RERA Escrow Account and the 70% Rule in Telangana: What Home Buyers and Builders Should Know (2026)

By Vijay Arjun V (B.Pharm, PGDM), authorised LIC HFL DSA since 2002 and DME (Direct Marketing Executive) appointed by LIC HFL. Written from the Real Estate (Regulation and Development) Act, 2016; checked 30 October 2026.

What the RERA 70% rule says

• 70% goes into a separate account. Of all the amounts a builder collects from buyers for a project, 70% must be deposited in a separate account with a scheduled bank.
• Only for that project. The money in that account can be used only to cover the land cost and construction cost of that project.
• Withdrawals follow progress. The builder can withdraw in proportion to the percentage of the project completed.
• Three certificates. Each withdrawal must be certified by an engineer, an architect and a chartered accountant in practice.
• Yearly audit. The builder’s accounts are audited by a chartered accountant every year, which checks that the project’s money was used for the project.

The rule applies to projects that must be registered under RERA. In Telangana, check a project’s registration with TG RERA before you book; see how to check a project on Telangana RERA.

Is the “RERA escrow account” the same thing?

Mostly, yes. The Act calls it a “separate account”, but builders, buyers and banks often call it the RERA account, the 70% account or the RERA escrow account. Separately, lenders who fund a builder usually ask for sale receipts to pass through an escrow account so that the project loan is repaid from sales: LIC HFL’s project loans to builders, for example, are repaid through an escrow account.

What it means for home buyers

• Your money stays with your project. At least 70% of what you pay, including your home loan disbursements, has to be kept for your project’s land and construction.
• Pay the right account. Pay by bank transfer or cheque to the builder’s project account, against a receipt, and never in cash. Check that the project name on the receipt matches your agreement.
• Loans follow construction. For an under-construction flat, your home loan is released in stages as the building progresses; see home loan for an under-construction flat.
• It lowers the risk; it doesn’t remove it. Also check the builder’s track record, the construction progress on site and whether a lender such as LIC HFL has approved the project; see the LIC HFL approved projects.

What it means for builders

• Plan cash flow around 30%. Only 30% of collections is free for other uses; the 70% follows the work done.
• Keep the paperwork ready. Each withdrawal needs the three certificates, and the yearly audit checks them.
• Project finance fits around it. A construction loan is released as work progresses and repaid from sales through an escrow account; see construction finance for builders and project loan and APF approval for builders.

Frequently asked questions

Can a builder use buyers’ money for another project?

Not the 70%. The money in the separate account can only be used for the land and construction cost of the project it was collected for.

Who certifies that a withdrawal is in line with the work done?

An engineer, an architect and a chartered accountant in practice must certify that the withdrawal is in proportion to the percentage of the project completed.

Does the 70% rule apply to plotted layouts?

It applies to real estate projects that must be registered under RERA, and RERA covers plotted developments as well as apartments. Check the project’s registration with TG RERA.

What can I do if I think a builder is misusing project money?

You can file a complaint with the Telangana Real Estate Regulatory Authority (TG RERA). Keep your agreement, payment receipts and any correspondence ready.

Sources: Real Estate (Regulation and Development) Act, 2016, Sections 3 and 4(2)(l)(D); lichousing.com, Builder & Developer Scheme (repayment through an escrow account), checked 30 October 2026.

Hyderabad Home Loans is run by Elite Financial Services, an authorised Direct Selling Agent (DSA) of LIC Housing Finance Ltd. We are not LIC HFL. Loans are sanctioned solely at LIC HFL’s discretion; rates and fees may change.