New MahaRERA Guidelines Mandate Designated Bank Accounts for Developers from July 1

New regulations aim to ensure transparency and accountability in housing projects, safeguarding homebuyers’ investments.

Mumbai, June 28, 2024 — In a significant move to enhance financial discipline and transparency in the real estate sector, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has issued new guidelines for the maintenance and operation of bank accounts for registered projects. These guidelines will come into effect on July 1, 2024, and are aimed at safeguarding homebuyers’ investments and ensuring compliance with financial regulations.

Key Guidelines and Requirements

Under the new directive, developers must open and maintain three specific bank accounts within a single scheduled bank for each registered project:

1. RERA Designated Collection Account: This account will receive all payments from flat buyers, excluding taxes and statutory duties.
2. RERA Designated Separate Account: Seventy percent of the funds from the Collection Account will be transferred here to cover land and construction costs.
3. RERA Designated Transaction Account: The remaining thirty percent of the funds will be transferred here for other project-related expenses.

Objectives and Benefits

These measures, as highlighted by MahaRERA Chairman Ajoy Mehta, are designed to build trust among homebuyers by legally securing their investments. “By mandating the opening of three bank accounts for each project, MahaRERA aims to enhance financial oversight and reduce delays in project completion, thereby benefiting homebuyers and improving the real estate sector’s credibility,” Mehta stated.

Enforcement and Compliance

Promoters are obligated to furnish details of the project bank accounts at the time of registration. These accounts must be free from any liens, loans, or third-party controls. Additionally, all transactions must be facilitated through an auto-sweep facility, ensuring that funds are transferred appropriately and cannot be withdrawn through traditional means such as cheques or online banking.

The guidelines also stipulate that if a homebuyer cancels their registration, they are entitled to a refund of 70% of the amount received from the Separate Account, along with compensation for any losses. The remaining 30% will be refunded from the Transaction Account.

Enhanced Transparency and Monitoring

Developers must disclose any loans taken against the mortgage of land, flats, or the entire project, providing detailed information about the financial institution, transaction date, sanctioned amount, withdrawn amount, and remaining balance. These details must be certified by the project’s Chartered Accountant.

Obligations for Banks

Banks are required to ensure that no third-party encumbrances are created on the RERA Designated Collection and Separate Accounts. They must also facilitate the auto-sweep transfer facility and ensure that these accounts are not used for any unauthorized transactions.

Conclusion

These comprehensive guidelines reflect MahaRERA’s commitment to fostering a transparent, accountable, and trustworthy real estate sector. By implementing stringent financial management practices, MahaRERA aims to protect homebuyers’ investments and promote a healthier real estate environment in Maharashtra.