LUCKNOW To check misappropriation of funds and enhance transparency in execution of projects, the UP Real Estate Regulatory Authority (RERA) has made disclosure of funds collected from homebuyers mandatory for promoters. The decision came on Friday, in wake of the authority getting complaints that promoters were not depositing funds received from allottees into designated ‘collection’ account.
After complaints of misappropriation of funds by promoters, the UP RERA has warned of stern action against violators.
According to the Real Estate (Regulation and Development) Act, 2016, promoters are mandated to keep 70% of the funds received for project development in the projects’ ‘separate account’ and use them exclusively for construction work.
As per guidelines issued by UP RERA, every promoter must provide details of three project accounts, collection, separate and transaction accounts, on the UP RERA portal.
The regulatory authority has directed all banks to automatically transfer 70% of the funds received in the ‘collection’ account to the ‘separate’ account and 30% to the ‘transaction’ account on a daily basis.
The amount in the ‘separate’ account is strictly meant for activities directly related to project completion. Withdrawals from this account are permitted only in proportion to the completed project work, duly certified by an engineer, architect, and chartered accountant.
According to UP RERA, in some cases it has come to light that promoters do not deposit funds received from allottees into the designated ‘collection’ account, but instead transfer them to other accounts, thereby misusing funds rather than utilising them for project completion.
“We are taking separate legal action in such cases,” said Sanjay R. Bhoosreddy, chairman, UP RERA.
To enhance transparency, UP RERA has made the ‘collection’ account details of all live RERA-registered projects available on its portal under the ‘details of collection account (live projects)’ link.
Bhoosreddy has issued an appeal to promoters and allottees to thoroughly check all project-related details on the UP RERA portal before investing and ensure that payments are made only to the designated ‘collection’ account.
“Legal action will be taken by RERA against any violation of these provisions, particularly if homebuyers’ funds are deposited into unauthorized accounts, instead of the designated ‘collection’ account,” he added.
