The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has introduced a comprehensive regulatory framework governing the collection, management, investment and transfer of the Interest-Free Maintenance Security (IFMS) fund collected from homebuyers in residential projects. The move aims to prevent the alleged misuse and misappropriation of IFMS funds by developers while ensuring greater transparency and accountability in maintenance fund management.
Under the new framework, every developer will be required to maintain a separate bank account exclusively for the IFMS fund. The entire amount collected must be accounted for separately and invested in a fixed deposit (FD) scheme offering the highest available interest rate. The objective is to safeguard the fund while ensuring that the interest earned benefits the concerned residential project.
UP RERA has also made it mandatory for developers to transfer the entire IFMS corpus to the project’s Apartment Owners Association (AOA) or Residents Welfare Association (RWA) at the time of project handover. Thereafter, the association will assume full responsibility for the management and utilization of the fund.
The regulator has specified that the IFMS fund may only be used for limited purposes, including the operation of common areas, routine maintenance, repairs, replacement of essential equipment and services, and other maintenance-related requirements of the project. The fund cannot be diverted for any other purpose.
The revised framework also mandates regular audits of the IFMS fund by a Chartered Accountant (CA). Audit reports must be presented every three months during the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM), enabling apartment owners to monitor the status of the fund and its utilization in a transparent manner.
UP RERA has additionally prescribed standard IFMS rates based on the type of housing unit and carpet area. The charges may range from ₹20 to ₹100 per square foot, bringing greater uniformity to the collection of maintenance security deposits across residential projects.
UP RERA Chairman Sanjay Bhoosreddy said the IFMS fund will now remain completely separate from other maintenance-related collections. He noted that the mandatory segregation of funds, independent audits and periodic reporting would significantly enhance transparency and help reduce disputes between developers and homebuyers.
Resident associations have broadly welcomed the decision, describing it as a positive step towards protecting homebuyers’ interests. However, they have also stressed the need for strict enforcement in pending cases, greater accountability for developers accused of irregularities, and continued regulatory oversight to ensure transparency in the management of maintenance funds.
