Maharera Freezes Builders’ Escrow Accounts Over Non-filing Of Returns, ET RealEstate

September 21, 2023

NAGPUR: Taking a tough stance against builders, the Maharashtra Real Estate Regulatory Authority (MahaRera) has frozen bank accounts of over 40 realty projects in Nagpur division.

This includes projects coming up in the city as well as other districts of eastern Vidarbha like Wardha, Bhandara, Gondia, Gadchiroli and Chandrapur, which come under the Nagpur division.

These are escrow accounts opened for a specific project by the builders. Similar action has been taken across the state and other parts of the region. The names of the projects affected are expected to be put up on the MahaRera website soon.

The action follows inordinate non-compliance by builders in filing of quarterly returns. The process began early this year with issuance of initial notices and finally freezing of accounts.

Rera officials say once this exercise, which covers a huge number of projects, is completed, freezing of escrow account would be a straight consequence of non-filing of returns by the builder. Once a quarter is over, the builders will be given a 15-day notice. Later, the accounts would be seized after giving them a breather of 45 days if the returns are not filed. All projects spread over an area of 5,000 square feet or more have to be registered with Rera.

According to the rules, 70% of the amount received by a builder from the buyers has to be kept in an escrow account. This means the amount has to be specifically spent on the construction of the given project.

The idea is to ensure that funds are not diverted elsewhere, said Sanjay Bhimanwar, deputy secretary and head of the Rera office at Nagpur. The accounts will only be freed after returns are filed.

The builders are also supposed to submit a quarterly returns progress. The details include work done, number of flats sold, amount spent, and other relevant details. This helps Rera know that the funds are being spent only for the particular project. The data is also open for consumers, so that selling of the same unit to multiple buyers is prevented, he said.

MahaRera went soft on builders initially as many were to yet recover from the impact of the pandemic. Some of the builders had even died due to Covid and business was taken over by their heirs. After giving enough time, the builders were expected to comply. Rera began by giving notices and even summoning the builders, and finally the accounts have been frozen, he said.

The process continues and backlog of non-filers up to February will be completed first. The quarter for each project ends at a different date. After that accounts will be frozen as part of the procedure. The accounts are also being opened up after returns are filed, and in some cases the builder are being fined also.

  • Published On Sep 21, 2023 at 09:28 AM IST

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