Buyers’ payments and its utilisation as per RERA Act

May , 9

For a long time, it has been a question in the buyers’ mind as to how a developer or a builder utilizes the payments received by them from the buyers. Well, in RERA Act (Real Estate Regulatory Authority, 2016), there is given real specification as to when and how buyers need to make the payments to the developer and how the developers are supposed to utilize the fund for the best benefits of both the parties.


Generally the payment schedule is finalized after a mutual discussion between the developer and the buyer and is payable in several installments according to the completion of the project.  

The agreement begins with paying up the installments till the present stage of completion of the project. One must ensure that before the registration is completed, the developer cannot ask for any payment more than 10% of the property value.


A developer must maintain two accounts to manage the funds released upon as the payments from buyers in two accounts. They are:  

  1. Escrow Account 
  2. Separate Account.


  1. An escrow account is generally held in a Government recognized bank and it permits the bank to withdraw funds whenever needed to cater to mandatory and fixed obligations.
  2. A separate account is said to be held in a scheduled bank and it is that account from where the funds are mostly withdrawn by the developer, each time to be utilized in the construction and other requirements of the project. 
  3. As per Section 4(2)(l)(D), it is said that 70% of the amount realized by a promoter from the buyers, periodically needs to be deposited in the ‘separate account’.

Hope this clears a lot of confusion regarding the management of funds received by the developers from the buyers.

We will be back with many other interesting topics. By the time, if you have any questions please put them in the comment box and we will try to answer to the best of our knowledge.

Also, read our article on: “Rights and responsibilities of a real estate investor as per RERA Act

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