In plain words: the Interest-Free Maintenance Security (IFMS) you paid at possession is residents' money, collected for the long-term upkeep of common facilities. When the builder hands maintenance to the Resident Welfare Association (RWA), it is expected to account for the IFMS and transfer the unused balance, with interest where due — not simply keep it. Where RERA applies, HARERA has ordered exactly that.
You paid IFMS. Where is your money?
At the time of possession, most buyers are asked to pay an amount towards Interest-Free Maintenance Security (IFMS), often calculated on the super area. Many pay it without a second thought, as part of the builder's possession demand. But a real question arises once the RWA takes over maintenance: can the builder keep holding residents' money, and must it account for every rupee collected and spent? These are not just administrative points — they go to contractual obligations, financial transparency, and the rights of apartment owners.
1. What is IFMS?
IFMS is a security amount a developer collects from buyers to create a reserve for the maintenance, repair and replacement of common facilities. Depending on the Builder-Buyer Agreement and the Maintenance Agreement, it may support lifts, electrical and backup systems, water and sewage infrastructure, common-area upkeep, and the repair or replacement of shared facilities.
Important: IFMS is not necessarily the same as monthly maintenance charges, a sinking fund, or club-membership security. Each amount has to be read separately under the relevant agreement.
2. What happens to IFMS when the RWA takes over?
Once the association of allottees takes over maintenance, the question is: who should hold the IFMS corpus? The answer turns on the agreements and the applicable law. In most projects, the builder is expected to hand over a proper account of the IFMS, explain any permissible spending, and transfer the balance to the association. It should not simply retain the money without explaining how it was used.
As an RWA, you should demand:
- The total IFMS collected from all apartment owners.
- Bank account and fixed-deposit details.
- Interest earned on those deposits.
- Expenditure incurred from the IFMS corpus.
- Supporting bills, vouchers and audited statements.
- The unutilised balance available for transfer.
3. A real Haryana RERA case: Rosewood City, Gurugram
Wembley Estate Apartment Owners Welfare Association v. Ajay Enterprises Pvt. Ltd. & Others — HARERA, Gurugram (decided 5 March 2024), Complaint Nos. CR/2457/2021 and CR/844/2021, Rosewood City, Sectors 49-50, Gurugram.
The dispute: the owners' association said the builder had collected IFMS and other funds but failed to transfer them after the association took over maintenance. It sought transfer of the funds, audited financial statements, interest details, and handover of facilities. The builder disputed the amounts and some entitlements.
What HARERA decided: the Authority recognised IFMS as a common corpus created for sustainable maintenance and contingent capital expenditure — to be held by the promoter before handover and by the RWA after handover, as custodian for the residents' common interest. It directed the builder to transfer the IFMS collected, with interest accrued if any, to the association, and to provide IFMS details and duly audited financial statements. The dispute over the community building's ownership was left to the competent forum.
Why it matters: an IFMS corpus should not be quietly retained or distributed away from its purpose as a common maintenance fund — and an association can insist on financial transparency and transfer.
4. Another key Haryana case: Diplomatic Greens, Gurugram
Diplomatic Greens Residents Welfare Association v. Puri Construction Pvt. Ltd. & Natureville Promoters Pvt. Ltd. — Haryana Real Estate Appellate Tribunal (decided 28 July 2025), Appeal No. 691 of 2024, Sectors 110A-111, Gurugram (Occupation Certificate 29 August 2016; possession offered in 2016).
What happened: the association alleged the promoter had failed to transfer the IFMS corpus and give adequate financial details. HARERA appointed an auditor to examine the IFMS accounts. The auditor recommended that the promoter provide complete expenditure details, pay the interest provided in the agreements, and transfer the unutilised IFMS with interest to the RWA. HARERA directed transfer of ₹63,81,268 to the association, with expenditure justification and documents; the builder transferred that amount on 16 October 2024. The Appellate Tribunal disposed of the appeal on the builder's undertaking to furnish the remaining details, with liberty to the association to file afresh if any cause of action survived.
Why it matters: it shows the practical value of an independent audit, documented expenditure and disclosure when recovering IFMS — and that associations should insist on proper accounting instead of accepting an unexplained balance figure.
5. Can the builder deduct maintenance expenses from IFMS?
Possibly — but only if the deductions are supported by the agreements and the law. A builder may claim part of the IFMS went towards legitimate maintenance or unpaid dues. Residents should not accept arbitrary deductions. Insist on detailed expenditure statements, supporting invoices and vouchers, maintenance contracts, bank statements, auditor verification, and a clean reconciliation of collections, interest, spending and the remaining balance. In both the Rosewood City and Diplomatic Greens matters, audited details and, in the latter, an auditor's examination preceded the transfer.
6. Which legal provisions can protect residents?
Depending on the project's RERA applicability and the nature of the dispute, these may be relevant:
| Provision | Why it matters |
|---|---|
| RERA Section 11(4)(a) | Promoter's responsibility for obligations under the Act and the agreement until conveyance |
| RERA Section 11(4)(d) | Maintenance of essential services until the association takes over |
| RERA Section 11(4)(g) | Payment of outgoings collected from allottees |
| RERA Section 17 | Conveyance and transfer of common areas to the association |
| RERA Section 31 | Filing a complaint before the Authority |
| RERA Section 37 | Directions the Authority can issue to a promoter |
| Haryana Apartment Ownership Act, 1983 | Rights and duties relating to apartments and common areas |
Which of these actually applies must be assessed against the project's completion status, certificates, agreements and the Haryana Rules.
7. What to do if the builder refuses to transfer IFMS
- Collect documents — Builder-Buyer and Maintenance Agreements, IFMS receipts, possession letters, conveyance deeds and association records.
- Pass an RWA resolution — the Governing Body should formally authorise the association to seek the IFMS corpus and the financial statements.
- Send a legal notice — a written demand for transfer of the IFMS balance, interest where payable, and complete financial records.
- Seek an independent audit — if the builder disputes the figure, a CA audit of collections, interest and expenditure.
- Approach the right forum — where RERA applies, a complaint under Section 31; where it does not, contractual, consumer and civil remedies.
8. A crucial caution: RERA does not apply to every old project
This is where many residents go wrong. Under Section 3(2)(b) of the RERA Act, a project that received its completion certificate before the Act commenced is generally exempt from registration; for Haryana, Rule 2(1)(o) of the Haryana RERA Rules, 2017 must also be read. A project completed before 1 May 2017 is not automatically brought under RERA just because the builder has not transferred IFMS.
The distinction between an Occupation Certificate (OC) and a Completion Certificate (CC) can be decisive. In Rosewood City, for instance, there were earlier OCs, but the Completion Certificate came later — which is why the project fell within RERA. So do not assume an old project with a pre-2017 OC automatically qualifies: check the OC, the CC (and any part/phase completion), possession dates and the agreements first, and establish RERA applicability before you file.
9. What if the builder is in insolvency?
A further caution: tribunals have held that IFMS deposited by allottees is generally not a 'financial debt' under Section 5(8) of the Insolvency and Bankruptcy Code (as in the NCLAT matter concerning ILD Owners Welfare Association v. ALM Infotech City). That does not mean IFMS cannot be recovered — it means the route may be RERA, contractual or other proceedings rather than a financial-creditor claim in the insolvency process. Getting the forum right matters.
10. Frequently asked questions
Can a builder keep IFMS after the RWA takes over? It must account for the fund and meet its contractual and legal obligations; where transfer is due, it cannot be withheld without lawful basis.
Is IFMS refundable to individual owners? Not automatically — IFMS is usually a common corpus for the collective benefit of residents; the agreement and law decide entitlement.
Can residents demand interest on IFMS? Yes, where the agreements or applicable law provide for it — check the exact interest clause.
Can an RWA demand an IFMS audit? It can seek financial disclosure and audit information where its legal and contractual rights support it; an independent audit helps establish the true balance.
Can residents approach HARERA if the project was completed before 2017? Not automatically — the completion certificate, phases and Haryana Rules must be checked first.
Your IFMS is residents' money — demand accountability
IFMS is collected for a specific purpose: the long-term maintenance of common facilities. Builders should keep transparent accounts, explain expenditure, and comply with their obligations at handover. Residents should not be left guessing where their money is, how it was used, or what remains. The Rosewood City and Diplomatic Greens matters show how Gurugram associations have secured transparency and IFMS transfer through legal proceedings. Paying IFMS should never mean surrendering your right to accountability.
How Vakil Help Desk helps
Vakil Help Desk has strong, hands-on experience in RWA and homebuyer matters in Gurugram and across Haryana. We first establish whether RERA applies to your project (OC vs CC, phases, the Haryana Rules), then help your association demand accounts, obtain an independent IFMS audit, send the legal notice, and pursue transfer of the corpus with interest before HARERA or the appropriate forum. If your builder is holding your IFMS, contact Vakil Help Desk for a clear, project-specific strategy.
This article is for general legal awareness, not individual legal advice. Whether RERA applies, and whether IFMS can be recovered, depends on the project's certificates, agreements, handover, limitation and the facts of each case. Please verify the cited orders and your project's documents before acting.