RERA and MahaRERA for Society Redevelopment: What Changed and What It Means for Members

The Real Estate (Regulation and Development) Act, 2016 — almost everyone just calls it RERA — is the central law that regulates builders and property projects across India, and in Maharashtra it is enforced by the Maharashtra Real Estate Regulatory Authority, known as MahaRERA. For a Mumbai housing society heading into redevelopment, the short answer is this: almost every real society redevelopment must be registered with MahaRERA before the builder advertises or sells a single new flat, and once a project is registered it gains a public web page, strict controls on how buyers' money is used, protected building plans, legally binding timelines, and a five-year warranty against structural defects. MahaRERA has also taken the position that the society itself can be treated as a promoter or co-promoter — so understanding these rules before you sign is genuinely worth your time.

What RERA and MahaRERA actually are

RERA was passed by Parliament in 2016 and came into force in 2017. It created a regulator in every state to license property projects, hold builder money in a controlled account, publish project details, and settle buyer complaints quickly. Maharashtra set up MahaRERA as its state authority, along with state rules that adapt the central law to local practice. Today MahaRERA is one of the most active real-estate regulators in the country, and its registrations, orders and circulars shape how redevelopment is actually done on the ground in Mumbai.

A word you will meet repeatedly is “promoter”. Under RERA a promoter is not only the builder — it is any person or body that causes a building to be constructed for sale. As you will see below, that definition matters a great deal for societies. Another key word is “allottee”, which simply means the person to whom a flat is allotted or sold — in a redevelopment, that includes both the existing members getting their new flats and the outside buyers of the free-sale flats.

From MOFA 1963 to RERA 2016 — what changed

Before RERA, the main law protecting flat buyers in Maharashtra was the Maharashtra Ownership Flats Act, 1963 (MOFA). MOFA placed real duties on promoters. Its Section 11 requires the promoter to convey clean title to the society within the agreed time, and where a builder drags its feet, Section 11(3) allows the society to obtain deemed conveyance — the law treats the transfer as done — through the Competent Authority, which in practice is the designated District Deputy Registrar of Co-operative Societies. Those protections were valuable, but MOFA had no dedicated regulator; enforcement mostly meant slow civil litigation.

RERA did not erase these older consumer protections. Instead it added a specialist regulator with real teeth and made project registration compulsory. The table below shows the shift in plain terms.

In short, RERA is now the primary framework for regulating promoters in a redevelopment, while useful MOFA remedies such as deemed conveyance remain available. MahaRERA is simply where most redevelopment disputes now go first.

Does your redevelopment need MahaRERA registration?

Not every project is covered. Section 3 of RERA makes registration compulsory before a promoter can advertise, market, book, or sell any flat. But Section 3(2) carves out small projects: registration is not required where the land proposed to be developed does not exceed 500 square metres, or where the number of apartments proposed does not exceed eight, counting all phases together.

The size threshold in practice

Notice that you fail the exemption if you cross either limit, not both. A typical Mumbai society redevelopment — where an old building is demolished and a taller tower with free-sale flats is built to fund the project — will almost always cross this line. So before you sign anything, ask which entity will register the project and confirm the registration number the moment it is issued. It helps to first estimate the true scale of your project using our FSI calculator and additional area calculator, so you can judge whether the plan you are being shown is realistic.

The 70% escrow rule — where your project money must sit

One of RERA's strongest safeguards is Section 4(2)(l)(D). It requires the promoter to keep 70% of the money collected from buyers in a separate scheduled-bank account — a dedicated project account, often called an escrow account — that can be used only for that project's land and construction costs. Money can be withdrawn only in proportion to how far construction has actually progressed, certified together by the project engineer, architect and a chartered accountant, and the account must be audited by a CA within six months of each financial year-end.

A worked example

Suppose the free-sale flats in your redevelopment are expected to bring in Rs 40 crore. Under Section 4(2)(l)(D), at least Rs 28 crore (70%) must stay in the separate project account and can be drawn only as the building genuinely rises, stage by stage. Only the remaining Rs 12 crore (30%) is freely available to the builder. This is what stops a developer from collecting your project's sale money and quietly diverting it to a different site — the classic cause of a stalled redevelopment.

For members, this rule is a practical test of seriousness. A committed developer will have no problem naming the project bank account and showing that money flows into it. If a builder resists, treat it as a warning sign and compare offers carefully using our offer comparison tool before committing.

No silent changes to your building — Section 14

Once plans are sanctioned and disclosed, Section 14 bars the promoter from changing the approved plans, layout, or specifications without the written consent of at least two-thirds of the allottees. This protects members from a builder quietly shrinking a garden, moving a lift, or altering the specification of the new flats after everyone has signed.

Section 14(3) then adds a five-year structural-defect warranty: if any structural defect, or a defect in workmanship, quality or provision of services, is brought to the promoter's notice within five years of handing over possession, the promoter must set it right at no extra cost, and generally within thirty days. This is the safety net that keeps a developer accountable well after the ribbon is cut. Our possession and corpus guide explains how to record defects properly at handover so this right is easy to enforce later.

If the builder delays — Section 18

Delay is the single biggest fear in redevelopment, because members are usually living on rent while the project runs. Section 18 squarely addresses it. If the promoter fails to hand over possession by the date committed to MahaRERA, the allottee can either withdraw and claim a full refund with interest, or choose to continue and claim interest for every month of delay until possession. Because the completion date is filed with the regulator rather than buried in a private agreement, this is a promise members can actually enforce.

If your project is already stuck, our guide on what to do about builder delay sets out the practical steps, including how a society can use MahaRERA to press for progress or compensation. Members may also have a parallel remedy for deficiency of service under the Consumer Protection Act, 2019, depending on the facts.

Can your housing society be treated as the “promoter”?

This is the most important — and least understood — part of RERA for societies. Because the Act defines a promoter widely, and because the society owns the land and appoints the developer, MahaRERA has held that a redeveloping society can itself be a promoter or co-promoter alongside the builder. In practice the society's name may appear on the registration, and the society is expected to act in good faith towards the new buyers — for example, by not obstructing lawful construction and by cooperating with the regulator.

Being a co-promoter does not make members personally liable for the builder's private defaults, but it does raise the stakes on getting the paperwork right. Our note on the red flags in a development agreement explains what to insist on, and the promoter obligations under MahaRERA page sets out the full duties that attach to whoever is registered. Remember too that key documents creating rights in the property — the development agreement and each member's permanent alternate accommodation agreement — must be registered, in line with Section 17 of the Registration Act, 1908.

Where RERA cover can be limited

There is an important nuance. RERA is built around the sale of flats to buyers. Where a redevelopment involves only rehabilitation — existing members simply receiving their new flats with no free-sale component being marketed to the public — the extent of RERA cover can be narrower, because there may be no “sale” that triggers full registration under Section 3. Some self-redevelopment situations, where the society builds for its own members without any public sale, fall into the same grey zone, especially if the project also sits under the Section 3(2) size exemption.

This does not mean such projects are unregulated. Other municipal approvals, the society's registered bye-laws, and general law still apply. But members should not assume that every arrangement automatically enjoys the full protection of a registered RERA project. If your society is weighing a builder-led route against doing it yourselves, our guide on self-redevelopment versus a builder walks through how RERA cover, control and risk differ between the two paths.

What this means for your society — a practical checklist

Translating the law into action, here is what a well-run committee should actually do:

• Confirm registration early. Establish whether your project crosses the Section 3(2) threshold, and if so, get the MahaRERA number in writing and verify it on the portal.
• Insist on the separate account. Name the Section 4(2)(l)(D) project bank account in the agreement and require the CA-certified withdrawal mechanism.
• Lock the plans. Attach the sanctioned plans and specifications to the agreement, so any later change needs the Section 14 two-thirds consent.
• Fix the timeline and penalty. Ensure the completion date filed with MahaRERA matches your agreement, and that Section 18 delay consequences are spelt out.
• Preserve the defect warranty. Record every snag at possession to keep the five-year Section 14(3) protection alive.
• Clarify the promoter role. Decide in advance how the society will be described on the registration and split liabilities accordingly.

These points also connect to the wider consent framework — a society cannot enter redevelopment at all without the majority approval discussed in our note on the 51% consent rule.

Tax touchpoints you should not overlook

RERA governs the construction, but two tax provisions quietly shape a redevelopment. Under Section 194-IA of the Income-tax Act, 1961, a buyer of a free-sale flat must deduct 1% TDS where the consideration or stamp-duty value is Rs 50 lakh or more, and deposit it using Form 26QB within thirty days of the month-end — explained further on our TDS on property purchase page. And under Section 45(5A), for an individual or HUF member in a registered redevelopment, capital gains are generally taxed only in the year the completion certificate is issued, with the consideration taken as the stamp-duty value of the member's new share plus any cash received — covered on our capital gains on redevelopment page. For your own numbers, always confirm the current position with a tax professional.

Where to find the official rule

The primary law is the Real Estate (Regulation and Development) Act, 2016, available on the Government of India and Government of Maharashtra portals. State-level rules, model formats, project registrations, orders and circulars are published on the official MahaRERA website maintained by the Government of Maharashtra. Always verify a project's registration number and status directly on the MahaRERA portal, and read the current version of any rule, since thresholds and procedures are updated from time to time. For tax matters such as Section 194-IA and Section 45(5A), confirm the current position on the Income-tax Department's official portal.

RERA has genuinely raised the standard of accountability in Mumbai redevelopment, but it works best when your society understands its own position early. If you would like a structured starting point tailored to your building, you can register your society with us for plain-language guidance.