RERA 70 Percent Rule: How to Check If Your Builder Is Diverting Funds

No. A builder cannot legally spend your flat money on another project. Under the Real Estate (Regulation and Development) Act, 2016, the promoter must put 70 percent of the money collected from buyers of a project into a separate bank account for that same project, and can take money out only in step with real, certified construction progress. If your builder is quietly moving your money to a different tower or a land deal, that is a violation you can complain about to your state RERA authority.

This guide explains the rule in plain words, shows you the exact documents to ask for before and after you book a flat, lists the warning signs of fund diversion, and walks you through filing a RERA complaint.

Many buyers and even some agents call this the “70 percent escrow account”. Legally that name is not exact, and the difference matters for you.

A true escrow account is held by a neutral third party who releases money only when conditions are met. What RERA actually requires is a separate designated account in a scheduled bank, opened and operated by the builder for one specific project. The bank does not police the withdrawals. Instead, three professionals, an engineer, an architect, and a chartered accountant, must certify that any withdrawal matches the percentage of construction actually completed.

So the safeguard is not the bank. The safeguard is the certificate. That is why checking those certificates is the single most useful thing a buyer can do.

The rule sits in Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016. When a builder applies to register a project with the RERA authority, the builder must give a written declaration that:

“seventy per cent. of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.”

The same Section 4(2)(l)(D) has provisos that control how the money comes out:

• The builder may withdraw from the separate account in proportion to the percentage of completion of the project.
• Each withdrawal must be certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion.
• The builder must get the project accounts audited within six months after the end of every financial year by a chartered accountant in practice.

In short: your money is fenced off for your project, and it can be released only against proof of matching construction. An “allottee” is simply the buyer to whom the flat is allotted.

A note on the number. 70 percent is the figure in the central Act. A few states have set their own rules, so always read the RERA registration page for your specific project rather than assuming the number.

Do this while you can still walk away. Every registered project has a public page on the state RERA portal.

1. Find the project's RERA registration number in the builder's brochure or sale material. By law it must be displayed.
2. Search that number on your state RERA website (for example MahaRERA for Maharashtra, UP RERA for Uttar Pradesh, HRERA for Haryana). The project's public page opens.
3. Confirm the project is registered and active, not lapsed or “under process”.
4. Open the uploaded documents. Look for the separate account details and the name of the scheduled bank declared for the project.
5. Check the quarterly progress updates and the professional certificates the builder is required to upload.
6. Read the buyer complaints, if any, listed against the project or promoter.

If a project has no RERA number, or the number does not open a real page, treat that as a stop sign.

After booking, you have the standing of an allottee and more leverage.

• Pay only into the declared account. Cross-check the account number on your demand letter against the separate account declared on the RERA portal. Money paid into a different account is easier to divert.
• Ask for the withdrawal certificates. You are entitled to see the engineer, architect and CA certification that supports each withdrawal against construction stages.
• Track quarterly updates on the RERA portal and compare them with what you see at the actual site.
• Watch the annual audit. The six-month CA audit under Section 4(2)(l)(D) should confirm the money was used only for your project.

• The demand letter asks you to pay into an account that is not the separate account shown on the RERA portal.
• Construction on site is far behind the percentage of completion the builder claims.
• The builder cannot or will not show you the engineer, architect and CA withdrawal certificates.
• The project's quarterly updates on the RERA portal are missing, stale, or copied from an earlier quarter.
• The annual audit is overdue or never uploaded.
• The builder pressures you to pay in cash or “off the books”.
• The same builder is suddenly funding another new project while yours has stalled.

Section 31 of the Act gives any aggrieved person the right to complain. It says:

“Any aggrieved person may file a complaint with the Authority or the adjudicating officer … against any promoter allottee or real estate agent.”

The word “person” in Section 31 also covers an association of allottees or a registered voluntary consumer association, so buyers can act together.

Steps:

1. Gather your documents: allotment letter, payment receipts, demand letters, the builder-buyer agreement, and copies or screenshots of the RERA portal records that show the mismatch.
2. Go to your state RERA portal and open the complaint or grievance section.
3. Fill the prescribed complaint form. Under Section 31(2) the form, manner and fee are as prescribed by each state, so check the current fee on your state portal rather than relying on any figure you read elsewhere.
4. Clearly state the violation: breach of Section 4(2)(l)(D) through withdrawal beyond certified completion, or collection into a wrong account.
5. Attach every proof and submit. Keep the acknowledgement.

Complaints seeking compensation are usually decided by the adjudicating officer. You do not always need a lawyer to start, but for a large claim it can help.

• Believing “escrow” means the bank guards the money. It does not. The certificates do.
• Paying into whatever account the builder names without matching it to the RERA-declared account.
• Never opening the RERA portal after booking, so diversion goes unnoticed for years.
• Throwing away receipts and demand letters, which are the exact proof a Section 31 complaint needs.
• Assuming the 70 percent figure applies unchanged in every state. Read your own project's page.

Not in the strict sense. Section 4(2)(l)(D) requires a separate account in a scheduled bank, operated by the builder, from which withdrawals are allowed only against certification by an engineer, architect and chartered accountant. A true escrow has a neutral third party releasing funds, which this is not.

No. The 70 percent deposited in the separate account must be used only to cover the construction and land cost of that same project. Moving it to another project is a violation you can raise before your state RERA authority.

The quarterly progress reports on the RERA portal, the engineer, architect and CA withdrawal certificates, the annual audit statement, and any demand letter that names an account different from the declared separate account. Compare claimed progress with what you see on site.

Section 31 of the Real Estate (Regulation and Development) Act, 2016. It lets any aggrieved person, including an association of allottees, complain to the Authority or the adjudicating officer against a promoter. Section 31(2) says the form and fee are as prescribed by each state.

The fee is fixed by each state under Section 31(2), so it varies. Check the current amount on your own state RERA portal before filing, rather than relying on a figure quoted on any other website.

The 70 percent figure is in the central Act. Some states have set their own variations, so read the registration page for your specific project on your state RERA portal to confirm the number and the account details that apply to you.

If you suspect diversion, get your facts and paperwork ready first, then complain.

• Learn the wider system in The RTI Playbook.
• Draft a clean information request with the AI RTI Drafter.
• If a public authority stonewalls you, build a follow-up with the First Appeal Builder.
• Read the RTI Act, 2005 to see what public records you can demand.

• Real Estate (Regulation and Development) Act, 2016, Section 4(2)(l)(D), separate account and withdrawal provisos: Indian Kanoon: Section 4(2) RERA
• Haryana RERA official directions on compliance of Section 4(2)(l)(D) separate account: Haryana RERA: Section 4(2)(l)(D) directions
• Real Estate (Regulation and Development) Act, 2016, Section 31, filing of complaints: IBC Laws: Section 31 RERA

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