July 1, 2024: The Maharashtra Real Estate Regulatory Authority (MahaRERA) on June 27 said that starting July 1, real estate developers will be required to maintain three separate bank accounts for each project within a single bank. This measure aims to ensure financial discipline and the timely completion of projects.
The first account, known as the Collection Account, will be used to deposit all amounts received from allottees, excluding stamp duty, GST and other indirect taxes. No withdrawals are permitted from this account. Developers must include details of this account in allotment letters and sale agreements to ensure transparency.
The second account, called the Separate Account, will receive 70% of the funds from the Collection Account via an auto sweep facility. Funds in this account can only be used for specific purposes such as land costs, construction costs and interest on loans, as well as payments of interest, compensation or refunds to allottees.
The third account, the Transaction Account, will receive up to 30% of the collected funds. Banks are required to ensure that both the Collection and Separate Accounts are free from any encumbrances, liens, or third-party controls, ensuring they are not escrow accounts and cannot be attached by any government authority.
This decision, effective from July 1, was made after consulting stakeholders. Previously, MahaRERA required developers to maintain a single designated account per project, holding 70% of the project cost. However, developers were often asking homebuyers to deposit money into different accounts for various purposes, which led to this new mandate.
A similar decision was made by the Uttar Pradesh RERA (UPRERA) in December 2023, requiring developers to maintain three designated bank accounts. MahaRERA’s new regulation aims to enforce uniformity, accountability and financial discipline, ultimately protecting the interests of homebuyers.
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