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. RERA also fixes one definition that decides what every member physically receives — carpet area, in Section 2(k) — and it defines “promoter” widely enough that your own society can end up named as a co-promoter.

Source: Real Estate (Regulation and Development) Act, 2016 — sections as cited.

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(1) of RERA makes registration compulsory before a promoter can advertise, market, book, sell, offer for sale, or invite anyone to buy a flat. Section 3(2) then carves out three exemptions, and a society should test its project against all three:

• Section 3(2)(a) — the land proposed to be developed does not exceed 500 square metres.
• Section 3(2)(a), second limb — the number of apartments proposed to be developed does not exceed eight, counting all phases together.
• Section 3(2)(c) — the work is for renovation, repair or re-development that does not involve marketing, advertising, selling or new allotment of any apartment. This is the clause that matters for a pure rehabilitation scheme with no free-sale flats.

The size threshold in practice

Read the size exemption strictly. Treat it as available only if the plot is 500 sq m or less and the total apartments across every phase are eight or fewer. If your project crosses either limit, register. 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. Estimate the true scale first with our FSI calculator and additional area calculator, so you know how many flats the scheme really produces before you accept anyone's assurance that registration is not needed.

The four-question registration test

Run these four questions at your general body meeting and minute the answers. They decide the point.

Source: Real Estate (Regulation and Development) Act, 2016, Section 3.

If a developer tells your society that registration is not needed, ask which of those clauses he is relying on and get the answer on his letterhead. The consequence of getting it wrong falls on him: Section 59(1) provides a penalty of up to 10% of the estimated cost of the project as determined by the Authority for contravening Section 3, and under Section 59(2) continued contravention can attract imprisonment of up to three years or a further penalty of up to 10% of the estimated cost, or both. A member or the society files that complaint with MahaRERA under Section 31; an appeal against the Authority's order goes to the Appellate Tribunal within sixty days under Section 44(2).

Carpet area — the Section 2(k) definition that decides what you actually get

This is the single most useful line of RERA for a society member, and it is the one most often quoted wrongly. Section 2(k) defines carpet area as the net usable floor area of an apartment, excluding four things and including one:

Source: Real Estate (Regulation and Development) Act, 2016, Section 2(k).

Note the inclusion carefully. Anyone who tells your committee that carpet area means “the floor area excluding all walls” is understating every member's entitlement, because the internal partition walls between your own rooms are counted in. Only the four listed items come out.

That number, and only that number, is what belongs in your agreement. “Built-up”, “super built-up” and “saleable” area are not defined anywhere in RERA. An offer of “700 sq ft” means nothing until the builder says which measure it is. Use our carpet vs built-up converter to test any figure a developer quotes you, and our offer comparison tool to line up two offers on the same measure.

Three checkable obligations on carpet area

• Get the figure in square metres, in the agreement. Insist each member's permanent alternate accommodation agreement states the carpet area of the new flat in sq m, with the words “carpet area as defined in Section 2(k) of the Real Estate (Regulation and Development) Act, 2016”. A figure in sq ft alone, or in “saleable” area, is not enforceable in the same way.
• Get the balcony and terrace listed separately. They are excluded from carpet area but you still receive them — so the agreement should show carpet area, balcony area and terrace area as three separate figures, not one merged number.
• Cross-check against the MahaRERA project page. The registered project page carries the carpet area of each apartment type. If the figure in your agreement is smaller than the figure filed with the regulator, you have found a problem before possession rather than after.

The trap: your redevelopment has two carpet areas, and they are not the same

This is the part that causes the most argument at handover, and almost no committee is told about it in advance.

The general definition in DCPR 2034, Regulation 2(22) is aligned with RERA — carpet area “would have the same meaning as defined in Real Estate (Regulation and Development) Act, 2016”. But the individual scheme regulations that decide how much area the scheme owes you carry their own definition. Under Regulation 33(7) for cessed buildings and Regulation 33(5) for MHADA schemes, the sanctioned text defines rehabilitation carpet area as the net usable floor area within a tenement excluding that covered by the walls or any other area specifically exempted from FSI computation, but including the area of the balcony if it is allowed free of FSI under the then-prevailing regulation.

Read those two definitions side by side and they move in opposite directions on both items:

Sources: RERA 2016, Section 2(k); DCPR 2034 (sanctioned), Regulation 2(22), and the rehabilitation carpet-area definitions in Regulations 33(5) and 33(7).

So the concrete step is this. When a developer hands you an area statement, ask one written question: “Is this figure RERA carpet area under Section 2(k), or rehabilitation carpet area as defined in the scheme regulation?” Then require the agreement to state the RERA Section 2(k) figure for the flat you will actually own, separately from whatever figure was used to compute entitlement. Two numbers, both on paper, each labelled. A society that does this will not be arguing about square feet on possession day.

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, and it is easy to check. Ask for three things and note whether you get them:

• The bank, the branch and the account number of the separate project account, written into the development agreement — not just a promise that one exists.
• The three withdrawal certificates. Money leaves that account only against certificates from the project architect, the project engineer and a chartered accountant — issued in MahaRERA practice as Forms 1, 2 and 3. Ask for the latest set at every general body meeting; they tell you the true percentage of completion, not the marketing version.
• The annual audit. Section 4(2)(l)(D) requires the accounts to be audited by a chartered accountant within six months of the end of each financial year, with a certificate that the amounts collected were used for that project. If no audit certificate exists for the last completed year, that is a fact worth minuting.

If a builder resists any of the three, 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.

The rate is not left to negotiation either. Rule 18 of the Maharashtra RERA Rules, 2017 fixes the interest payable by the promoter to the allottee — and by the allottee to the promoter — at the State Bank of India's highest Marginal Cost of Lending Rate plus 2%. That is a computable figure: read the current SBI highest MCLR on the day, add two percentage points, and apply it to the amount paid for every month of delay. Note that the same rate runs both ways, so a member who is late paying is charged on the identical basis.

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.

What your society can demand, clause by clause

RERA does not only restrain the builder — Section 19 gives the allottee a list of positive rights, and Section 11 lists the promoter's positive duties. Together they are the most useful page of the Act for a committee, because every item is checkable. Print this table and take it into your next meeting with the developer.

Source: Real Estate (Regulation and Development) Act, 2016, sections as cited; Maharashtra RERA Rules, 2017, Rule 18.

Two duties run the other way, and a committee should say so plainly to members. Section 19(6) and 19(7) require the allottee to make the payments due under the agreement, with interest on delay at the same Rule 18 rate. And Section 19(10) requires the allottee to take physical possession within two months of the occupancy certificate being issued. A member who refuses possession to press an unrelated grievance is on weak ground.

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

This is the most important — and least understood — part of RERA for societies, and it turns on the wording of the statute rather than on anyone's opinion. Section 2(zk) defines a promoter to include a person who constructs or causes to be constructed an independent building or apartments for sale. The part societies miss is the Explanation to Section 2(zk): where the person who constructs the building and the person who sells the apartments are different persons, both of them are deemed to be promoters and are jointly liable for the functions and responsibilities under the Act. A society that owns the land, appoints a developer and takes a share of the outcome can therefore be named as a co-promoter on the registration.

The concrete step is simple. Before the registration application is filed, ask the developer in writing how the society will be described on it — promoter, co-promoter, or landowner only — and get his answer before the general body approves the development agreement. Then record the same description in the agreement, together with the split of duties and liabilities. This is a decision the society can influence for about a week; after filing, it is a fact your members live with for the whole project.

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. This is Section 3(2)(c): no registration is required for renovation, repair or re-development that does not involve marketing, advertising, selling or new allotment of any apartment. Some self-redevelopment situations, where the society builds only for its own members without any public sale, fall squarely inside that clause, and more so if the project also sits under the Section 3(2)(a) size limits.

Test it against the words, because the clause is narrower than it looks. The moment a single flat is offered to an outside buyer — to fund the project, to absorb surplus FSI, or by way of a “sale component” in the development agreement — there is marketing and new allotment, and Section 3(2)(c) no longer answers. If your society is relying on this exemption, put the reliance in the minutes along with the reason, so the position is documented if the scheme later changes shape.

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. Run the four-question test above against Sections 3(1) and 3(2), minute the answers, and if registration is required get the MahaRERA number in writing and verify it on the portal.
• Pin the carpet area. Write each member's new carpet area in square metres into the agreement, expressly as carpet area under Section 2(k), with balcony and terrace areas shown separately, and check it against the figure filed on the MahaRERA project page.
• Insist on the separate account. Name the Section 4(2)(l)(D) project bank account — bank, branch, account number — in the agreement, and require the architect, engineer and CA certificates for every withdrawal plus the audit within six months of each financial year-end.
• Lock the plans. Attach the sanctioned plans and specifications to the agreement, so any later change needs the Section 14(2) two-thirds consent.
• Fix the timeline and the interest. Ensure the completion date filed with MahaRERA matches your agreement, and that Section 18 delay interest at SBI highest MCLR + 2% (Rule 18) is spelt out.
• Preserve the defect warranty. Record every snag in writing at possession, with an acknowledgement, to keep the five-year Section 14(3) protection alive.
• Diarise the OC date. Registered conveyance is due within three months of the occupancy certificate under Section 17(1), and members must take possession within two months under Section 19(10).
• Clarify the promoter role. Settle before filing 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.