Realtors then transfer the remaining 30 percent of the money to a third account which they operate to appropriate for purposes other than construction and the cost of the land.
According to the authority, âThis practice is apparently wrong. Developers should receive the full amount in the escrow account and only the money left over after using 70% of the money for construction and the cost of the land should be allowed to be. withdrawn for a purpose other than the cost of construction and land. It is re-emphasized that this 70:30 percent ratio must be maintained from the start of the project. “
The above observation was made during a meeting held by the heads of UP-RERA with the general managers and general managers of all public and private banks. The authority has given appropriate instructions to all zone managers and branch managers to comply with RERA orders.
UP-RERA has also decided to verify all project accounts kept with the various banks. âRERA accountants will visit relevant branches in this regard,â said Rajive Kumar, President of UP-RERA.
The authority further stated that there can be no charge or lien on the separate project account, the bank cannot recover the amount or payment owed by the promoter from this account. The bank may have a lien on the account to which the promoter transfers 30 percent of the money collected.
âThe bank cannot demand that in the event of a loan for the project, the promoter opens an account with it and receives all the money from the beneficiaries in this account. The bank also cannot insist on the promoter to transfer the money from the balance of the existing project account to a new account, âsaid Abrar Ahmed, secretary of UP-RERA.
In accordance with the provisions of section 4 (2) (l) (D) of the Real Estate (Regulation and Development) Act 2016, seventy percent of the amount of a real estate project must be deposited into an account separate to be kept in a bank to cover the cost of construction and the cost of the land.
The relevant branch is responsible for ensuring that the money is used only for the specified purpose and not for any other purpose. The bank should also ensure that the developer is only allowed to withdraw any amount from this account after submitting the certificate of an engineer, architect and accountant.