Escrow account must for transparency in real estate: ASSOCHAM

Escrow account must for transparency in real estate: ASSOCHAM
The appointment of real estate regulator shouldn`t be delayed and it be made mandatory for real estate developers to open up escrow account to ensure transparency in real estate transactions, says ASSOCHAM.

The ASSOCHAM for this purpose has brought out a whitepaper for revival of real estate activities.

In addition, the ASSOCHAM has also demanded that real estate developers and all concerned stakeholders including consumers completely adhere to credit policies and norms communicated by Reserve Bank of India (RBI) and National Housing Bank in real estate projects funding.

Sajjan Jindal, ASSOCHAM president, highlights the need for appointing a real estate regulator to ensure that consumer grievances which continue to rise with increasing instances of customers complaints against developers, development authorities, real estate agents and financial institutions are addressed without any further delay.

Jindal further pointed out that mistrust towards all key stakeholders continue to hamper real estate growth on two dimensions, one on accounts of limited consumer confidence, resulting delays purchase decisions and second limiting the international activities of industry hampering entry of any major international players.

On the issue of escrow account, the ASSOCHAM Paper maintains that in the developed countries like USA, UK, Dubai, Australia etc., it is a very common practice to hold such accounts for any real estate transactions. In India, this facility needs to be encouraged by asking project developers to open an escrow account where fund flow from any financial institution to develop the project is deposited and accordingly any payment related to the development of the said projects will only be disbursed from the said account.

Even the buyers of property is suppose to deposit the agreed property price with his developers in the escrow account so that money is kept safe and not transferred to the seller until final possession of property is handed over.

Such accounts are also maintained for honoring property charges, insurance liabilities and maintenance charges on regular basis. In view of ASSOCHAM, real estate developers should be asked to open up Escrow account so that complete transparency is maintained and real estate industry returns on rails because of demand factors.