Redevelopment Myths vs Facts: The Real Rules for Mumbai Societies

Most redevelopment disappointments in Mumbai begin with a myth, not with bad luck or a legal dead end. You do not need 100% consent to redevelop, the developer offering the biggest flat is not automatically the best choice, and a delayed or defective building is not something members simply have to accept. This guide places each common myth beside the rule that actually governs it, drawn from the Section 79A directive dated 4 July 2019, the Real Estate (Regulation and Development) Act, 2016 (RERA), the Maharashtra Ownership Flats Act (MOFA), 1963 and other authentic provisions, so your society can decide from facts rather than fear.

Why these myths spread

Redevelopment is a once-in-a-generation event for most societies, so members rely on what a neighbour, a broker or a builder’s sales team tells them. Half-truths travel fast in WhatsApp groups, and the loudest voice often wins the meeting. The result is that societies vote, vacate and sign on the strength of assumptions that the law does not support. Below, each myth is answered with the current legal position, so you can check what you have been told against the rulebook that a Registrar, a Co-operative Court or MahaRERA would actually apply.

Myths vs facts at a glance

Myth: “We need everyone’s consent”

The most paralysing myth is that a single hold-out can block the whole society. The current rule is clearer and kinder to the majority. Under the Section 79A directive dated 4 July 2019 (which superseded the earlier 3 January 2009 directive) issued under Section 79A of the Maharashtra Co-operative Societies Act, 1960, redevelopment follows a defined sequence with fixed thresholds:

So a determined majority can proceed even when a few members object, provided the process is followed exactly. The directive also requires that the developer-selection SGBM be video-recorded and attended by a Registrar’s authorised officer, and that the shortlisted developer holds at least one MahaRERA-registered project. Read the full sequence in our guide to the 79A process.

Myth: “The biggest flat is always the best deal”

This is the costliest belief in Mumbai redevelopment. A builder who promises an extra few per cent of carpet area sounds unbeatable — until the project stalls because that same builder over-committed and cannot fund construction. Extra area is only one line in a much longer contract, and it is the easiest promise to make and the hardest to keep.

A worked example

Consider a member with a 600 sq ft flat weighing two offers:

Offer A wins on headline area by 60 sq ft. Offer B wins on almost everything that protects a family if the project runs late: a bigger corpus, higher rent, a stronger guarantee, a shorter timeline with a penalty, and a developer who has actually delivered. The 79A directive itself sets the bank guarantee benchmark at 20% of project value and completion within 2 years of the plinth commencement certificate — Offer B meets both; Offer A does not. Over even one year of delay, the extra rent and guarantee in Offer B are worth far more than 60 sq ft.

Weigh the full package with our offer comparison tool, and read how to choose a developer before you let one number decide. The biggest offer is not always best, and a developer who over-promises area is often the one who under-delivers on time.

Myth: “Once we sign, the builder controls everything”

Members often assume that after the agreement is signed, the builder can quietly redraw plans, shrink the garden or reroute the layout. RERA changed this. Section 14 of RERA bars the promoter from altering the sanctioned plans, layout or common areas without the written consent of at least two-thirds of the allottees. Your building is not a blank cheque handed to the developer — material changes need the members back at the table.

What binds the builder, and what protects you, is the registered Development Agreement together with each member’s Permanent Alternate Accommodation Agreement (PAAA). Under Section 17 of the Registration Act, 1908 both are compulsorily registrable, and the 79A directive requires both to be registered. A promise made in a presentation but missing from these documents is worth nothing. Check every clause on rent, corpus, carpet area and its measurement, timeline, penalty and bank guarantee against our red flags in a development agreement guide.

Myth: “If the builder delays, we can only wait”

Delay is the fear that keeps societies awake, and the myth that they are powerless against it is simply wrong. Two layers of protection exist. First, Section 18 of RERA entitles allottees to withdraw and claim a refund with interest, or to stay in the project and claim interest for every month of delay in handing over possession. Second, the 79A directive itself requires the developer to complete the project within 2 years of the plinth commencement certificate (3 years in exceptional cases) and to furnish a bank guarantee of 20% of project value, which the society can invoke if the builder defaults.

RERA also protects the project’s money supply: Section 4(2)(l)(D) requires 70% of buyers’ money to be held in a separate scheduled-bank account and drawn only in proportion to construction, with an annual audit by a chartered accountant. That makes it harder for a developer to divert funds and stall. If your project is already running late, read what to do about builder delay and see how the guarantee and RERA remedies work together.

Myth: “Defects after possession are our problem”

Many members believe that once they accept keys, cracks, leaks and poor finishing become the society’s maintenance headache. The law says otherwise. Section 14(3) of RERA makes the promoter liable to repair any structural defect or defect in workmanship, quality or provision of services that is reported within 5 years of possession, and to do so within 30 days at no charge. Court orders have reinforced this defect-liability duty; see the summaries under defect-liability court orders. Do not sign a possession letter that quietly waives this five-year cover.

Myth: “We don’t need conveyance”

Some societies think that because members own their flats, the land is already theirs. Ownership of a flat is not ownership of the land. Section 11 of MOFA obliges the promoter to convey the title of the land and building to the society. When a builder drags his feet — as many do — Section 11(3) provides deemed conveyance: the society applies to the Competent Authority (the designated District Deputy Registrar of Co-operative Societies), who, after a hearing, issues a deemed-conveyance order and certificate and gets the conveyance registered unilaterally, without the builder’s signature. Without conveyance, your society cannot fully control its own redevelopment. Our conveyance guide explains the steps.

Myth: “A society can never redevelop on its own”

The belief that only a big-brand builder can redevelop a society keeps many committees from even exploring alternatives. In fact, the 79A directive only requires the shortlisted developer to hold at least one MahaRERA-registered project, and MahaRERA has held that a redeveloping society can itself be a promoter or co-promoter. That opens the door to self-redevelopment, where the society borrows against its own land potential and keeps the developer’s margin for its members. It is not for every society, but it is a genuine option — compare the routes in our self-redevelopment vs builder guide.

Myth: “Redevelopment is completely tax-free”

The comforting idea that a new flat carries no tax is only half true. Under Section 45(5A) of the Income-tax Act, 1961, for an individual or Hindu Undivided Family, capital gains under a registered redevelopment or joint-development agreement are taxed in the year the completion certificate is issued — the consideration being the stamp-duty value of the member’s share plus any cash received. Separately, Section 194-IA requires 1% TDS to be deducted where the consideration or stamp-duty value of the property is Rs 50 lakh or more, paid through Form 26QB within 30 days of the month-end. This is not tax advice, and every member’s position differs, so consult a chartered accountant on your own figures.

Myth: “More FSI is a fixed bonus for everyone”

Members often expect a single, universal FSI number that every builder will offer. Buildable potential is never one figure. For Greater Mumbai, DCPR 2034 sets different routes — Regulation 33(7) for cessed and old island-city buildings (with MHADA), Regulation 33(9) for cluster and urban-renewal schemes, and Regulation 33(14) for slum (SRA) schemes — alongside a road-width-based FSI table and fungible compensatory FSI. The rest of Maharashtra follows the UDCPR. The exact potential depends on your plot size, road width, zone and building category, which is precisely why you should compute it for your own society using the FSI calculator rather than trusting a builder’s round number.

What this means for your society

None of this means redevelopment is a trap. It means the societies that do well are the ones that check every claim against the actual rule. In practice:

1. Treat the 51% and 2/3rd quorum under the 4 July 2019 directive as your real consent threshold — run a properly noticed, quorate, video-recorded SGBM.
2. Compare the whole package, not the biggest flat, using the offer comparison tool.
3. Insist the developer holds a MahaRERA-registered project and furnishes the 20% bank guarantee before you vacate.
4. Get the Development Agreement and every PAAA registered under Section 17 of the Registration Act, 1908.
5. Hold the builder to Section 18 (delay) and Section 14(3) (five-year defect liability) of RERA, and pursue conveyance under Section 11 of MOFA.

When your committee is ready to move from clearing up myths to a structured plan, register your society for a plain-language feasibility view from our team.