When homebuyers contract with a builder to purchase under-construction property, these buyers need to await the completion of the project before they obtain possession from the builder. Until then, the builder is responsible for the maintenance and upkeep of the apartments and the facilities that are promised by the builder. After the building receives an occupancy certificate or a completion certificate from the municipal authorities the possession of the property is ready for transfer. Until the buyers do not accept such possession, the builder collects money from the homebuyers into a reserve which is used for maintaining the apartments.

The contribution of a homebuyer towards the corpus fund is usually based on a fixed percentage value of the purchase price of the apartment/flat and is usually taken monthly over a long period. This money in this fund is usually accumulated in the fund and may be used for revenue or periodically occurring maintenance expenditure. To increase the corpus (quantum of money) the fund monies are invested in other investment options or made into fixed deposits or both to yield dividend and/or interest.

The returns yielded on these investments can then be used to meet periodically occurring expenditure of smaller amounts, while the main “corpus” is kept intact to meet a major capital expenditure that occurs on dire occasions. This article seeks to explain what corpus fund is and highlight the rules that regulate these funds.

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Corpus funds in housing societies

The corpus fund is a very important fund established by the builder to cover the maintenance and upkeep of flats/apartments until possession is transferred to the homebuyers. The responsibility of handling the corpus fund is also transferred to a newly constituted flat owners’ association or cooperating society by the builder. Such association or society periodically recharges the fund with contributions from the members of the association or society in anticipation of maintenance costs arising. Here are a few facts about Corpus Funds:

  • Corpus funds are pre-paid in nature and are a proactive measure against maintenance costs of flats and apartments that may arise without notice.
  • These funds are mainly held under the premise that expenses may arise without notice and may also escalate as such.
  • It is best to be prepared with a reserve and provide against rising maintenance costs than arranging for funds in a hurry in reaction to costs as and when they arise.

Corpus fund amounts are invested in other investment options or kept in fixed deposits to yield income in the form of dividend or interest which are used to meet small periodically occurring expenses. This allows the main corpus of the member contributions in the reserve to remain intact to make payments towards an unforeseen cost of substantial quantum.

  • These unforeseen expenses are as the name suggests unpredictable and contingent.
  • A nominal charge could escalate to a substantial one when revealed that the flat or apartment having minor cracks on the surface is needed in major repairs.

When the fund is under the management of the builder, the builder collects amounts from the homebuyers generally monthly and accumulates this collected money in the corpus fund to make payments towards maintenance costs until the possession of flats is transferred to the homebuyers. The money is entrusted to the builder and is not outright given to him. It is a liability for the builder and the monies in the fund and the responsibility of handling the fund is transferred to the homebuyers when the possession of the flats is transferred to them.

  • The corpus fund is calculated by the builder on a square feet basis and as such the amount could be in lakhs of rupees.
  • A builder cannot embezzle or keep/use the corpus fund amounts for his or her benefit.
  • If s/he were to do so, the homebuyers can send a legal notice to such builders demanding back the corpus fund monies entrusted to him.
  • If s/he refuses to comply with the demand in the notice within the stipulated time in such notice or within a reasonable time, s/he can file a complaint in the consumer court and with the regulatory authority established under the Real Estate (Regulation & Development) Act, 2016.
  • The RERA provisions are legislated for the benefit of homebuyers and investors.

When the project is completed and the possession of the flats is transferred to the homebuyers, the homebuyers form a new flat owners’ association or a cooperative society that gets the responsibility of managing the funds that contain the monies to maintain and repair the residential properties as and when the need arises.

  • Once the cooperative society becomes responsible for the corpus funds and other funds used for the upkeep of the building or residential society, the cooperative society must adopt rules provided with or without modification to maintain and administer the monies in the funds for the interests of the members of such society.
  • As such, it can adopt the model by-laws provided by different states for the benefit and regulation of societies under their jurisdiction and can modify these bye-laws for the benefit of the cooperative society’s members. These bye-laws provide procedures to regulate the contributions made by members to the corpus fund in a predetermined, systematic way.
  • Either way, adoption of bye-laws with or without modification is taken up by the cooperative society’s general body (the main body comprising of the members of the cooperative society) and this body decides how the society finances itself and how much contribution from the members goes into the different funds like the corpus fund, sinking fund, repair fund, etc. periodically.

According to the Maharashtra Model Bye-laws, it is clearly stated that a minimum balance of Rs10,000 to a maximum of Rs 25,000 premium can be charged on the transfer of rights. These come into effect once the society is formed. The society can form its own rules and regulations for the use of the corpus fund and if a member wants information about the use of the fund monies, s/he can get a copy of the society’s bye-laws and study the society’s annual financial statements.

For the operational requirements of the society, the general body utilizes the interest or dividend generated from the use of the corpus to cover expenses. However, if the corpus fund principal balance was used for a major expense, it is raised again as a sum of proportional contributions from the members of the society by the decision of the society’s general body.


The corpus fund is an accumulation of periodic contributions made by homebuyers/members of a cooperative society that is used for meeting the maintenance and upkeep costs of the residential properties. The monies in a corpus fund are invested in other investment options or converted to fixed deposits in banks to yield returns which can be used to make payments towards small expenses that occur from time to time. The main corpus of the fund is kept intact to meet substantial charges that are unforeseen and require a substantial sum to cover them.

After the responsibility of maintaining the corpus fund is transferred to the cooperative society from the buyer, the monies of such fund may also be transferred to the sinking fund to consolidate the two funds into one. The corpus fund is an important fund that has certain rules called bye-laws that regulate its maintenance and management. Adherence to these ye-laws is required to ensure the corpus fund’s monies are used effectively to meet maintenance expenses and property upkeep charges.