Points to Focus on while Taking Over Maintenance from Builder

Taking Over Maintenance From Builder
09:36 AM 11 Oct 2018

Maintenance charges include repairs and maintenance of common areas and amenities, service cost of elevators, parking areas, parks, clubhouse, housekeeping and security personnel of an apartment.

The residents of the building pay maintenance charges to maintain the building or apartment in which they live.

Mostly, it is calculated per flat or size of the flat (as a cost per sq.ft) owned by the resident.

The different types of maintenance charges are as follows:

  1. Building maintenance - involves repairs and maintenance of common areas, amenities, fixing any leakages, cleaning, and so on.
  2. Cost of maintaining the gardens and parks in the building.
  3. Parking charges - it is based on the number of parking slots available.
  4. Contribution to the Corpus Fund - The existing owners of the flat contribute to the Corpus Fund. The amount is accumulated and invested for future use.
  5. Property tax - It is the annual tax you must pay to the municipal authorities every year.
  6. Water and electricity charges - It is based on actual consumption. However, the water and electricity charges incurred for maintaining the common areas are divided equally.

GST is charged on maintenance charges if the total amount exceeds Rs 20 lakhs. The items on which the GST @ 18% is charged are as follows:

Is GST charged on everything?

You don’t have to pay GST on all the maintenance charges listed above. GST is only charged on repairs, maintenance, housekeeping, and contribution towards repair fund.

GST is not charged on the contribution made to corpus fund and property tax or other municipal taxes paid by the builder.

The builder collects maintenance charges from the buyers. He maintains the building and amenities till the society takes over the maintenance of the building.

Let's look at the points to keep in mind while taking a handover of maintenance from the builder.

Follow the Checklist Given Below When You Take Over Maintenance from the Builder:

The society must know how the building was operated and how it must be operated in future.

Document Handover from Builder to Society:

The builder must hand over all the documents relating to the building maintenance, approvals, and clearances received to the society.

For example:

  • Approved construction plan of the builder.
  • Ownership transfer from the landowner to the builder.
  • Certificate of completion.
  • Occupancy certificate.
  • Clearances in the form of No Objection Certificates (NOC) from the fire department, electrical inspector, and so on.
  • Approvals from Pollution Control Board

Operational information:

When you take over maintenance of the building, you must get the drawings of the following:

  • Sewerage treatment plants
  • Electric wiring and earthing points.
  • The water line in the building.

The society also needs to get documents relating to the waste disposal system. The society must know how the electricity, water, and sewerage lines work?

And, how to operate them in the future?

Facility Management

The facility management includes cleaning, maintenance of common areas, elevators, parks, parking areas, lobby, and so on.

The other activities such as maintenance of gardens, sitting areas, clubhouse, swimming pools, and so on.

Collect the Annual Maintenance Contracts (AMC) for servicing lifts, generators, transformers, and other types of equipment.

Confirm the work schedule of the facilities management staff and get the relevant documents from the builder. If facilities management is outsourced, you must get the agreement and contracts signed between the builder and the vendor.

Maintenance of assets

The assets of the building are lifts, pumps, generators, transformer, play area equipment, gym equipment, clubhouse furniture, and so on.

Ask the builder to provide the invoice of all the assets and their warranties. Also, check if the builder maintains any maintenance schedule of the building’s assets.

Financial Records

The builder provides the financial statements showing maintenance expenses, amount received, and dues if any till the date of handover. 

The builder shares the following:

  • Municipal tax payments.
  • Water and Electricity charges paid.
  • Maintenance expenses paid.
  • Payment to the vendor if facility management is outsourced.
  • How much money did he collect from the owners?
  • How much do the owners owe?
  • Corpus Fund related information.
  • If GST is applicable, the accounts and GST paid till date.

Legal Records

When you take over the maintenance from the builder, you must get the legal documents relating to ownership, asset purchase, vendor contracts, and so on.

The builder must provide the following documents:

  • Ownership records of the owners of the building like sale deed, khata certificate, and so on.
  • The full details of owners who are allotted car parking.
  • Contracts with third parties to maintain the building.
  • The builder settles dues incurred prior to the handover.
  • Transfer the utility connected from builder to society.
  • Transfer of clubhouse, gym equipment, and other common facilities.

EIPL is a real estate developer with luxury projects for sale. Find out more about EIPL projects such as Apila Block A at Kokapet, Rivera Block B at Narsingi by visiting www.propertyadviser.in.

By: Lotus Tech