In real estate, a corpus fund refers to a sum of money set aside for a specific purpose. It serves as a reserve fund for housing societies for repair and other purposes. A society corpus fund from society members can be termed as a maintenance amount. These funds are utilised for the upkeep of the property, repair, and communal amenities.
In housing societies, residents share common spaces and other facilities for which they must pay maintenance charges. Managing these charges is essential and thus, the society corpus fund is crucial. In this article, we will discuss about how the society corpus fund is calculated.
Society Corpus Fund: Significance
Members or residents of a housing society contribute to the corpus fund, which serves as a financial reserve for the upkeep, maintenance, and redevelopment of shared amenities and infrastructure. The funds are utilised by the developer to undertake timely repairs, renovations, and improvements to common areas, such as parks, roads, and recreational facilities.
Reasons to have Society Corpus Fund
- Increases property value: The Society Corpus Fund is utilised for the upkeep and improvements in the society. Well-maintained societies attract buyers and tenants alike. This contributes to the appreciation of property values in future.
- Financial stability: Society Corpus Funds offer financial security and play a role during unforeseen expenditures and emergencies. They serve as a buffer, providing developers financial stability they need, depending on any external financial source.
- Promoting social cohesion: Societies utilise the corpus funds to organise community events, social initiatives, and welfare programmes.
How is a corpus fund created?
Corpus fund is created to ensure the maintenance of common areas, amenities, and infrastructure within the residential community. Each property owner contributes a specific amount towards this corpus fund as monthly maintenance charges, one-time fee, or a percentage of the sale price during initial purchase of the property. The collected funds maintained as the Society Corpus Fund. It has often been seen that in under-construction projects the developers offer maintenance-free schemes to attract buyers.
How is corpus fund calculated?
The corpus fund is calculated by the developer on a per-square-foot basis. The amount can vary from thousands to lakhs, depending on the type of project and the total area of the apartment.
The corpus fund is also based on the property’s size. After the housing society is established, the corpus fund is transferred to the Sinking Fund, dedicated to major repairs, reconstruction, structural additions or redevelopment.
How is corpus fund managed?
The management of the corpus fund in housing societies is governed by legal agreements and guidelines set by the authorities. These include terms of fund utilisation, contribution, and other related terms.
Developers or redevelopers are required to carefully manage the society’s corpus fund. They are also required to provide regular updates to society members about the fund’s utilisation. The corpus fund should be operated in a transparent manner to prevent misuse or theft by the builder or other parties.
How is corpus fund utilised in a housing society?
- Maintenance and repairs: Society corpus fund is utilised for the upkeep and repairs in the community.
- Amenities: The funds are also used to upgrade shared amenities, such as elevators, lobbies, swimming pools, gardens, and community halls.
- Infrastructure upgrades: The amount is used for the installation of energy-efficient systems, improving security measures or upgrading amenities, such as playgrounds, parks, fitness centres, etc.
- New developments: The society corpus fund helps in financing any expansion or new constructions in a society, such a construction of a temple or other facilities, reducing the dependence on external funds or loans.
Housing.com News Viewpoint
The Society Corpus Fund plays a crucial role in the sustainable development and maintenance of common infrastructure in housing societies. All residents are required to contribute to this fund. The amount should be efficiently managed by society and utilised only to finance key projects, repairs, and improvements.
FAQs
What is corpus fund in society?
The corpus fund is a pool of money allocated for facility management, including common areas, light bill, servicing, cleaning, etc.
Who pays the corpus fund in redevelopment?
The Residents Welfare Association (RWA) collects the corpus fund from property owners to meet expenses related to major repair or renovation work.
Is it mandatory to pay corpus fund?
The society members must pay the corpus fund.
Is Society Corpus Fund taxable?
The receipt of the corpus fund is a capital receipt. Thus, it is non-taxable.
How to collect the corpus fund for an apartment?
The builder collects the Society Corpus Fund on a monthly, quarterly, or annual basis. The amount is handed over to the housing society's managing committee.
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