RERA Compliance for Promoters & Developers

Under Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act 2016, the promoter must deposit 70% of amounts realised from allottees into a designated separate bank account, and a Chartered Accountant must certify the withdrawal from this account by certifying actual cost of construction and land cost incurred. At the time of project registration, the promoter must submit a CA certificate declaring the financial details of the project including project cost, funds mobilised, and amounts deposited in the designated account. Quarterly and annual disclosures on the RERA portal (required under Section 11 of the RERA Act 2016) also typically require a CA-certified statement of funds in the designated account. The certificate format is prescribed by each state's Real Estate Regulatory Authority under the respective state RERA rules (e.g., MahaRERA General Circular No. 7/2017 for Maharashtra).

Section 4(2)(l)(D) of RERA 2016 mandates that 70% of all realisation from each project (including booking advances, instalments, and other collections) be deposited in a separate scheduled bank account within the state where the project is located. Withdrawals from this account are permitted only in proportion to the percentage of completion of construction, certified by a CA along with an engineer or architect as prescribed under Rule 4 of the respective state RERA rules. The funds can only be used for the land cost and construction cost of the specific project for which they were collected—cross-utilisation across projects is prohibited. In states like Maharashtra (Rule 4 of Maharashtra Real Estate (Regulation and Development)(Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules 2017), the CA, engineer, and architect must jointly certify each withdrawal.

Under Section 61 of the Real Estate (Regulation and Development) Act 2016, a promoter who fails to comply with RERA orders, including designated account and disclosure obligations, is liable to a penalty of up to 5% of the estimated cost of the real estate project for each day of default, and the Regulatory Authority can also direct refund of amounts to allottees with interest. Misappropriation of funds from the designated account can result in the promoter's RERA registration being revoked under Section 7(1) of RERA 2016 and, in serious cases, prosecution under Section 65 of RERA for up to three years' imprisonment. The CA who issues a false certificate for withdrawal from the designated account is also exposed to professional misconduct proceedings under the Chartered Accountants Act 1949 and Schedule I/II misconduct provisions. State regulatory authorities such as TNRERA and MahaRERA have levied penalties in multiple adjudication orders for under-deposit in the 70% account.

Under Section 2(zn) of RERA 2016, 'real estate project' includes plotted development involving more than 500 square metres or more than 8 units, and the promoter must register such projects with the state RERA authority. However, renovation or repair or redevelopment of existing buildings without marketing, advertising, or sale is specifically excluded under Section 3(2)(b) of RERA 2016. Ongoing projects that had received completion certificates before the commencement of RERA (May 1, 2017) are also exempt under Section 3(2)(a). For plotted development projects that are covered, the separate account, CA certification, and quarterly disclosure obligations all apply in the same manner as apartment projects under the respective state RERA rules.

RERA does not have its own related-party disclosure framework, but where the promoter is a company, related-party transactions must be disclosed in annual audited accounts under Section 188 of the Companies Act 2013 read with Regulation 23 of SEBI LODR for listed entities. The RERA authority's disclosure forms (e.g., Form REP under MahaRERA) require the promoter to disclose litigation history, financial information, and project details, and any loan from promoter group entities financing the project should be reflected in the project's financial statements. The CA certifying withdrawals from the 70% designated account must ensure that payments to related contractors or group companies are at arm's length and supported by work completion certificates, as inflated payments to related parties to siphon the 70% account is a recognised fraud pattern flagged in RERA adjudication orders. Promoters who are LLPs must additionally follow LLP disclosure norms under the Limited Liability Partnership Act 2008.