UP RERA orders delivery of IFMS corpus to RWAs at project hand over; explains new regulations

By Bricksnwall | 2026-07-16

UP RERA unveils new standards for developers to safely handle and transfer Interest Free Maintenance Security (IFMS) to be given to RWAs on Project Handover.

The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has launched a new system for the collecting, management and transfer of Interest Free Maintenance Security (IFMS) payments to eliminate conflicts related to maintenance fees. Developers would have to park the IFMS cash collected from purchasers in a separate bank account and transfer the entire corpus along with the accrued interest to the Residents’ Welfare Association (RWA) or the Association of Allottees at the time of handing over the project.

IFMS funds in a separate earmarked account

As per the modified regulations, promoters shall collect the IFMS amount from the allottees at the time of registration of the sale, lease or sub-lease deed and deposit the same in a separate designated account with a scheduled bank. After taking the quotations, the funds should be put in the fixed deposit, which offers the greatest interest rate amongst the suitable banks to ensure the safety, transparency and optimal returns of the corpus.

Compulsory transmission of complete IFMS corpus

In a crucial change, promoters will have to surrender the full corpus of IFMS, along with accumulated interest, to the RWA or Association of Allottees at the time of handing over the common areas of the project. “The move is aimed at ensuring transparency, accountability and proper utilisation of maintenance funds,” the regulator stated.

UPRERA said in a statement on July 15:

IFMS can be utilized only for service

The updated regulations state that the IFMS corpus can be used solely for operation, maintenance, repair and replacement of common facilities, equipment and shared services. The fund should be held in a separate bank account, which should be free from normal monthly maintenance fees.

The RWA or Association of Allottees shall maintain adequate accounts of all revenues, payments and utilisation of the fund. These accounts shall be audited by a chartered accountant and the audit report shall be submitted before the Annual General Meeting or Extraordinary General Body Meeting within three months of the conclusion of the audit.

The amendments were notified under the 12th Amendment to the Uttar Pradesh Real Estate Regulatory Authority (General) Regulations, 2019 and came into force immediately on their posting on UP RERA's website on July 15.

When is the IFMS amount payable to developers?

The promoters can collect the amount of IFMS from the buyers at the time of registration of sale, lease or sub-lease deed. The money received should be maintained in a separate designated bank account and put in the greatest interest-bearing fixed deposit available in the qualified banks, it said.

Interest Free Maintenance Security (IFMS) means:

IFMS is a one-time interest-free deposit made by the homebuyer to the developer at the time of taking possession. It would be a long term reserve for the maintenance of the housing society when the project is given over to RWA or Association of Allottees.

The fund has long been mired in controversies with RWAs pointing to delays in corpus transfer, lack of transparency in its management and conflicts about the amount required. The new framework aims to address these concerns by laying down explicit guidelines on the collecting, investment, transfer and use of IFMS monies.

What are the prescribed rates of IFMS?

Regulations dictate the IFMS rates on a project-wise basis depending on the type of development:

Group Housing Projects: ₹20- ₹100 per sq ft based on category of residential apartments.

Commercial projects: Rs40 per sq ft for non-central air-conditioned buildings and Rs50 per sq ft for fully air-conditioned structures.

Separate rates have also been notified for plotted residential and commercial constructions.

What takes place at project handover?

The project promoters shall pass over the common areas and the entire corpus of the IFMS with interest accruing thereon to the RWA or Association of Allottees.

UPRERA said they have to submit a complete transfer statement showing the unit-wise IFMS receipts, expense incurred, audit trail and the final balance transferred to the residents' organization.

“The amendment is aimed at ensuring transparency, accountability and financial discipline in collection, investment, transfer and utilisation of IFMS funds,” said UP RERA Chairman Sanjay R. Bhoosreddy.

“Homebuyers provide these funds for the maintenance of common facilities in the long run and it is important that the corpus remains safe and is used only for the intended purpose. The new requirements would ensure effective collection, investment, transfer and audited utilisation of IFMS monies and so protect the interest of the allottees. “This reform will empower the Residents’ Welfare Associations and ensure better maintenance and sustainable management of real estate projects across Uttar Pradesh,” he said.

Source: Hindustan Times