Introduction

On the purchase of a new flat, the builders ask for maintenance charges from the buyer. These charges are often applied monthly or annually and are calculated by the builder in lieu of the amenities provided by them in the project. However, there are several instances where the builder starts charging maintenance charges without completing the project. This puts unnecessary burden on the buyers who have to pay for the maintenance charges despite not being provided full amenities. However, in a relief to the buyers, the National Consumer Disputes Redressal Commission (“NCDRC”) held that no maintenance charges can be levied if the project has not been completed and the amenities are not being provided.

Decision of the Consumer Court

In the case of Madhusudan Reddy R. & Ors v. VDB Whitefield Development Pvt Ltd. & Ors.,[1] the NCDRC held that the maintenance charges are to only be paid by the buyers after the builder has obtained an Occupancy Certificate. It further referred to the decision in Kamal Kishor and Ors. v. M/s. Supertech Limited[2] where it had said that, “maintenance charges would be payable only from the date on which the possession is offered to the complainants after obtaining the requisite occupancy certificate and provided the construction of the villa is complete in all respects at that time.”

Therefore, the NCDRC has held that even though the physical possession is granted to the buyers, if the builder has not gotten an Occupation Certificate, the maintenance charges cannot be levied. The rationale behind the same is that the lack of an Occupancy Certificate indicates that the project is not completed and all the promised services have not been provided.

What is an Occupancy Certificate?

It is a document which is issued by a local government agency or planning authority, upon completion of construction of a new project. It provides proof that the project has been built, by adhering to applicable building codes, relevant regulations, and laws. The buyer has the responsibility to obtain the certificate.[3]

Implications for Consumers

This decision is significant as a lot of homebuyers purchase homes in unfinished projects which are still undergoing construction. Despite the lack of promised facilities like swimming pool, clubhouse, green areas and more, the builders levy maintenance charges from the date of possession. This decision provides that if such facilities are not being provided despite being a part of the project and the builder still levies maintenance charges, an appeal against the same can be filed before the consumer forum.

[1] Consumer Complaint no. 763 of 2020 – National Consumer Dispute Redressal Commission.

[2] Consumer complaint no. 1009 of 2016.

[3] https://corporate.cyrilamarchandblogs.com/2022/05/no-occupancy-certificate-no-maintenance-charges/.