{"id":9215,"date":"2023-10-26T23:21:10","date_gmt":"2023-10-26T17:51:10","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=9215"},"modified":"2025-02-27T13:01:52","modified_gmt":"2025-02-27T07:31:52","slug":"rera-escrow-account","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/business-banking\/rera-escrow-account\/","title":{"rendered":"All About RERA Escrow Account"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e0050d44d8b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e0050d44d8b\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/rera-escrow-account\/#What-is-a-RERA-escrow-account\" >What is a RERA escrow account?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/rera-escrow-account\/#What-is-an-escrow-account\" >What is an escrow account?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/rera-escrow-account\/#How-does-a-RERA-escrow-account-work\" >How does a RERA escrow account work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/rera-escrow-account\/#Real-Estate-Regulation-Development-Act\" >Real Estate Regulation &amp; Development Act<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/rera-escrow-account\/#How-to-open-a-RERA-escrow-account\" >How to open a RERA escrow account?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/rera-escrow-account\/#Why-is-a-RERA-escrow-account-needed\" >Why is a RERA escrow account needed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/rera-escrow-account\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-a-RERA-escrow-account\"><\/span><b>What is a RERA escrow account?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A RERA escrow account is a specific type of account mandated by the <a href=\"https:\/\/rera.karnataka.gov.in\/reraDocument?DOC=664285\" target=\"_blank\" rel=\"noopener\">Real Estate (Regulation and Development)<\/a> Act, 2016 (RERA).\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A RERA escrow account is held by the developer of an upcoming construction project. This includes both residential and commercial projects. In India, real estate developers collect funding from buyers in the form of down payments, instalments, and other payments as per the <a href=\"https:\/\/razorpay.com\/learn\/what-is-payment-schedule\/\">payment schedule<\/a> agreed upon in the sale agreement.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These payments are deposited into the RERA escrow account. The developer can only withdraw funds from the escrow account for the purpose of construction of the project, and only after obtaining the necessary approvals from the authorities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under RERA, developers are required to deposit 70% of the funds collected from buyers into a RERA escrow account. These funds can only be used for the construction of the project for which they were collected.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What-is-an-escrow-account\"><\/span><b>What is an escrow account?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An <a href=\"https:\/\/razorpay.com\/learn\/business-banking\/escrow-accounts\/\">escrow account<\/a> is a third-party account held by a neutral party, typically a bank or a financial institution. The purpose of an escrow account is to safeguard funds until certain conditions are met.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Escrow accounts are used in various kinds of transactions and industries, like online gaming, digital lending and marketplaces. One of the major uses of an escrow account is in real estate.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In India, the Real Estate Regulation and Development Act (RERA) mandates the use of an escrow account in all real estate projects with a cost of more than \u20b9500 lakhs or more than eight apartments, whichever is less. This escrow account is called a RERA escrow account.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How-does-a-RERA-escrow-account-work\"><\/span><b>How does a RERA escrow account work?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><img decoding=\"async\" class=\"alignnone wp-image-9228 size-full\" src=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2023\/10\/blog-temp-3.jpg\" alt=\"rera escrow working\" width=\"2400\" height=\"1257\" srcset=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2023\/10\/blog-temp-3.jpg 2400w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2023\/10\/blog-temp-3-300x157.jpg 300w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2023\/10\/blog-temp-3-1024x536.jpg 1024w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2023\/10\/blog-temp-3-1536x804.jpg 1536w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2023\/10\/blog-temp-3-2048x1073.jpg 2048w\" sizes=\"(max-width: 2400px) 100vw, 2400px\" \/>All developers registered under RERA are required to open a RERA escrow account for each project they undertake. This includes both residential and commercial projects.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The escrow account is managed by the developer of the project, and every project must have only one RERA escrow account.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">70% of the funds collected by the developer should mandatorily go to this RERA escrow account. Deposits and withdrawals from and into this account are regulated by the <\/span><a href=\"https:\/\/rera.karnataka.gov.in\/reraDocument?DOC=664285#:~:text=%22RERA%20Bank%20Account%22%20means%20the,land%20cost%20of%20the%20project.\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">RERA Act, 2016.\u00a0<\/span><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Real-Estate-Regulation-Development-Act\"><\/span><b>Real Estate Regulation &amp; Development Act<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The Real Estate Regulation and Development Act, 2016 (RERA) lays down a number of regulations governing the operation of RERA escrow accounts. These regulations include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The requirement to deposit 70% of the funds collected from buyers into the escrow account<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The requirement to use funds from the escrow account only for the construction of the project<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The requirement to provide regular updates on the status of the escrow account<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The requirement to obtain certification from an engineer, architect, and chartered accountant (CA) before withdrawing funds from the escrow account<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"How-to-open-a-RERA-escrow-account\"><\/span><b>How to open a RERA escrow account?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Developers can open a RERA escrow account with a scheduled bank in India. The process for opening a RERA escrow account is typically as follows:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Submit an application to the bank along with the required documentation<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Pay the necessary fees<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Sign the escrow agreement<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">With the development of technology and digitization of processes, more and more companies and developers are choosing a digital route over the traditional banking route.\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/razorpay.com\/x\/escrow-accounts\/\">Learn more about online escrow accounts<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Why-is-a-RERA-escrow-account-needed\"><\/span><b>Why is a RERA escrow account needed?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The law mandates a RERA escrow account for several reasons.<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Protection for homebuyers:<\/b><span style=\"font-weight: 400;\"> RERA escrow accounts protect homebuyers from fraud and financial losses. The funds deposited into the escrow account can only be used for the construction of the project, and the developer cannot withdraw the funds without the approval of the Real Estate Regulatory Authority (RERA).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Transparency:<\/b><span style=\"font-weight: 400;\"> RERA escrow accounts promote transparency in real estate transactions. Developers are required to provide regular updates on the status of the escrow account to RERA and to homebuyers. This makes it easier for homebuyers to track their funds&#8217; use and identify any potential problems.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Accountability: <\/b><span style=\"font-weight: 400;\">RERA escrow accounts make developers more accountable for the use of funds. Developers can only withdraw funds from the escrow account after meeting certain milestones, such as completing a specific stage of construction. This helps to ensure that the project is completed on time and within budget.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Reduce the risk of project delays or non-completion:<\/b><span style=\"font-weight: 400;\"> By ensuring that funds are available for construction, RERA escrow accounts help to reduce the risk of project delays or non-completion.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Boost investor confidence:<\/b><span style=\"font-weight: 400;\"> RERA escrow accounts boost investor confidence in the real estate sector by providing a layer of protection for their investments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Promote financial discipline:<\/b><span style=\"font-weight: 400;\"> RERA escrow accounts promote financial discipline among developers by ensuring that funds are used for the intended purpose.<\/span><\/li>\n<\/ol>\n<h3><b>Benefits of Digital RERA Escrow:<\/b><\/h3>\n<p><b>Convenience<\/b><span style=\"font-weight: 400;\">: Digital escrow accounts are a completely online solution, making it more convenient for both developers and homebuyers. Developers can open an online escrow account in minutes, and homebuyers can deposit funds into the escrow account using a variety of payment methods, including net banking, credit cards, and debit cards.<\/span><\/p>\n<p><b>Transparency<\/b><span style=\"font-weight: 400;\">: Digital escrow provide real-time updates on the status of the escrow account to both developers and homebuyers. This makes it easier for all parties to track the use of funds and to identify any potential problems.<\/span><\/p>\n<p><b>Security<\/b><span style=\"font-weight: 400;\">: Digital escrow accounts provide a secure platform that protects the funds deposited into the escrow account from unauthorized access. The platform uses the latest security technologies to ensure the safety of funds.<\/span><\/p>\n<p><b><a href=\"https:\/\/razorpay.com\/x\/escrow-accounts\/\">Learn more about<\/a> <a href=\"https:\/\/razorpay.com\/x\/escrow-accounts\/\">online escrow accounts<\/a><\/b><\/p>\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\t\t\t<div id=\"rank-math-rich-snippet-wrapper\" class=\"\">\n\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\n","protected":false},"excerpt":{"rendered":"<p>What is a RERA escrow account? A RERA escrow account is a specific type of account mandated by the Real Estate (Regulation and Development) Act, 2016 (RERA).\u00a0 A RERA escrow account is held by the developer of an upcoming construction project. This includes both residential and commercial projects. In India, real estate developers collect funding<\/p>\n","protected":false},"author":151156542,"featured_media":9227,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3437],"tags":[3712,3718,3727],"class_list":{"0":"post-9215","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-banking","8":"tag-escrow","9":"tag-escrow-account","10":"tag-rera-escrow"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/9215","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156542"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=9215"}],"version-history":[{"count":4,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/9215\/revisions"}],"predecessor-version":[{"id":16309,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/9215\/revisions\/16309"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/9227"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=9215"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=9215"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=9215"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}