RERA Escrow Account
A dedicated bank account where builders must deposit 70% of all project collections. Funds can only be withdrawn for construction and land costs after certification by an engineer, architect, and CA.
What is a RERA Escrow Account?
The RERA escrow account — formally called the "designated account" under Section 4(2)(l)(D) of RERA 2016 — is a project-specific bank account into which the developer must deposit at least 70% of all money collected from buyers including down payments, construction-linked instalments, and other charges. The remaining 30% can be used for other expenses including land payments.
The critical protection: funds in the escrow account can only be withdrawn to cover construction costs and land acquisition, and only after the withdrawal is certified by a registered civil engineer (confirming construction progress), a registered architect (confirming work matches sanctioned plans), and a practising chartered accountant (confirming financial appropriateness).
Why This Matters for Buyers
Before RERA, developers routinely diverted homebuyer money from Project A to fund land acquisition for Project B, or to service personal debt. This was the primary cause of mass project stalling across India between 2013 and 2018, leaving hundreds of thousands of buyers with neither homes nor refunds. The escrow mechanism is designed to prevent this diversion.
In theory, with 70% of your payment ring-fenced for construction, a project cannot run out of money for your building while the developer launches new ventures. In practice, enforcement varies — some states have poor audit mechanisms and developers find ways to under-deposit.
How to Check Escrow Compliance
- Visit the state RERA portal and locate the project by RERA number
- Open the quarterly progress reports (QPR)
- Look for the "Escrow Account Balance" or "Designated Account" section
- Compare cumulative amount collected from buyers against the escrow balance — it should be at least 70%
- Check whether withdrawals were accompanied by engineer/architect/CA certificates
Warning signs: escrow balance significantly below 70% of total collections, no CA certificates for large withdrawals, or escrow account showing zero despite active bookings.
How Brickplot Uses Escrow Data
Brickplot monitors escrow compliance as part of the Builder Financial Health axis in our scoring model. Projects where the disclosed escrow balance falls below 65% of cumulative collections receive a score penalty. Projects where the escrow account shows evidence of systematic under-reporting receive a hard cap. This data is sourced directly from state RERA portals and refreshed quarterly.
Related Terms
- RERA Registration — the framework that mandates the escrow account
- RERA Quarterly Update — filings where escrow data is disclosed
Related terms
Brickplot verifies rera escrow account disclosures on every reviewed project as part of the independent 11-axis score. No builder commissions. No editorial override.