This directive follows the regulator’s observation of widespread non-compliance by promoters, raising serious concerns about transparency and accountability within the real estate sector.

During a recent review meeting, HRera highlighted that numerous promoters had failed to submit these mandatory reports, despite being issued repeated reminders.

Consequently, the authority has begun issuing show-cause notices to defaulting promoters. These notices stipulate a strict deadline for compliance and warn that failure to adhere will result in substantial financial penalties.

In its official order, HRera stressed that failing to file annual reports constitutes a significant breach of the Real Estate (Regulation and Development) Act, 2016 (RERA Act).

Promoters who do not comply within 30 days of receiving the notice will face an initial penalty of ₹5 lakh. Additionally, for non-compliance extending beyond 60 days, an incremental penalty of ₹10,000 per day will be imposed.

The submission of annual reports is a vital obligation under Section 4(2)(l)(d) of the RERA Act. Promoters are required to ensure their project accounts are audited by a certified chartered accountant within six months after the conclusion of each financial year.

This audit must confirm that funds collected for a project are used solely for its intended purpose and that withdrawals correspond accurately to the project’s progress.

HRera has further cautioned that any promoter who provides false information or violates the provisions of Section 4 may face penalties of up to 5% of the estimated project cost, as outlined in Section 60 of the Act.

This measure underscores the critical importance of upholding financial integrity in real estate projects.
The regulator has reiterated that these steps are designed to enhance transparency and accountability within the industry.

Promoters are strongly urged to comply with these statutory requirements promptly to avoid facing severe financial and legal consequences.

HRera’s strict stance reflects its dedication to protecting homebuyers’ interests and ensuring that project funds are managed responsibly. Through these actions, the authority aims to reinforce trust and ethical practices in the real estate sector.

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The project’s financial records will be examined by an authorized panel auditor if there are significant inconsistencies or complaints. The promoter is responsible for covering the cost of this audit.

Regarding the modification of the project account, the authority also issued directives. If the authority is satisfied with the justification provided by the promoter via an online application on the authority portal, it will only allow the promoter to modify the project account under extraordinary circumstances.

The bank accounts of the project are extremely important to it, and the Authority has established strict criteria for these accounts to safeguard consumer interests and guarantee the promoter’s accountability,” stated Sanjay Bhoosreddy, chairman of UP-RERA.

The authority has established procedures for all such actions, but it is aware that occasionally changes to the accounts may be required and that there may even be circumstances when a forensic audit of the accounts is required.”

Changes may be taken into consideration if the project’s bank account was not disclosed by the promoter when the project was registered with the authority if the bank account is shared by the promoter for multiple projects, if the bank account is a general collection account rather than a project bank as specified in these instructions, if the bank account is with a bank outside the project’s district, and if the bank has been entirely taken over by a new banking institution or if the promoter has obtained new project financing for the duration of the project.

After the project is completed, the promoter may apply online for permission to close the project account.

This request must be accompanied by a copy of the completion certificate from the appropriate authority, the architect’s certificate in Form RA-5, the final REG Form-3 duly certified by the chartered accountant, and an affidavit from the promoter attesting to having paid all outgoings by section 11(4)(g) of RERA.

After reviewing the application, the authority may agree to allow the promoter to close the project’s separate account and withdraw the remaining funds.

Nonetheless, at the time of the application for the closure of the project’s separate account, the promoter will not be released from any obligations that it has not discharged or informed to the relevant authorities.

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