The RERA 70% Escrow Rule and How It Protects You
Before RERA, money you paid for a flat in one project could fund a plot the developer was buying somewhere else. When that second project stalled, your building stalled with it, and you had no way of knowing until it happened. The 70 per cent rule exists to break that chain. It is the single most useful piece of the Act for an under-construction buyer to understand — and it is also more limited than most people assume.
What is the 70 per cent rule in RERA?
It requires a developer to deposit seventy per cent of the money collected from buyers of a registered project into a separate account maintained for that project, to be used only for its construction and land cost.
Withdrawals from that account are meant to be tied to construction progress and certified by the project's engineer, architect and chartered accountant, rather than being available on demand.
The intent is simple: keep the money raised from one project inside that project. It is the mechanism that turns a promise about your building into something with a paper trail behind it.
What does the escrow rule actually protect you from?
It protects you from cross-funding — your money being diverted to a different project, a land purchase, or the developer's other business — which was historically one of the main reasons projects stalled midway.
It also creates a documented record. Because withdrawals are tied to certified progress, there is a trail that a regulator or a court can follow if things go wrong, which materially changes a buyer's position in a dispute.
What it does not do is guarantee delivery. A developer can comply with the escrow requirement and still be defeated by cost inflation, approval delays or plain incompetence. Escrow reduces one specific failure mode; it does not remove execution risk.
How can a buyer check that a project is complying?
Start at the MahaRERA portal with the project's registration number, then read the quarterly progress updates the developer is required to file against what you can see on site.
- Confirm the registration number applies to the specific tower or phase you are buying, since large projects register phases separately.
- Read the quarterly updates for construction progress, and compare the stated stage with what you actually observe on a site visit.
- Check the registered completion date on the filing against the date the sales team is quoting you.
- Look for complaints and orders against the promoter on the portal — a pattern matters more than a single entry.
- Ask for the project account details to be named in your agreement and pay into that account, not into a different one.
- The RERA in Navi Mumbai guide walks through the portal checks in order, and RERA-verified inventory is a reasonable place to start a shortlist.
Why should this change how you pay a developer?
Because the protection only works if your money goes into the registered project account. Paying into a different account, or paying a large amount in cash, puts your money outside the mechanism designed to protect it.
It should also make you sceptical of pre-launch offers on unregistered projects. A discount for booking before registration is, in practice, a discount for giving up the Act's protections at exactly the stage when you most need them.
Insist on a registered agreement and a receipt for every payment. Our step-by-step buying guide sets out where each payment belongs in the sequence, and the slab-wise payment guide explains how construction-linked instalments should track progress.
