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Advance Maintenance charge collected by builder before reg. society
08-Jan-2025 (In Property Law)
Advance maintenance charges collected by Builder (at booking and before reg. of society) is reserve similar to Sinking fund`?
Particularly ,on sale of a flat, sinking fund contribution gets transferred to new owner s account
but the total advance maintenance fund goes to Society fund or not.
legal treatment of maintenance fund is untouchable corpus or usable by society as deemed appropriate. meaning its not flat owner specific but society`s fund. what is correct?
An advance maintenance charge and a sinking fund share similar characteristics. Here's why - Both are set aside for future expenses, ensuring funds are available when needed. Both involve regular contributions or deposits into a separate account. Both help plan for anticipated future expenses, reducing financial burden. Advance maintenance charges are typically earmarked for maintenance, repairs, or replacement of specific assets or equipment. Sinking funds, on the other hand, can be used for a broader range of purposes, such as debt repayment, asset replacement, or major repairs.
Advance maintenance charges might be treated as a current asset or a prepaid expense, whereas sinking funds are often recorded as a non-current asset or a reserve.
Sinking funds can be more flexible in terms of usage, whereas advance maintenance charges are usually tied to specific maintenance or repair activities.
In summary, while both concepts involve setting aside funds for future expenses, advance maintenance charges are more specific in their application, whereas sinking funds offer more flexibility.
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Adv. Pankaj Bajaj
Mumbai | 1000+ Answers
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