The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has introduced a new framework governing the collection, management, investment, transfer and utilisation of Interest Free Maintenance Security (IFMS) funds collected from homebuyers. The revised provisions have been incorporated under Regulation 47 through the 12th amendment to the Uttar Pradesh Real Estate Regulatory Authority (General) Regulations, 2019. The new rules came into effect immediately after being published on the authority's website. 
Under the revised regulations, promoters must collect the IFMS amount from allottees at the time of registration of sale, lease or sub-lease deeds. The entire amount must be deposited in a separate designated bank account with a scheduled bank to ensure that the funds remain independent from other project-related accounts. 
The authority has also made it mandatory for promoters to invest the IFMS corpus in the fixed deposit scheme offering the highest rate of interest among eligible scheduled banks after obtaining quotations. The objective is to protect the fund, maintain transparency in its management and generate the maximum possible returns without compromising the safety of the corpus. 
UP RERA has prescribed project-wise IFMS rates depending on the type of development. For group housing projects, the IFMS has been fixed between INR 20 and INR 100 per square foot, based on the category of residential units. Commercial developments will attract IFMS of INR 40 per square foot for non-centrally air-conditioned projects and INR 50 per square foot for centrally air-conditioned developments. Separate IFMS rates have also been specified for plotted residential and commercial projects. 
A key change under the amended regulations is that promoters must transfer the entire IFMS corpus to the Residents' Welfare Association (RWA) or the Association of Allottees when the common areas of the project are handed over. Along with the transfer, promoters will be required to submit a detailed statement containing unit-wise IFMS collections, expenditure incurred, the audit trail and the final balance transferred to the association. 
The amended regulations also specify that IFMS funds can only be used for the operation, maintenance, repair and replacement of common areas, equipment and shared services within the project. These funds must be maintained separately from regular maintenance charges through a dedicated bank account to ensure proper financial control. 
The RWA or Association of Allottees will be responsible for maintaining detailed records of all receipts, payments and utilisation of the IFMS fund. The accounts must be audited by a chartered accountant in accordance with generally accepted accounting principles. The audit report must also be presented before the Annual General Meeting or Extraordinary General Body Meeting within three months after the audit is completed. 
The amendment is part of UP RERA's continued efforts to strengthen financial governance in residential and commercial projects across the state. Over the years, the authority has introduced several measures aimed at improving transparency, ensuring timely project delivery and protecting the interests of homebuyers through stronger regulatory oversight. 
UP RERA Chairman Sanjay R. Bhoosreddy said the amendment had been introduced to improve transparency, accountability and financial discipline in the collection, investment, transfer and utilisation of IFMS funds. He stated that since homebuyers deposit these funds for the long-term maintenance of common facilities, it is necessary to ensure that the money remains secure and is used only for the purpose for which it is collected. 
He further said the revised provisions are expected to protect the interests of allottees by ensuring proper collection of IFMS, secure investment of the corpus, timely transfer to resident associations and mandatory audits. According to him, the framework will also strengthen the role of RWAs and Associations of Allottees in managing completed real estate projects and maintaining common infrastructure. 
Source PTI