A corpus fund is a significant financial component in housing society redevelopment or new housing projects, especially in cities like Mumbai, Pune, and other parts of Maharashtra. While it is often misunderstood, it is crucial for both housing society members and builders to understand the legal nature, transfer conditions, and usage restrictions of this fund.
What Is a Corpus Fund?
A corpus fund is a lump sum amount paid by the developer to the housing society or its members. This amount is:
- Non-refundable
- Paid as a one-time payment (or in agreed installments)
- Intended to serve as a reserve fund or future maintenance buffer for the society
The purpose of this fund is to generate interest income that can help the society cover its long-term expenses like maintenance, repairs, sinking fund contributions, or unforeseen events.
When Is the Builder Required to Transfer the Corpus Fund?
There is no statutory law that prescribes a fixed amount or specific timeline for the payment of the corpus fund. The conditions for its payment are typically governed by:
- The terms of the Development Agreement (DA)
- The Permanent Alternative Accommodation Agreement (PAAA)
- Negotiations between the builder and the society or individual members
Common practices include:
- Transfer of the corpus upon completion of the project or handover of possession
- Partial payment during construction phases
- Final payment upon obtaining Occupation Certificate (OC) or at the time of society formation
Thus, the builder’s obligation to pay corpus fund is purely contractual, and enforceable only through the terms mutually agreed upon and legally documented.
Can the Builder Adjust Corpus Fund Against Outstanding Maintenance Dues?
No, unless specifically agreed upon in the DA or PAAA. Here’s why:
- Corpus fund is meant for the society’s long-term benefit and not to offset an individual member’s pending dues.
- Adjustment of corpus against maintenance dues can be seen as a unilateral act if not supported by written consent or agreement.
- The society, once formed, becomes the custodian of the corpus, and only the general body can decide on its utilisation, as per cooperative housing laws and society bye-laws.
If a builder attempts to deduct or withhold part of the corpus fund due to unpaid maintenance by a member, the member may:
- Contest such deduction legally
- Approach MahaRERA (if covered under its jurisdiction)
- Raise a dispute with the society or relevant consumer forum
Key Legal Points to Remember
- No fixed amount or mandatory payment schedule is imposed by law; the builder’s obligation depends on contractual terms.
- The corpus fund should not be used for running daily maintenance. It is a reserve for future needs.
- Once the society is formed, the corpus fund should be transferred to the society’s account, not retained by the developer.
- The usage of corpus fund is to be decided only by the general body of the society.
Conclusion
The corpus fund is a negotiated, contractual payment, not a statutory obligation. Its purpose is long-term financial stability, and it must be transferred by the builder as per the agreed terms. Members should ensure that the terms of corpus fund payment and transfer are clearly documented in the Development Agreement and should not permit arbitrary deductions by the builder.
