Where Your Payments Go: The RERA 70 Percent Account Rule for Bengaluru Buyers

Picture a Bengaluru buyer three years into an under construction purchase. The payment plan has run like clockwork: booking amount, plinth, each slab, brickwork. Close to 60 percent of the flat's price has left the family's bank account. The tower, meanwhile, has stalled at the eighth floor, and the site has gone quiet. The first question a buyer in that position asks is where all that money went.

The Real Estate (Regulation and Development) Act, 2016 tries to answer that question before it arises. Section 4(2)(l)(D) requires a promoter to keep 70 percent of the money collected from buyers for a project in a separate bank account, and to draw on it only in step with construction. This guide reads the provision as published in the Gazette of India and explains what it does and does not protect, and what a Bengaluru buyer can check.

The short answer. Under section 4(2)(l)(D) of the RERA Act, a promoter registering a project must declare, on an affidavit, that 70 percent of the amounts realised from allottees for the project will be deposited in a separate account in a scheduled bank to cover the cost of construction and land, and used only for that purpose. Withdrawals must be in proportion to the percentage of completion, certified by an engineer, an architect and a chartered accountant in practice, and the accounts must be audited within six months after the end of every financial year. The trade-off: the rule ties most buyer money to the project, but it does not freeze the other 30 percent or guarantee completion, so it reduces risk rather than removing it.

What does section 4(2)(l)(D) require?

The Gazette of India copy of the RERA Act places the rule inside section 4, which governs the promoter's application for registration. Section 4(2)(l) requires a declaration, supported by an affidavit signed by the promoter or a person authorised by the promoter, covering several points. Clause (D) is the one on money.

It says the promoter declares that seventy per cent of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost, and shall be used only for that purpose.

Three provisos follow. The first says the promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. The second says withdrawals shall be made after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion. The third says the promoter shall get the accounts audited within six months after the end of every financial year by a chartered accountant in practice, and produce a statement of accounts, certified and signed by that chartered accountant, and that it shall be verified during the audit that the amounts collected for a particular project have been utilised for the project and that withdrawals complied with the proportion of completion.

How does the rule work in practice?

The rule has three moving parts: what goes in, what comes out, and who checks. The table below sets them side by side.

A simple example shows the logic. On a flat priced at Rs 1 crore, if a buyer has paid Rs 40 lakh so far, the declaration covers Rs 28 lakh of that, being 70 percent, by our arithmetic. That Rs 28 lakh is meant to sit in the separate account and come out only as the project's percentage of completion rises.

The rule applies to amounts realised for the project as a whole, not account by account for each buyer. So it is a project level safeguard. Your individual protection still rests on your agreement for sale and the rest of the Act.

What does the rule not protect?

It helps to be clear about the limits. The declaration covers 70 percent of the amounts realised. The Act does not, in this clause, restrict how the remaining 30 percent is used. Nor does the rule by itself guarantee that the project will be completed on time, or at all. A project can still stall if costs rise, approvals are delayed or the promoter runs into trouble.

The rule also relies on professionals certifying the percentage of completion. If those certificates are wrong, money can leave the account faster than the building rises. That is why the annual audit in the third proviso matters, and why a buyer should look at progress on site rather than relying only on paperwork.

Where things do go wrong, the Act provides consequences. Section 60 says that if a promoter provides false information or contravenes section 4, the promoter is liable to a penalty which may extend up to five per cent of the estimated cost of the project, as determined by the Authority. Our earlier explainer on the 70 percent account rule for Mumbai buyers covers the same provision from Maharashtra's side.

What else does the promoter declare on the same affidavit?

Clause (D) sits beside three other declarations in section 4(2)(l), and a Bengaluru buyer should read them together. Clause (A) is that the promoter has legal title to the land on which development is proposed, along with legally valid documents with authentication of such title if the land is owned by another person. Clause (B) is that the land is free from all encumbrances or, as the case may be, details of the encumbrances on it. Clause (C) is the time period within which the promoter undertakes to complete the project or phase.

Together, these four declarations are the promoter's sworn statement about title, encumbrances, timeline and money. They are filed when the project is registered. Before booking, check the project's registration on the Karnataka RERA portal and read what was declared. Our guide on verifying a Karnataka RERA project registration explains how to find it.

What happens to the money if a project's registration is revoked?

The separate account matters most when a project is in serious trouble. Section 7 of the Act allows the Authority to revoke a project's registration, on a complaint, on its own or on the recommendation of the competent authority, if it is satisfied that the promoter has defaulted in doing anything required under the Act, rules or regulations, violated the terms of its approvals, or engaged in unfair practices or fraudulent practices.

Section 8 then says that on lapse or revocation of registration, the Authority may consult the appropriate Government to take such action as it may deem fit, including the carrying out of the remaining development works by the competent authority or by the association of allottees, or in any other manner determined by the Authority. In case of revocation, the association of allottees has the first right of refusal for carrying out the remaining development works.

If that day comes, money that has stayed in the separate account, as the rule intends, is money that can still go towards finishing the building. That is the practical case for the rule, and the reason to keep asking where your payments sit.

What can a buyer check before and after booking?

The Act puts the duty on the promoter, but a buyer can still ask sensible questions and keep records that would matter if a dispute arose. Ask the promoter to confirm in writing the bank where the project's separate account is held. Compare each demand letter against the construction stage it claims, and visit the site to see whether the stage has been reached.

Keep every receipt and bank statement entry for payments to the promoter. If a project stalls, the question of how much was collected and what was spent will come up, and your own records are the starting point.

Use this checklist:

1. Check the project's registration and declarations on the Karnataka RERA portal.
2. Read the declarations on title, encumbrances and completion time.
3. Ask the promoter to confirm in writing where the separate account is held.
4. Match each demand letter to the construction stage it claims.
5. Visit the site before paying a stage linked instalment.
6. Keep every receipt and the matching bank statement entry.
7. Raise concerns in writing if demands run ahead of visible progress.

What do Bengaluru buyers ask about the 70 percent rule?

What is the 70 percent rule under RERA?

Section 4(2)(l)(D) of the RERA Act requires the promoter to declare that 70 percent of the amounts realised from allottees for a project will be deposited in a separate account in a scheduled bank, to cover the cost of construction and the land cost, and used only for that purpose.

When can a builder withdraw money from the separate account?

The Act says withdrawals must be in proportion to the percentage of completion of the project, and only after an engineer, an architect and a chartered accountant in practice certify that the withdrawal matches that proportion. The accounts must also be audited within six months after the end of every financial year.

Does the 70 percent rule guarantee my flat will be completed?

No. The rule keeps most buyer money tied to the project and requires certified, proportionate withdrawals, but it does not cover the remaining 30 percent or guarantee completion. Cost overruns, approval delays or a promoter's difficulties can still stall a project, so site visits and records still matter.

What happens if a builder breaks the 70 percent rule?

Section 60 of the RERA Act says a promoter who provides false information or contravenes section 4 is liable to a penalty which may extend up to five per cent of the estimated cost of the real estate project, as determined by the Authority. Buyers can also pursue remedies available to them under the Act.

Last updated 2026-10-18. PropNewz Team.