Starting January 1, 2026, a significant update will be implemented concerning real estate law in Tamil Nadu. This update pertains to the enforcement of a three-bank-account structure for real estate projects. The change aims to strengthen monitoring of homebuyers’ funds and prevent misuse of money for unrelated projects. As per the latest circular, builders are required to establish three specific bank accounts within a single scheduled bank and branch for each real estate project. The details of these accounts must be furnished at the time of applying for project registration.
The three mandated accounts are:
A. Designated Collection Account (100%)
B. Designated Separate Account (70%)
C. Designated Transaction Account (30%)
Under this mechanism, all homebuyer payments are first deposited into the collection account (100%). From this account, the bank automatically transfers 70% of the amount to the separate account earmarked exclusively for land and construction expenses. Funds in the separate account (70%) can be accessed by the builder only upon submission of the required certificates issued by the architect, engineer, and chartered accountant, as prescribed under the applicable regulations. These certificates must also be uploaded to the regulatory authority’s online portal. The transaction account (30%) will hold funds contributed by the builder that do not originate from homebuyers. This account may be used for expenses such as refunds (limited to a maximum of 30% of the total refund amount), compensation, interest on refunds or compensation, marketing expenses, loan repayment including interest, administrative and overhead costs, and penalties, if any. Builders are required to redesign their project-level banking operations by opening all three mandated accounts in the same bank and branch, with an automated same-day sweep mechanism to eliminate manual control at the collection stage. All customer payment channels must be aligned to route funds only through the designated collection account; failure to do so will render the receipt non-compliant. In joint development projects, landowners must be contractually bound to the same three-account structure before any revenue share is released. Existing project loans must be disclosed and ring-fenced, ensuring that loan servicing occurs only through the permitted transaction account. Going forward, withdrawals and refunds must be planned strictly around certified construction milestones, as inter-project fund movement will no longer be legally or technologically permissible.
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