The Importance of a Resident Welfare Association
When a real estate project is completed, the developer cannot simply hand over the keys and walk away. The management of common areas, security, lifts, and clubhouses must be officially handed over to a legally recognized body of the homebuyers, typically known as a Resident Welfare Association (RWA) or Cooperative Housing Society.
However, builders often delay the formation of the RWA to retain control over lucrative maintenance contracts or unsold open spaces. RERA provides strict guidelines to prevent this exploitation.
The Legal Time Limit Under RERA
Under Section 11(4)(e) of the RERA Act, a promoter is legally obligated to enable the formation of an association or society of the allottees.
If there are no specific local state laws dictating the timeline, RERA mandates that the association must be formed within three months of the majority of allottees having booked their apartment or plot in the project. This ensures that the homebuyers have a collective voice early in the project's lifecycle.
What if the Builder Fails to Form the RWA?
If the promoter deliberately delays or refuses to facilitate the formation of the RWA, several legal consequences and obligations arise:
1. Builder Bears the Maintenance Costs
Under Section 11(4)(g) of RERA, until the physical possession of the project is handed over to the allottees and the formal RWA is established, the promoter is solely responsible for paying all outgoings. This includes water and electricity charges, municipal taxes, and general maintenance of the premises. They cannot abruptly stop maintaining the building citing a lack of funds if they have refused to form the society.
2. Delay in Defect Liability Commencement
The handover of common areas as per the provisions of RERA to the Association should essentially be done immediately upon the Occupancy Certificate being obtained. Any delay in the formal handover of the physical possession of the common areas to the Association would result in the 5-year defect liability period not kicking in for those common areas.
3. Withholding the Corpus Fund
Builders collect an Interest-Free Maintenance Security (IFMS) or a corpus fund from buyers at the time of possession. This massive pool of money legally belongs to the RWA. If the builder does not form the RWA, they are illegally holding onto these funds, which is a severe violation of RERA.
Actions Homebuyers Can Take
If the three-month statutory period has expired, homebuyers should not wait indefinitely:
- Form an Ad-hoc Committee: The buyers should unite and form an interim committee to formally demand the builder initiate the registration process.
- File a RERA Complaint: The allottees can jointly file a complaint with the State RERA Authority to compel the builder to register the society, hand over the original title documents and sanctioned plans, and transfer the collected corpus/maintenance funds.