Replacing old lifts is a major capital expense for any housing society, and naturally raises the question—can the sinking fund be used for this purpose? The answer is yes, but with proper conditions and approvals.
What Is the Sinking Fund?
The sinking fund is a long-term reserve fund collected from members to meet heavy, non-recurring expenses, such as:
- Structural repairs
- Major replacements
- Reconstruction of the building
Its purpose is to ensure that societies are financially prepared for large future expenses.
Legal Provision Under Bye-laws
As per
Model Bye-law 14(C)
- The sinking fund can be used for:
- Reconstruction of buildings
- Structural additions or alterations
- Major works based on architect’s opinion
Is Lift Replacement Covered?
Yes—replacement of lifts qualifies as a major capital replacement, especially when:
- Lifts are 17 years old
- Typical life span is 15–25 years
Such replacement is not routine maintenance but a substantial infrastructure upgrade, making it eligible for sinking fund usage.
Conditions to Use Sinking Fund
Before utilising the fund, the society must ensure:
1. General Body Approval
- Mandatory approval in a General Body Meeting (GBM)
- Resolution should clearly mention:
- Number of lifts
- Estimated cost
- Source of funds
2. Expert/Technical Opinion
- Obtain report from:
- Architect or lift consultant
- This helps:
- Justify replacement
- Maintain proper audit records
3. Proper Documentation
- Maintain:
- Quotations
- Technical reports
- GBM resolution
This is crucial for audit compliance and transparency
What If Sinking Fund Is Not Enough?
If funds fall short:
- Society can collect additional contribution from members
As per
Model Bye-law 67
- Charges for such capital works can be:
- Equally shared by all members
- Regardless of:
- Floor level
- Lift usage
Important Clarification
Even if some members:
- Do not use lifts
- Stay on lower floors
👉 They are still liable to contribute, because:
- Lifts are part of common amenities
- Benefit the overall property value and functionality
Best Practices for Societies
- Plan lift replacement well in advance
- Maintain adequate sinking fund contributions annually
- Avoid sudden heavy financial burden on members
- Ensure transparent communication with residents
Conclusion
Yes, a housing society can utilise the sinking fund for replacing old lifts, provided the decision is backed by general body approval and expert opinion. If the fund is insufficient, additional contributions can be collected from all members. Proper planning and compliance with bye-laws will ensure smooth execution without disputes.
