The per RERA rules, every builder has to deposit 70 percent of the total project cost in the bank, which can be used only for construction of the project. The withdrawals from the account will be according to the extent of the work completed after it is certified by an engineer, an architect and a chartered accountant and will be subject to an audit every six-month. Such measures to a large extent are expected to minimise the diversion of funds, if not fully.
Maharashtra Real Estate Regulatory Authority (RERA) to further clarify this rule has issued an order earlier last week stating that the builders cannot use the money deposited for anything other than the construction of the building which includes the cost incurred for marketing of a project and brokerage paid for the sale of an apartment in the construction cost of an apartment.
MahaRERA also issued another order clarifying what carpet area will include. As per the new order, balcony and other dry areas are not part of carpet area anymore.
Dr. Sanjay Chaturvedi, an expert on RERA, said that according to the new rules, the deposit money is protection in case the building remains incomplete; this money can then be used for the construction of the building. This will safeguard the interest of the home buyers.
However, builders claim that there is ambiguity in this order as it considers marketing and brokerage as part of the project cost.
On one hand the order states that marketing and brokerage are part of the project cost while on the other it doesn’t allow the money from deposits to be used for it, said a builder on condition of anonymity.
Every builder who has an ongoing project in the state and doesn’t have an occupation certificate has to be registered with the MahaRERA.