The Roles and Responsibilities of Builders in Maintaining Unsold Flats
When it comes to managing unsold flats before the formation of a homeowners association (HOA), building owners and developers often have specific responsibilities. This article explores who bears the financial burden of maintaining these units and how local laws play a significant role in determining these responsibilities.
Builders' Responsibility for Maintenance
Generally, builders or developers are held responsible for the maintenance of unsold flats until the society is officially formed. This is because the units remain under the builder's ownership until they are purchased by individuals. Builders have a duty to ensure that these units are maintained to uphold the overall condition of the property.
Maintenance Charges: A Necessity for Property Upkeep
builders may be required to cover the maintenance charges for unsold flats to maintain the property's overall upkeep. This provision is often included in the sale agreement with buyers or mandated by local housing regulations. It is crucial to ensure that all areas, including common areas and individual units, are kept in a satisfactory condition to protect both the builder and future homeowners.
The Formation of an HOA
Once the society is established and the ownership of the flats is transferred to the buyers, the responsibility for maintenance charges typically transitions to the HOA. The HOA collects fees from all property owners, including those of unsold units, to cover ongoing maintenance costs. This shift in responsibility can have various implications, such as impacting HOA fees and ensuring ongoing property management.
State Regulations and Local Laws
It is essential to understand the specific regulations and laws in your jurisdiction. For instance, in India, the Maharashtra Cooperative Societies Act and the Real Estate (Regulation and Development) Act (RERA) provide guidelines on these matters. Consulting a legal expert or a real estate professional familiar with local laws can help clarify these responsibilities.
Condominiums and HOA Management
To further illustrate these responsibilities, let's look at condominiums. In the development and sale of condominiums, the concept of a homeowners association (HOA) is prevalent. A developer builds and sells units and manages the HOA until approximately 70% of the units are sold. During this period, the developer typically subsidizes the HOA by covering more than its fair share of costs.
The HOA takes over management once the developer transfers the responsibilities to the co-owners and an elected board of directors. At this point, co-owners are responsible for paying all costs and sharing them according to the ratios set out in the HOA documents. It's common for HOA dues and monthly assessments to increase significantly when the HOA is formed and the co-owners take over.
From my experience, it is always advisable to recommend clients to carefully review the HOA documents and understand the responsibilities involved in buying into new condominiums. Transparency and clear communication are key to avoid future disputes regarding maintenance and financial responsibilities.
To summarize, builders bear significant responsibilities for the maintenance of unsold flats until the formation of an HOA. While state and local laws play a crucial role in defining these responsibilities, ensuring clarity and transparency can help both builders and future homeowners avoid potential conflicts.