From July 1, Developers in Maharashtra must use designated Accounts for Homebuyers’ funds

From July 1, Developers in Maharashtra must use designated Accounts for Homebuyers' funds

From July 1, Developers in Maharashtra must use designated Accounts for Homebuyers' funds

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MahaRERA’s new measures aim to prevent fund misappropriation, ensure timely project completion, and protect homebuyers.

June 28, 2024

From July 1, developers in Maharashtra will not be able to deposit homebuyers’ money into different accounts. Buyers need to use designated bank accounts as mandated by the Maharashtra Real Estate Regulatory Authority (MahaRERA). The new measures are designed towards safeguarding homebuyers’ investments. This will provide transparency in monetary transactions.

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. Now, MahaRERA requires developers to open three specific bank accounts in a single bank. 

MahaRERA Chairman Ajoy Mehta emphasized that these measures 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% of the revenue received from homebuyers, transferring at least 70% into the RERA-designated separate account for land and construction expenditures. The remaining 30% 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Banks will facilitate this process through auto-sweep mechanisms and funds in these accounts cannot be withdrawn via cheques, online banking, credit or debit cards, or any other means.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% of the amount paid. Compensation will also be provided for any losses from the RERA-designated separate account, with interest on the amount applicable. The remaining 30% will be refunded from the RERA-designated transaction account.

MahaRERA’s new protocol aims to streamline the refund process. This process will allow for quicker resolution of cancellations and ensure 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. 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 prevent 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.

The new measures reflect MahaRERA’s commitment to protecting homebuyers. A more transparent and disciplined real estate market in Maharashtra will also be fostered through this initiative.