Realtor will be audited over claims of funds diversion

As per the law, a developer has to create a master bank account, a project account, also called Rera account, along with a third account.

After recommending a police case against three housing finance companies and a real estate developer for allegedly diverting funds collected from homebuyers, the Haryana Real Estate Regulatory Authority (H-Rera), on Thursday, decided to conduct a forensic audit of the accounts of four realty projects belonging to a single developer in Gurugram to find out how funds were diverted.

After recommending a police case against three housing finance companies and a real estate developer for allegedly diverting funds collected from homebuyers, the Haryana Real Estate Regulatory Authority decided to conduct a forensic audit of the accounts of four realty projects belonging to a single developer in Gurugram to find out how funds were diverted.

As per the law, a developer has to create a master bank account, a project account, also called Rera account, along with a third account. All the receivables from homebuyers are supposed to go to the master account and 70% of the amount collected from homebuyers has to be deposited to the Rera account. This money needs to be used only for construction and to meeting the land costs. This money can also be withdrawn only after completing certain formalities, such as obtaining a certificate from an architect, engineer or a chartered accountant giving the reason for its use. Thirty per cent of the money has to be kept in the third account.

K K Khandelwal, chairman, H-Rera, Gurugam, said, “We have to know what happened to the money so that this does not happen in the future. Financial institutions and banks have to realise that homebuyers’ money is sacrosanct and can be used only for developing the projects. The money does not belong to the promoter and he is only the custodian of it. He has no right to create a charge or a lien on that and if it is created, it is illegal. Furthermore, no authority has the right to withdraw the funds from this account.”

The H-Rera also observed that banks had withdrawn 100% of the receivables from the accounts after the promoters failed to return the loans.

“In no case, the money of homebuyers can be withdrawn as per the rules,” said Khandelwal.