Site icon Saptakala Real Estate Law Journal

TNRERA Mandates 20% Additional Deposit for Project Registration Extensions to Protect Homebuyers

TNRERA Tamil

The Tamil Nadu Real Estate Regulatory Authority (TNRERA) has introduced a new compliance measure to strengthen homebuyer protection and curb delays in real estate projects. Developers seeking project registration extensions exceeding one year must now deposit an additional 20% of the total collections from allottees into the designated project escrow account.

This move, issued under Section 7(3) of the Real Estate (Regulation and Development) Act, 2016, empowers the authority to impose extra conditions in the interest of homebuyers, rather than immediately canceling project registrations in cases of prolonged delays.

Objective Behind the Rule

TNRERA officials stated that the measure is designed to:

Under RERA, developers must already deposit 70% of homebuyer collections into an escrow account for construction and land costs. With the new rule, an extra 20% deposit is required if the project seeks an extension beyond one year, effectively increasing financial accountability.

Builders Raise Concerns

Small and mid-sized developers expressed cash flow concerns over the new directive:

Balancing Accountability and Flexibility

While developers seek relief for genuine delays, TNRERA’s initiative aligns with its mission to protect homebuyers and reduce the risk of stalled projects. By increasing financial discipline, the authority aims to minimize the risk of diversion of buyer funds, which is a common cause of delayed possession in the sector.

Industry experts note that the directive encourages timely completion of projects and ensures funds are available to meet construction milestones, ultimately boosting trust in Tamil Nadu’s real estate market.

Exit mobile version