed to the society.

Step 4 - File a complaint with the RERA authority. Every state has a Real Estate Regulatory Authority. You can file online. The complaint fee varies by state (typically Rs 1,000 to Rs 5,000). The authority can order the builder to refund the wrongly collected amount, with interest, and can impose a penalty for violating Section 11(4)(g). This is usually faster and cheaper than a civil suit.

Step 5 - If the builder has no OC, use RTI to prove it. File an RTI application with the municipal corporation asking: “Has an occupancy certificate been issued for [project name, address]? If yes, provide the certificate number, date, and a copy.” The reply is your written proof that the maintenance demand was premature. For the filing route and fees, see how to file RTI online in India, and to avoid the common pitfalls that get replies rejected, read why RTI gets rejected.

Step 6 - Escalate if needed. The ladder is:

1. RERA authority (complaint for refund, penalty, and direction to execute conveyance).
2. Appellate tribunal (Real Estate Appellate Tribunal in your state, if you or the builder appeal the authority's order).
3. Consumer forum (a deficiency-of-service complaint also lies, and you can choose this route instead of RERA).
4. High Court (writ petition, usually only for a procedural breakdown or where no tribunal is functioning).

You generally do not need the police for a maintenance dispute unless there is coercion or forceful withholding of access.

## Common traps to avoid

1. “Pay maintenance first, then we will give possession.” This reverses the legal order. Possession and OC come first; maintenance follows. Section 11(4)(g) is your answer.
2. Corpus fund dressed as “society formation charges”. A corpus for the society is legitimate after the society exists and takes over. Before that, the builder has no standing to collect it on the society's behalf.
3. GST added on everything. GST at 18% applies only when the Rs 7,500 / Rs 20 lakh thresholds are crossed, and municipal pass-through taxes are outside GST altogether. Question any flat GST loading that ignores these limits.
4. No OC, but “fit-out” possession offered. Fit-out possession without an OC is not lawful possession under RERA. Do not treat it as the trigger for your maintenance liability. If you suspect the OC copy is being withheld, see builder not providing the occupancy certificate copy.

## When the problem continues after handover

Sometimes the wrongs surface only after the society is formed: the builder delays transferring maintenance, or the RWA cannot locate the corpus accounts. Those are separate fights, and we cover them in builder delays maintenance transfer and builder or RWA not handing over corpus accounts and maintenance records.

## The short answer

Ramesh's Rs 2.92 lakh demand was mostly not his to pay. The maintenance, the corpus, and the pre-OC taxes belonged to the builder under Section 11(4)(g). The OC, the conveyance deed (Section 17), and the two-month possession window (Section 19(10)) set the timeline. The five-year defect liability (Section 14(3)) protected him after he moved in. The GST rules told him which part of any genuine maintenance charge could attract 18%. And the RERA authority plus a single RTI to the municipality gave him the tools to enforce all of it.

You have the same tools. Use them in order: written objection, OC check by RTI, RERA complaint, and then the appellate or consumer route if the builder still will not move.

For the complete stage-wise table of charges and the worked Chennai example, read the companion guide: builder demanding maintenance before possession and OC. More housing guides are listed at all practical guides.

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Builders often demand maintenance charges before handing over possession. Here is how to challenge this:

1. Step 1: Check the agreement. The Builder-Buyer Agreement (BBA) or Sale Deed should specify: (a) the maintenance charge amount, (b) when it becomes payable (usually after possession), and © the basis for the charge (per sq ft or lump sum).
2. Step 2: Check RERA rules. Under RERA, the builder can only charge maintenance for the period after possession. Charging maintenance before possession is illegal unless the BBA specifically provides for it.
3. Step 3: Write to the builder. State that maintenance charges are payable only after possession and demand that the charges be deferred until possession. Keep a copy.
4. Step 4: File a complaint with RERA. File a complaint with the state RERA authority stating that the builder is illegally demanding maintenance before possession. RERA can direct the builder to refund the excess and stop the practice.
5. Step 5: File a complaint with the Consumer Forum. File a complaint with the District Consumer Disputes Redressal Commission for unfair trade practice and deficiency of service.

1. After possession: The builder can charge maintenance for common areas, amenities, and services. The charge must be: (a) reasonable, (b) based on actual costs, © approved by the residents' welfare association (RWA) after it is formed.
2. Before formation of RWA: The builder can charge maintenance for the initial period (usually 1-2 years) until the RWA is formed. The builder must provide a statement of account showing the actual costs incurred.
3. Sinking fund: A one-time sinking fund contribution can be charged, but it must be reasonable and used only for major repairs. It cannot be used for routine maintenance.
4. Advance maintenance: Builders often demand 12-24 months of advance maintenance. This is legal if the BBA provides for it, but the builder must account for the funds and transfer them to the RWA when formed.

1. Demand a statement of account. Ask the builder for a detailed statement showing: (a) actual costs incurred, (b) the basis for the per sq ft rate, © the proportion charged to each flat, and (d) the surplus/deficit.
2. Compare with similar societies. Compare the builder's maintenance rate with similar residential societies in the area. If the builder's rate is significantly higher, it is unreasonable.
3. File RTI with RERA. Ask RERA for: (a) the builder's registered project details, (b) the maintenance charge declared in the RERA registration, and © any complaints against the builder for excessive maintenance charges.
4. Form an RWA. Once 51% of the flats are sold, form an RWA and take over maintenance. The RWA can then negotiate or fix the maintenance charge.

1. Step 1: Write to the builder. Request a refund of excess charges with interest. State that the charges were not based on actual costs.
2. Step 2: File a complaint with RERA. RERA can direct the builder to refund the excess and provide a statement of account.
3. Step 3: Consumer Forum. File a complaint with the District Consumer Disputes Redressal Commission for refund of excess charges with compensation.
4. Step 4: File RTI. Ask the builder (if the project is registered with RERA) for the maintenance account and the basis for the charges.

Use AI RTI Drafter. See RERA 70% Escrow Guide and Builder Maintenance Charges Guide.