You just moved to a new home only to find out some of the most unexpected charges that you have to pay for maintenance. Sounds familiar? Maintenance costs are the part of owning or owning a real estate that are inevitable and these charges can be super confusing.
This blog will help you understand Real Estate Maintenance Charges and will be perfect for Homebuyers Guide IFMS ( Interest-Free Maintenance Charge), an important concept for real estate. We will help you understand, what is IFMS the benefits for developers and homebuyers, and how it will work out with the right legal system.
Until the end of this blog, you will understand the importance and benefits of IFMS and will be ready to make the right choice on your property purchase based on this aspect.
Table of Contents:
- What is IFMS and Why is it Important?
- How IFMS Works
- Benefits of IFMS for Homebuyers
- Common Misconceptions about IFMS
- Legal Aspects of IFMS
- Calculation and Collection of IFMS: Tips for Homebuyers
- Conclusion
What is IFMS and Why is it Important?
The Interest-Free Maintenance and Service Charge or IFMS is a type of service charge that’s levied on property buyers by the developers, unlike the real estate maintenance charges, which have interests and are paid monthly.
IFMS are directly collected during the time of purchase and they are held under an interest-free account. This accumulated amount is further used by the developer or through RWA ( Residents Welfare Association) to cover future maintenance expenses of that property.
- The concept of IFMS serves several purposes: This is the real concept of IFMS that serves many different purposes depending upon many factors. Let’s look at some of the purposes:
- Financial Security for Buyers: By understanding and pre-funding these types of maintenance costs, IFMS ensures that you have a dedicated pool of funds that you can address for maintenance needs, thus preventing unexpected burdens on the residents.
- Peace of Mind: Homebuyers can relax as they know that all the essential maintenance is covered, thus directly promoting a sense of security along with the well-being of the community.
- Transparency in Maintenance Management: IFMS helps in the transparent process of a clear system for establishing a clear utilization of funds for maintenance.
How IFMS Works: Collection, Utilization, and Refunds
- Collection Method: IFMS are generally included in the property prices and generally done, and collected from the buyers for the initial purchase. The exact amount can change depending upon the different property sizes and developer policies along with amenities offered.
- Utilization of Funds: Once collected, the right IFMS amount gets deposited into an interest-free account and that’s designated specifically for real estate maintenance charges. This type of account is managed by the developer until the RWA or Residents Welfare Association is formed. Once the Residents Welfare Association is formed, the responsibility for maintenance of IFMS and utilization of that fund falls under the power of RWA.
- Refund Policy: Although considered non-refundable, there can be situations when a certain amount or portion of Interest-Free Maintenance Charge. This typically occurs if there is a certain delay during the handover of the property or if the amenities are not delivered within a reasonable timeframe. However, certain terms and conditions will be outlined under the sale agreement for the buyer and developer.
Benefits of IFMS for Homebuyers
There are certain benefits of IFMS that are great for:
Financial Security
IFMS acts as the most important financial safety net for residents, thus ensuring that essential maintenance needs are met like repairs, cleaning, security, and common area upkeep as well. This helps in the management of expenses thus effectively ensuring a well-maintained property as well for potential buyers.
Enhanced Trust
Implementing a perfectly transparent system like IFMS shows the commitment of the developer to the long-term well-being of that property. This can build trust and credibility with potential buyers, thus increasing buyer’s interest in projects.
Also Read: Pros and cons of Real Estate Investment in India
Common Misconceptions about IFMS
Here are certain misunderstandings about the IFMS that we like to know:
Non-Refundable Nature:
While these are non-refundable, under specific situations as mentioned above, these can be refunded under certain guidelines for developer delays or failure to form an RWA that can directly lead to certain partial refunds.
Difference From Security Deposits
IFMS is distinct from other types of deposits like certain security deposits or other maintenance deposits. Security deposits are fully refundable when the tenant ends the lease or during the end of tenancy, while the monthly deposits are collected to cover any kind of damages from the owners.
IFMS are generally one-time, non-interest-bearing charges that are used for specific overall property maintenance.
Also Read: How Interest Rates Impact Real Estate
Legal Aspects of IFMS
Regulations
The legal system of framework that governs IFMS in India falls through the purview of the RERA or Real Estate Regulatory Authority, 2016. The RERA rules mandate that developers should create a separate account for IFMS and ensure its transparent functioning.
Buyer’s Rights
Under RERA, homebuyers have a certain right to access the information for IFMS in Real Estate and how these funds under IFMS are being used through RWA. They have the full right to raise concerns if the funds are being misused.
Calculation and Collection of IFMS: Tips for Homebuyers
- Due Diligence
Before committing to any type of purchase in real estate, deeply understand the terms and conditions that are related to IFMS or through real estate maintenance charges. Ask the developer for clarity on the breakdown of that amount and how it needs to be calculated based on property sizes.
- Contract Clauses
Ensure that the sale agreement includes specific clauses outlining through IFMS amount along with the IFMS amount, collection process, and the transfer of process of RWA after formation.
Also Read: How to Choose the best real estate company in India
Conclusion
The Interest-Free Maintenance Charge plays a crucial role thus ensuring the smooth and proper functioning for the long-term value of the property. By going through the concept as well as its associated benefits, homebuyers can make well-researched and informed decisions.
Looking for investment in a well-maintained property with a well-built and transparent system? Do consider some reputable developers like Omaxe Ltd. We are committed to providing different high-quality properties with different and clear policies, that include responsible management under IFMS.
Contact Omaxe Group today and start exploring the wide range of properties that provide peace of mind solutions and a perfectly secure investment for the future!
