From July 1, developers in Maharashtra won’t be able to deposit homebuyers’ money in different accounts
The Maharashtra Real Estate Regulatory Authority’s (MahaRERA) new measures are designed to check fund misappropriation, promote timely project completion and safeguard the interests of homebuyers.
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Previously, developers could ask homebuyers to make payments into various accounts for different purposes, such as booking fees and amenities like gyms and swimming pools. Starting July 1, developers in Maharashtra will be required to maintain designated bank accounts for homebuyers’ payments as mandated by the Maharashtra Real Estate Regulatory Authority (MahaRERA). This measure aims to enhance financial discipline, transparency, and protect homebuyers’ investments.
Previously, developers could ask homebuyers to make payments into various accounts for different purposes, such as booking fees and amenities like gyms and swimming pools. MahaRERA now requires developers to open three specific bank accounts in a single bank:
1. RERA-designated collection account: for 100 per cent of the revenue from homebuyers.
2. RERA-designated separate account: for 70 per cent of the funds allocated for land and construction.
3. RERA-designated transaction account: for the remaining 30 per cent of the funds.
MahaRERA Chairman Ajoy Mehta said the measures, which followed a consultation process initiated in mid-March, are intended to secure homebuyers’ investments and ensure financial oversight in real estate projects.
Projects with multiple promoters will also have the flexibility to open a RERA-designated master account to receive all collections from homebuyers.
Section 4(2)(i)(D) of the Real Estate (Regulation and Development) Act 2016 supports these dedicated bank accounts to promote transparency and financial discipline. Developers must segregate 100 per cent of the revenue received from homebuyers, transferring at least 70 per cent into the RERA-designated separate account for land and construction expenditures. The remaining 30 per cent will go into the RERA-designated transaction account.
Banks will facilitate this process through auto-sweep mechanisms, and funds in these accounts cannot be withdrawn via cheques, online banking, credit or debit cards, or any other means.
In case of a homebuyer cancelling their registration, they will be entitled to a refund of 70 per cent of the amount paid, plus compensation for any losses, from the RERA-designated separate account, with interest on the amount applicable. The remaining 30 per cent will be refunded from the RERA-designated transaction account.
MahaRERA’s new protocol aims to streamline the refund process, allowing for quicker resolution of cancellations and ensuring that funds are readily available for refunds and compensations. Developers will also use the RERA-designated transaction account for project-related expenses other than land and construction.
The RERA-designated collection and separate accounts are legally protected from government attachment, and banks must ensure no third-party encumbrances are created. These accounts must cease operation upon project completion unless extended by MahaRERA.
Withdrawals from these accounts require certificates from chartered accountants, engineers, and architects of the respective projects. In projects with multiple promoters, responsibilities will be based on mutual agreements.
These provisions are designed to check fund misappropriation, ensure transparency, and promote timely project completion. Developers must also disclose any loans secured against the project’s land or flats, detailing the financial institution’s name, address, transaction date, and loan amount. This information must be certified by the project’s chartered accountant.
These measures also aim to safeguard homebuyers, promote financial discipline, and enhance the credibility of the real estate sector.
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