Status as on- 27/03/2020
In a recent development, Haryana Real Estate Regulatory Authority (Hereinafter referred as HRERA) has taken an extra step to protect the interest of homebuyers from the defaulting promoters and builders. The HRERA issued directions that promoters should get their accounts audited within six months after the end of every financial year.
Additionally, they have to show the statement of accounts that must be duly verified by a chartered accountant so that it is ensured that collection, as well as expenditure of funds, is done as per the rules prescribed by the RERA Act.
The objective of RERA establishment is not only to protect buyers and help investment in the Real Estate Sector but also to enhance transparency and accountability in real estate and transactions. Therefore, to accomplish this objective, the HRERA took this move to assure that amounts collected from the homebuyers for a housing project must be utilized for the construction of the same project and withdrawal is in compliance with the proportion to the percentage of the completion of the project.
The promoters and builders can only use 70% money for the construction, but the outstanding 30% can also be only used for accompanying activities like paying bank loans, advance for construction and related activities alone.
According to the guidelines, the auditor will also have to check that the amounts have been withdrawn by a promoter only after it is certified by an engineer, architect, and a chartered accountant and that the withdrawal is in proportion to the percentage of the project completed till date.
The HRERA laid mandatory requirements to submit the audited statement of accounts to the authority by September 30. If the promoter or builder doesn’t comply with the rule and does not furnish all such account details then the same will be considered a violation at the end of developers and a penalty may be levied upon them.
At present, there are numerous projects, wherein promoters/builders collected money for one project but did not spend the same for that particular project rather used it to acquire land or complete other commercial projects that left many buyers in the trouble. However, the major change in HRERA rules will enhance the transparency and ultimately which in turn will benefit the homebuyers to get timely delivery of their booked house or properties.
Disclaimer- The above article is based on the personal interpretation of related laws and judicial pronouncements, which may differ from person to person. The readers are expected to take expert advice before replying to the above article. The author can be reached at firstname.lastname@example.org