When the residents of a large complex off Hennur Road finally formed their owners association, they discovered a hole where their money should have been. Over the years the builder had collected a corpus fund and a sinking fund from every buyer at possession, sums meant to be held for the community future. But at handover, the account of those funds was vague and the transfer never quite happened. It took a RERA complaint to get the money moved. Every one of those buyers had paid the fund without asking a single question about where it would end up. The ones who ask at the start, and keep the receipts, rarely end up chasing at the finish for money that was theirs all along.

The short answer. Beyond your maintenance charges, a Bengaluru builder typically collects a corpus fund and a sinking fund from buyers, and these are held in trust for the owners and must be accounted for and transferred to the owners association at handover. The trade off for a buyer is attention now against recovery later. These funds are easy to pay and easy to forget, but they belong to the community, and the time to make sure they are documented is when you pay, not years later when they go missing.

What are these three funds, and how do they differ?

They are three different pots of money with three different jobs, and confusing them is where buyers lose track. Maintenance is the running cost of the building, the month to month spending on security, housekeeping, common area electricity, lift servicing and the like. The corpus fund is a one time reserve, usually collected once at possession, meant to give the future owners association a financial cushion for larger needs. The sinking fund is a reserve built up over time specifically for major periodic works, the kind that arrive every several years, such as repainting the towers, replacing lifts, or structural repairs. The simplest way to hold them apart is by rhythm. Maintenance is monthly and gets spent, the corpus is a one time cushion, and the sinking fund is a slow build for the big jobs down the line. What they share is more important than their differences. All three exist for the owners, not for the builder.

Because these funds sit outside the headline price of the flat, buyers often pay them almost absent mindedly at possession, bundled into a long list of charges. That is exactly why they are worth understanding. Money you do not track is money that is easy to lose, and a fund with a vague name on a crowded demand note is the easiest of all to overlook.

Does the builder actually have to hand these over?

Yes, and this is settled ground in Karnataka. Money collected from buyers as a corpus or sinking fund is held in trust for the owners, and the promoter cannot treat it as their own. At handover, these funds must be accounted for and transferred to the owners association bank account. The Karnataka Real Estate Regulatory Authority has held clearly that a promoter holds homebuyer money in trust, cannot divert it, and that the obligation to transfer common areas, project assets and funds to the association continues even after possession is handed over. You can read the framework on the Karnataka RERA portal. In practice this means the corpus and sinking fund are not favours the builder does the community, they are the community own money that the builder is holding temporarily.

This matters because the handover moment is where the risk concentrates. A builder winding down involvement in a project has little incentive to be generous about accounting for funds collected years earlier. The law is on the owners side, but the owners still have to ask.

When are these funds collected and held?

They are usually collected around possession and held by the builder until the owners association takes over. In most Bengaluru projects, the developer or an appointed facility company runs the building for the first stretch after possession, before the owners association is formally constituted. During this period the builder collects and holds the corpus and sinking fund, and manages the maintenance. The intention is that once the association is formed, the funds and the running of the complex pass to it. The table below sets the three funds side by side so you can see what each is for and where it should end up.

Read the last row as the whole point. Whatever the labels a particular builder uses, every rupee collected for the community must be accounted for and passed on when the association takes charge.

How big are these funds, and can you get yours back?

The amounts vary from project to project, and the money is community money rather than a personal deposit you can reclaim. There is no single fixed figure, because builders set the corpus and sinking fund based on the size of the project, the amenities it carries and the arrangements written into the sale agreement. A larger project with heavy amenities, lifts and extensive common areas naturally needs a bigger reserve than a small building. What matters more than the exact number is that the basis is disclosed to you and written down, so you know what you paid and why. It is also important to understand that these are not refundable deposits you get back when you sell. Once paid, the corpus and sinking fund belong to the community, held by the association for the benefit of all owners, and they stay with the property rather than following you out the door. When you eventually sell, your buyer steps into the same arrangement. So do not think of these funds as savings you will recover, but as your share of a common reserve that keeps the building healthy for everyone, including your future self while you still live there.

What can go wrong, and what is your recourse?

What goes wrong is vagueness, and the recourse is RERA. The typical failure is not dramatic theft but a quiet lack of accounting, where the builder cannot or will not produce a clear statement of what was collected, what interest it earned, and what remains to be transferred. If a developer keeps the corpus, refuses to account for the maintenance or sinking fund, or simply stalls the transfer, the owners association can file a complaint with the state RERA authority. Adjudicating officers under RERA have the power to direct recovery of the funds and to impose penalties on a non compliant promoter, and Karnataka RERA has ordered exactly such transfers in real cases. So the money is recoverable, but recovery is a fight you would rather not have. The way to avoid it is to insist on clean documentation at every stage, starting from the day you pay. Our guide on the owners association under the Karnataka apartment law explains how the association takes charge, and our explainer on conveyance and handover to the association covers the wider transfer of assets.

How should a Bengaluru buyer protect these funds?

Document everything, and keep the paper from the very first payment. The residents off Hennur Road struggled because nobody kept a clear record of what had been paid. You can do better by treating these funds as seriously as the price of the flat. Work through the checklist below in order.

1. Ask the builder in writing how much corpus and sinking fund you are being charged, and on what basis.
2. Get a receipt for every fund payment that names the fund clearly, not just a lump sum.
3. Read your agreement for the clauses on corpus, sinking fund and their transfer to the association.
4. Keep copies of these receipts and clauses with your sale deed in one file.
5. When the association forms, ask the builder for a full statement of funds collected and interest earned.
6. Confirm the funds are transferred to the association bank account and documented at handover.
7. If the builder stalls or cannot account for the money, escalate through RERA without delay.

Following this order turns a common loss into a rare one. For a project such as Adarsh Tropica on Sarjapur Road, asking about the corpus and sinking fund arrangements before you pay tells you how the builder thinks about the community future, and a developer who answers clearly and puts it in writing is showing you exactly the transparency you want to see carried through to handover.

Common questions from Bengaluru buyers

What is the difference between corpus, sinking fund and maintenance?

Maintenance is the running cost of the building, like security, cleaning and common area power, collected and spent month to month. The corpus fund is a one time reserve for larger future needs. The sinking fund is a reserve built up for major periodic works such as painting, lift replacement and structural repairs.

Does the builder have to transfer the corpus and sinking fund to us?

Yes. Money collected from buyers as corpus or sinking fund is held in trust for the owners, not for the promoter. At handover it must be accounted for and transferred to the owners association bank account. Karnataka RERA has held that a promoter cannot retain these funds and must hand them over, and can enforce this if a developer refuses.

When are the corpus and sinking funds collected?

They are usually collected around possession, separately from the basic sale price, so many buyers do not notice them in the headline cost. The builder typically maintains the building and holds these funds until the owners association is formed, after which the funds and the running of the complex are meant to pass to the association.

What can we do if the builder keeps the corpus fund?

The route runs through RERA. If a developer keeps the corpus, refuses to account for the maintenance or sinking fund, or stalls the transfer, the owners association can file a complaint with the state RERA authority. Adjudicating officers have the power to direct recovery of the funds and to impose penalties on a non compliant promoter.

Last updated 2026-08-08. PropNewz Team.