Understanding the Escrow Process Timeline for the India RERA Agent Exam

Last updated: April 2026

For candidates preparing for the real estate licensing exams in India, understanding financial compliance is just as critical as mastering property laws. The concept of "escrow" in the Indian real estate sector is unique. Unlike the United States, where third-party title companies manage escrow accounts for almost every transaction, the Indian primary real estate market relies on the strict financial mandates set by the Real Estate (Regulation and Development) Act, 2016 (RERA). Mastering this timeline is a crucial component of the Complete India RERA Agent Registration Exam Exam Guide.

In this article, we will dissect the RERA "escrow" process—specifically the RERA-designated project bank account—its statutory timeline, withdrawal rules, and the compliance responsibilities of registered real estate agents.

The Concept of Escrow Under RERA (The 70% Rule)

Before RERA was enacted, one of the most significant issues in Indian real estate was the diversion of funds. Developers would collect money for Project A and use it to buy land for Project B, leading to massive delays and stalled constructions. To combat this, RERA introduced a statutory protective mechanism that functions similarly to an escrow account.

Under Section 4(2)(l)(D) of the RERA Act, 2016, a promoter must deposit at least 70% of the amounts realized for the real estate project from the allottees (buyers) into a separate bank account maintained in a scheduled bank. This account is commonly referred to in the industry as the "RERA Escrow Account" or "RERA Designated Account."

The funds in this account can only be used to cover the cost of construction and the land cost of that specific project. This ring-fencing of funds ensures that the project has sufficient capital to reach completion.

Standard RERA Escrow Process Timeline

For a real estate agent, guiding a buyer through the payment timeline is a primary duty. Payments must be deposited directly into the RERA-designated account in a phased manner linked to construction progress. Below is a visual representation of a standard construction-linked payment plan.

Standard Construction-Linked Payment Timeline (%)

1. The Booking Phase (0 - 10%)

The timeline begins when a buyer decides to purchase a unit. As per RERA guidelines, a promoter (and their authorized agents) cannot accept more than 10% of the property's cost as an advance payment or application fee without first entering into a registered Agreement for Sale. Agents must ensure that the booking cheque or electronic transfer is made strictly in favor of the project's RERA-designated account, never a personal or generic company account.

2. Agreement for Sale Execution

Once the initial 10% is paid, the Agreement for Sale is executed and registered. This legally binding document outlines the exact payment schedule, which must align with actual construction milestones rather than arbitrary dates. This protects the buyer's funds within the escrow-like structure until the developer actually delivers on construction promises.

3. Construction-Linked Demands

As the project progresses, the developer raises demand letters for further installments (e.g., completion of the plinth, casting of specific slabs, internal plastering). The buyer deposits these funds into the RERA account.

The Withdrawal Formula: Developers cannot simply withdraw these funds at will. Withdrawals from the RERA account must be proportionate to the percentage of completion of the project. The formula applied is:

Eligible Withdrawal Amount = Total Funds in RERA Account × Percentage of Project Completion

To authorize this withdrawal, the promoter must obtain three distinct certificates:

An Engineer's Certificate validating the physical construction progress.
An Architect's Certificate validating the completion of the specific phase.
A Chartered Accountant's (CA) Certificate validating the financial costs incurred.

4. Project Completion and Possession

The final 5% to 10% of the payment is typically demanded upon the issuance of the Occupancy Certificate (OC) or Completion Certificate (CC) and the handover of possession. Once the project is fully completed and handed over, and all financial obligations are met, the RERA account can be formally closed following a final audit.

Escrow Mechanisms in the Secondary Market

While RERA covers the primary market (new developments), the secondary (resale) market in India is increasingly adopting third-party escrow services. In a resale transaction, an escrow timeline looks different:

Agreement to Sell: Buyer and seller sign the agreement.
Escrow Funding: The buyer deposits the token amount and subsequent payments into a neutral third-party escrow account.
Due Diligence & Clearances: Title checks are completed, and No Objection Certificates (NOCs) are obtained from housing societies.
Registration & Disbursement: Upon successful registration of the sale deed at the sub-registrar's office, the escrow agent releases the funds to the seller.

Real Estate Agent Duties Regarding Escrow Accounts

Under RERA, real estate agents act as the crucial bridge between the promoter and the allottee. An agent's handling of the payment timeline is strictly scrutinized.

Agents must understand the difference between their role and the developer's role. For a deep dive into these operational differences, review our guide on India RERA Broker vs Agent Responsibilities. Key agent duties regarding the escrow process include:

Never Handling Cash: Agents must never accept large cash deposits. All transactions should be routed through banking channels directly into the RERA account.
Verifying RERA Details: Before facilitating a sale, the agent must verify that the project's RERA registration number and designated bank account details are prominently displayed in all marketing collateral.
Avoiding Conflict of Interest: Agents must act transparently. If an agent is representing both the buyer and the seller in a secondary market transaction utilizing an escrow service, they must adhere to strict disclosure rules. Learn more in our article on India RERA Dual Agency Risks and Rules.

Exam Preparation Strategy

Questions regarding the 70% rule, the 10% maximum booking amount, and the certification required for withdrawal frequently appear on the India RERA Agent Registration Exam. You will be expected to know exact percentages and the statutory authorities involved.

To ensure you allocate enough time to memorize these regulatory timelines, we highly recommend using a structured study plan. Check out our India RERA Study Schedule Planner to organize your preparation effectively.

Frequently Asked Questions (FAQs)

1. What percentage of project funds must be deposited into the RERA designated account?

Under Section 4(2)(l)(D) of the RERA Act, 2016, a minimum of 70% of the amounts realized for the real estate project from the allottees must be deposited into a separate account maintained in a scheduled bank to cover land and construction costs.

2. Can a developer withdraw 100% of the funds from the RERA account at any time?

No. Funds can only be withdrawn in proportion to the percentage of project completion. Furthermore, the withdrawal must be certified by an engineer, an architect, and a chartered accountant in practice.

3. What is the maximum booking amount an agent can ask a buyer to deposit before signing an agreement?

Under RERA, a promoter or real estate agent cannot accept more than 10% of the cost of the apartment, plot, or building as an advance payment or application fee without first entering into a written and registered Agreement for Sale.

4. Are real estate agents allowed to accept client funds into their personal bank accounts?

Absolutely not. Real estate agents must ensure that all payments made by the buyer are directed to the promoter's RERA-designated project bank account. Routing client funds through an agent's personal account is a severe violation of RERA regulations and fiduciary duties.

5. Is the RERA designated account exactly the same as a traditional third-party escrow account?

While it serves a similar protective purpose, it is technically a "separate project bank account" rather than a traditional third-party escrow. The developer owns the account but is legally restricted by RERA rules and bank audits from withdrawing funds freely, ensuring the money is exclusively used for project completion.