In a bid to safeguard consumer interests and enforce strict compliance with the RERA Act, the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has issued comprehensive directives concerning real estate project bank accounts. The guidelines explicitly prohibit promoters from creating liens on project-specific accounts and extracting interest, penalties, or assured returns from these accounts. Promoters must maintain a collection account for allottee payments, ensuring transparency. The regulations also mandate the disclosure of three bank accounts during the project's registration application, and strict control mechanisms aim to ensure timely project completion and enhance transparency in project fund management.
In a move aimed at ensuring the protection of consumer interests and strict adherence to the RERA Act, the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has issued comprehensive directions regarding real estate project bank accounts. The guidelines, mandated by UP-RERA, explicitly prohibit promoters from creating liens on project-specific accounts and bar them from extracting interest, penalties, or assured returns from these accounts.
Sanjay Bhoosreddy, Chairman of UP-RERA, emphasized the significance of transparency and accountability in managing project funds, stating that any violation of the directives would face heavy penalties.
According to the new regulations, every project is required to maintain a collection account for allottee payments. Promoters must disclose this account in advertisements, allotment letters, agreements for sale, and all communications with allottees. Additionally, the promoter must ensure that at least 70% of the collection account funds are automatically swept into a separate account, with no more than 30% directed to the project's transaction account.
Promoters are obligated to disclose details of three bank accounts - the collection account, the separate account, and the transaction account - during the project's registration application. Funds from the separate account can only be utilized for land cost, construction, and project development. While normal interest payments on project loans are allowed, penalties, compound interest, and compensation to allottees are strictly prohibited.
Furthermore, all secured and unsecured loan amounts for project financing must be deposited into the separate account. Withdrawals from this account require submission of certificates from a chartered accountant, engineer, and architect, ensuring that the amount does not exceed the verified cost of completed work.
Bhoosreddy highlighted that UP-RERA will adopt a stricter stance in cases of project rehabilitation under section-8 of the RERA Act. In such instances, promoters must deposit 100% of funds collected from allottees and raised through loans for construction and development into a separate account. Promoters are also required to inform all allottees about making payments exclusively into the separate account.
These measures, according to UP-RERA, aim to guarantee timely project completion through rigorous control mechanisms and enhance transparency in project fund management.
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