GujRERA Highlights Developers Liable to Pay Maintenance for Unsold Flats After BU Approval
- Maintenance liability continues until unsold flats are sold and transferred to allottees
- Grant of BU marks the start of the occupation phase, making upkeep of common areas mandatory
- Developers remain legal owners of unsold units and must contribute to maintenance like other residents
- Maintenance burden cannot be shifted to existing occupants due to unsold inventory
The Gujarat Real Estate Regulatory Authority (GujRERA) has ruled that real estate developers are liable to pay maintenance charges for unsold housing units from the date Building Use (BU) permission is granted until such units are sold to allottees. The order reinforces the obligation of promoters to shoulder common area expenses for inventory that remains unsold even after a project becomes operational.
The decision was given after the housing service society in Vastrapur, Ahmedabad, lodged a complaint against the developer of the project who had allegedly not paid the maintenance charges of the unsold flats. The society claimed that due to the developer's failure to pay, the burden of the payment was shifted to the existing residents who had to bear the shortfall to ensure the maintenance and first, rate care of the common facilities.
In its order, GujRERA observed that once BU permission is issued, the project enters the occupation phase, and maintenance of common areas such as lifts, security, water supply, lighting, and housekeeping becomes mandatory. The authority held that until the unsold units are transferred to individual buyers, the promoter continues to be the owner of those units and is therefore liable to contribute proportionately to maintenance expenses, similar to other allottees.
Key Findings and Directions of the Authority
- Maintenance liability on developers: Promoters must pay maintenance for all unsold units from the date of BU permission until sale.
- BU marks occupation phase: Once BU is granted, maintenance of common areas becomes mandatory.
- Promoter treated as owner: Developers remain owners of unsold flats and must contribute like other allottees.
- Residents protected: Maintenance burden cannot be shifted to existing occupants.
- RERA-backed ruling: Based on Sections 11(4)(g), 17(1) and 17(2) of the RERA Act.
- Clear compliance order: Developer directed to clear pending dues to the housing society.
The project got the green light from BU in 2019, but some units were still not sold. The societys point was that since the developer did not pay maintenance for these units, it was the residents who had already taken possession who were left to bear the increased financial burden. GujRERA concurred with the point raised by the society that promoters cannot avoid their maintenance obligation just because the units are still unsold.
To back its ruling, the authority referred to the Real Estate (Regulation and Development) Act, 2016, and mainly Section 11(4)(g) which imposes on promoters the payment of outgoings until the ownership is formally transferred, as well as Sections 17(1) and 17(2) which speak about the transfer of the common areas and the obligations of the association of allottees. The order made it clear that the promoter is the one who has to bear the cost of running maintenance for all the unsold units after getting BU approval.
GujRERA directed the developer to clear the pending maintenance dues payable to the housing society for the unsold flats and comply with statutory obligations under RERA. The authority noted that failure to do so would undermine the financial stability of housing societies and adversely impact residents who have fulfilled their payment obligations.
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