Tamil Nadu RERA Mandates Three Bank Accounts Per Real Estate Project To Track Homebuyer Funds

To ensure that money collected from homebuyers for one real estate project is not diverted to another, the Tamil Nadu Real Estate Regulatory Authority (TN RERA) has issued an order requiring promoters/builders to operate three separate and designated bank accounts for every registered project.

The order, issued on December 12, 2025, will apply to all project registration and resubmission applications received from January 1, 2026 onwards.The Authority said the new framework is meant to bring the entire flow of buyer funds under regulatory oversight, starting from the point of collection.

TNRERA noted that while the law already requires promoters to set aside 70 percent of the money received from allottees for land and construction costs, promoters usually collect payments in ordinary bank accounts before transferring funds later. This, the Authority said, leaves the initial collections outside its monitoring system and creates room for funds to be used across projects.

“There is no mechanism to monitor the collection account.Further, in some cases, promoter maintains a separate collection account for each project whereas in some cases, the collection account may serve multiple projects."

To address this, the order mandates that every real estate project must have three designated bank accounts, all opened in the same scheduled bank and branch.

All payments from homebuyers must first be credited to a collection account. No withdrawals are permitted from this account in any form, and the money can move out only through an automatic sweep mechanism.

Seventy percent of the amount collected must be transferred on the same day to a separate RERA account. Withdrawals from this account are allowed only after certificates are submitted by the architect, engineer and chartered accountant.

The funds can be used only for land costs, construction or development work, and refund of principal to buyers, capped at 70 percent of the refund amount.The remaining 30 percent of the collections will be transferred to a transaction account.

This account may also receive promoter contributions and project loans, and can be used for project-related expenses such as marketing, administrative costs, loan repayments, compensation, interest payments, penalties imposed by the Authority, and refunds up to 30 percent.

For projects developed under joint development agreements, the Authority has directed that two complete sets of these three accounts must be opened, one for the landowner and one for the promoter, regardless of the number of landowners or promoters involved.

The orders also tightens disclosure requirements for project loans.

Promoters will now have to give the authority full details of all project loans, whether secured or unsecured. This includes information on the lender, the amount sanctioned and disbursed, outstanding dues, mortgage details, and a chartered accountant's certification that the loan has been used only for the project.

Any loan taken after a project is registered must be disclosed immediately, and all repayments must be made only through the designated transaction account.

Promoters will also need prior written approval from TNRERA for any change in the project's designated bank accounts.

After completion of the project, promoters may withdraw the remaining balances from all three accounts only after the Authority issues a completion report and communicates the same to the bank.

Promoters are also permitted to place funds from the 70 percent separate account in fixed deposits, subject to strict conditions. Such deposits must be no-lien, cannot be used to raise loans or create charges, and must return only to the same separate account on maturity or early closure.