UP-RERA Takes a Stand for Homebuyers: Mandates Three Bank Accounts for Real Estate Projects

UP-RERA ensures project transparency. Three bank accounts are mandated for real estate projects to protect consumer interests and guarantee timely completion.

The Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has laid down comprehensive guidelines requiring real estate promoters to maintain three distinct bank accounts. This step aims to safeguard consumer interests, ensure fund utilisation in line with the RERA Act, and guarantee the completion of projects.

Chairman Sanjay Bhoosreddy emphasised the importance of transparency and accountability in project management, stating, "Disclosing three accounts on the U.P. RERA web portal and proper fund utilisation will ensure time-bound project completion. Violations will face heavy penalties."

Each project must have a collection account for allottee payments, disclosed in advertisements, allotment letters, and agreements. Promoters must instruct banks for an auto-sweep of 70% to the separate account and 30% to the transaction account. The three accounts (collection, separate, and transaction) must be specified during project registration.

Funds from the separate account are earmarked for land, construction, and development costs. Promoters can pay normal interest on project loans but are barred from penal or compound interest and compensations to allottees. All project loans, secured and unsecured, must be deposited in a separate account.

Strict measures apply to project rehabilitation under Section 8 of the RERA Act. In such cases, promoters must deposit 100% of allottee funds and loan amounts in a separate account. Allottees must be informed about making payments only to the separate account.