Last reviewed: 29 September 2026. Every rupee an allottee pays into a registered project is, by law, split the moment it lands: seventy paise of every rupee is locked into a separate escrow account, and getting it out again needs three signatures — an engineer's, an architect's, and a chartered accountant's. For most promoters, the CA's signature is the one that actually decides whether the withdrawal request goes through. For most CAs, it is also the one certificate on their letterhead that carries a penalty clause attached to somebody else's project.
Why the 70% escrow rule exists
Before RERA, a promoter could collect money for Project A and use it to plug a cash shortfall on Project B — the classic reason possession dates slipped for years with no way for an allottee to trace where their money had gone. Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016 closes that gap at the source: seventy percent of the amount realised from allottees for a project has to be deposited in a separate account maintained with a scheduled bank, and can be used only to cover the cost of construction and the land cost of that specific project. The remaining thirty percent is unrestricted and can be used for the promoter's other business needs, including other projects. This deposit requirement sits alongside, and is verified at, the same stage as MahaRERA project registration — the escrow account has to be opened and declared before a project can be marketed at all.
The intent is simple — ring-fence the money against diversion. The mechanics of proving that the money is actually being used for the stated purpose is where the engineer, the architect and the CA come in.
Form 3: the withdrawal certificate, and who certifies what
Money cannot simply be moved out of the escrow account on the promoter's say-so. The Act allows withdrawal only "in proportion to the percentage of completion of the project", and that proportion has to be certified before the bank releases funds. Maharashtra's rules bundle this into what practitioners commonly refer to as Form 3, built from three separate professional certificates:
| Certifying professional | What they certify |
|---|---|
| Engineer | Physical progress of construction at site matches the stage being claimed |
| Architect | Construction on site is in accordance with the sanctioned plans and specifications |
| Chartered Accountant (in practice) | Total cost incurred on construction and land to date, the proportion this bears to the total estimated project cost, and the resulting escrow balance and eligible withdrawal |
The CA issuing this certificate must hold a valid Certificate of Practice and must not be an employee of the promoter or the promoter group — the certification is meant to be an independent check, not an internal sign-off restated on a CA's letterhead. In practice, a fresh certificate is obtained each time the promoter wants to draw funds; many promoters align this with their quarterly progress reporting to MahaRERA, but the exact periodicity should always be confirmed against the authority's current circulars rather than assumed from last year's practice.
A worked example — and a caution about the formula
Say a project has an estimated total cost of ₹20 crore (₹6 crore land, ₹14 crore construction), and the promoter has collected ₹8 crore from allottees so far.
| Item | Amount / status |
|---|---|
| Collections from allottees to date | ₹8.00 crore |
| Mandatory escrow deposit (70%) | ₹5.60 crore |
| Freely usable (30%) | ₹2.40 crore |
| Engineer/architect-certified physical completion | 40% |
| CA-certified cost incurred (₹9 crore of ₹20 crore estimate) | 45% |
| Withdrawal this stage, capped at the lower percentage (40% of ₹5.60 crore) | ₹2.24 crore |
This illustrates the principle, not a fixed formula — practitioners across states have flagged genuine ambiguity in how "proportion to percentage of completion" should be read where physical progress and cost-incurred percentages diverge, and whether project financing costs and interest belong in the cost base at all. Before certifying, agree the calculation method in writing with the promoter and, where the point is material, seek the state authority's clarification rather than defaulting to a convenient reading.
Form 5: the annual reconciliation, not a duplicate of Form 3
Form 3 certificates cover individual withdrawals through the year. Form 5 is different — it is the CA-certified annual statement of accounts for the project, reconciling total collections, total withdrawals from the escrow account, and the closing balance for the financial year, due within six months of the year-end. Treat it as a control, not a formality: a Form 5 that does not tie back to the Form 3 certificates issued during the year is itself a red flag, and MahaRERA can — and does — ask for that reconciliation. It sits alongside the promoter's other periodic filings — see our note on quarterly progress reports and Form 5 timelines for how the two obligations run together through the year.
Before signing: a working checklist for the CA
- Bank statement of the designated RERA escrow account reconciled line-by-line to the books, not just to the closing balance.
- Collection register agreed to sold units, payment-plan stages and receipts actually banked.
- Engineer's site-completion certificate on file — dated, signed, and for the same stage being claimed.
- Architect's certificate confirming the construction matches the sanctioned plan, not a revised or unsanctioned layout.
- Cost-incurred figures traced to vouchers and contractor bills, not management's internal cost sheet.
- No transfers out of the escrow account to a different project of the same promoter group.
- UDIN generated for the certificate and quoted on it, with membership details.
- Working papers retained — they are what the annual Form 5 reconciliation, and any later scrutiny, will be tested against.
Common mistakes we see
The recurring ones are avoidable: certifying off the promoter's cost sheet without vouching to source documents; treating GST and finance cost inconsistently between certificates issued in different quarters; missing or mismatched UDIN; and an annual Form 5 prepared as a paperwork exercise that nobody has cross-checked against the Form 3 certificates actually issued that year. Each of these turns a routine certification into a documented gap the moment the project comes under any scrutiny — an allottee complaint, a bank due-diligence, or a MahaRERA audit.
What is actually at stake
Two exposures run in parallel, and they are not the same thing. For the promoter, contravening the escrow and withdrawal provisions can attract action under Section 61 of the Act — a penalty of up to 5% of the estimated cost of the project — and, in a serious or repeated case, action affecting the project's registration itself. For the certifying CA, a certificate issued without adequate verification is a professional conduct matter under the Chartered Accountants Act, 1949, independent of whatever happens to the promoter. Neither outcome is automatic — both depend on the specific facts and the view the authority or the Institute takes — but the structure of the certificate exists precisely so that the CA's name carries real weight, and real exposure, on the document. The escrow certificate is a separate obligation from a promoter's exposure on delayed possession under Section 18 — a clean Form 3/Form 5 track record does not, by itself, answer an allottee's delay claim.
Frequently asked questions
Is Form 3 the same everywhere in India, or is it Maharashtra-specific?
The RERA Act itself mandates the three-signature certificate nationally under Section 4(2)(l)(D). The exact form number and layout — Form 3, built from engineer, architect and CA annexures — is prescribed by each state's rules; Maharashtra follows the Maharashtra RERA Rules, 2017. A promoter or CA working across states should check the local authority's prescribed format rather than assuming MahaRERA's applies elsewhere.
How often must Form 3 be filed for an ongoing project?
It is tied to withdrawals, not to a fixed calendar: a fresh engineer-architect-CA certificate is required each time the promoter wants to draw funds from the 70% escrow account, in proportion to the project's percentage of completion. Many promoters align this with quarterly progress reporting, but the current periodicity should always be confirmed against MahaRERA's live circulars.
What is Form 5, and how is it different from Form 3?
Form 5 is the CA-certified annual statement of accounts for the project — it reconciles total collections, total withdrawals from the escrow account and the closing balance for the financial year, and is due within six months of the year-end. Form 3 certifies each individual withdrawal through the year; Form 5 is the yearly reconciliation of the same account.
Can any practising CA sign the Form 3 or Form 5 certificate?
The CA must hold a valid Certificate of Practice and must not be an employee of the promoter or the promoter group — the certification is meant to be an independent check. The certificate should also carry the CA's UDIN and membership details, and firms should follow MahaRERA's current portal process for any registration or empanelment it requires.
What happens if the CA certifies incorrectly?
Two separate exposures run in parallel. The promoter risks action under Section 61 of the RERA Act — a penalty of up to 5% of the estimated project cost — and, in a serious case, action affecting the project's registration. The signing CA separately risks disciplinary proceedings under the Chartered Accountants Act, 1949, for a certificate issued without adequate verification. Neither outcome is automatic; both depend on the specific facts.
Does the 70% escrow rule apply to every real estate project?
It applies to projects registered under RERA — broadly, projects above the area or unit thresholds notified by the state. Plotted developments and any category specifically exempted by a state notification can have different treatment, so registration status and applicable carve-outs should be checked before assuming the 70% rule applies.
Who actually operates the escrow account, and can the promoter access it freely?
The account is maintained with a scheduled bank in the promoter's name, but the entire structure — the 70% deposit requirement and the certified-withdrawal mechanism — exists precisely so the promoter cannot access land and construction cost money freely or move it to another project. Withdrawals are permitted only against certified, proportionate completion.
We handle MahaRERA Form 3 and Form 5 certifications, and the underlying project accounting, for promoters and developers across Maharashtra.
RERA compliance services Project bookkeeping & accounting Talk to usThis article explains the general framework under the Real Estate (Regulation and Development) Act, 2016 and the Maharashtra RERA Rules, 2017 as commonly applied by MahaRERA, for general awareness. Form numbers, formats and periodicity are subject to the authority's current circulars and can vary for projects registered before recent amendments; this is not a substitute for project-specific advice. For a live certification, always work from the latest MahaRERA-notified formats and your engagement letter's scope. CA Somesh Chandak & Associates, FRN 158694W.