MahaRERA recently issued a circular making it mandatory for promoters to provide certificates from engineers, architects and chartered accountants to the banks and with copies to the real estate regulatory authority before withdrawing any amount realized from the home allottees, stating that the withdrawal is in proportion to the percentage of work completed.
The amounts realized from allottees are deposited in a separate account.
MahaRERA will upload the certificates provided by the engineer and the architect on its website for the benefit of the home buyer. This would mean, home allottees will know the exact status of the project, such as the amount of work completed, and costs incurred, among other things. Earlier, the promoter had to obtain the certificates, but they only needed to provide a self-declaration to the bank.
The promoters are also required to get their separate account audited within six months after the end of every financial year by a chartered accountant and shall have to produce a statement of accounts duly certified and signed by the chartered accountant. The audit will verify that the amounts collected for a particular project have been utilized for the project and that the withdrawal is in compliance with the proportion to the percentage of work completed. The new rule applies to both new projects and on-going projects.
Promoters under sub-section (2)(l) D of section 4 of the Act are required to deposit 70% of the money, that has been collected, for the real estate project from the allottees, in a separate account in a scheduled bank, to cover the cost of construction, the land cost, and the amount so deposited can be used only for that purpose. To ensure that the withdrawal is in proportion to the percentage of work completed on the project, the promoter needs to submit certificates from the engineer, architect and the chartered accountant to MahaRERA, apart from the bank, at the time of every withdrawal till the occupancy/completion certificate is received for the project.
The 2017 circular of the MahaRERA had allowed the promoter to just give a self-declaration every quarter, rather than submitting these three certificates on every withdrawal to the bank. Advocate Anil D Souza, secretary of the MahaRERA Bar Association, said “MahaRERA has not only brought in more transparency into the financial aspect of the project management, but also thrust greater accountability on promoters, along with the Engineer, Architect and CA certifying every stage. Hitherto, home buyers had no clue where their hard-earned money disappeared, once they had invested in a project. But with this initiative, MahaRERA will rein in wayward builders.”