Development Agreement Checklist for Housing Societies

By the time a housing society reaches the development agreement, most members are tired. The meetings have been long, the developer has been chosen and everyone wants the building to come down and the new one to go up. That is exactly when mistakes are made. The development agreement is the document that will govern the next several years of the members’ lives: where they live, what they are paid, what they receive at the end, and what they can do if the developer defaults. For most members, it is also the main source of protection, because the law gives them less direct protection than they often assume. This development agreement checklist sets out what the managing committee and members should look at before the society signs.

Start with title and conveyance

A society can grant development rights only over what it owns or is entitled to deal with. Before negotiating commercial terms, the society should confirm:

• whether the land and building have been conveyed to the society, or whether title still rests with the original promoter or landowner;
• what the property card, 7/12 extract or other revenue records show, and whether they match the conveyance;
• whether there are tenancies, encroachments, reservations or litigation affecting the plot; and
• whether any member’s flat is mortgaged, which will need the lender’s involvement.

If conveyance was never executed, it usually needs to be obtained first, by consent or through deemed conveyance before the competent authority. For allottees in projects registered under the Real Estate (Regulation and Development) Act, 2016 (RERA), the MOFA (Amendment and Validation) Act, 2025 added Section 11A to the Maharashtra Ownership Flats Act, so that deemed conveyance remains available. A title report from a practising advocate should be obtained before the agreement is finalised and referred to in it.

Get the consent and the meeting right

A development agreement signed on the strength of a defective resolution is open to challenge by any dissenting member. The Maharashtra Co-operative Societies (Amendment) Rules, 2026, notified on 18 June 2026, introduced Rules 106C-1 to 106C-14 for housing societies. Rule 106C-13 deals with general body meetings, including those on redevelopment. For a redevelopment special general meeting, it requires:

• fourteen clear days’ notice;
• a quorum of two-thirds of the total members of the society;
• the meeting to be held in the presence of a representative of the Registrar, who reports to the Registrar on how it was conducted;
• a video recording of the meeting, with a copy kept in the office of the Assistant or Deputy Registrar; and
• selection of the developer or contractor by a majority of fifty-one per cent of the total members, counting those attending by video conference.

The State Government has also issued a Government Resolution dated 30 September 2026 under Section 79A of the Maharashtra Co-operative Societies Act, 1960, replacing the redevelopment directives of 4 July 2019. Societies should obtain and read the text of that resolution and check whether any step in their process needs to be repeated or supplemented. Older checklists that quote figures from the 2019 directives should not be relied on without that check.

When the process is followed correctly, the general body’s decision binds the minority. In Girish Mulchand Mehta v. Mahesh S. Mehta (Bombay High Court, Division Bench, 10 December 2009), members who had opposed redevelopment were held bound by the society’s decision, and interim measures were granted against them. That protection depends on the record of the meeting being clean.

RERA: what it covers and what it does not

Members often assume RERA will protect them. It protects them less than they expect.

Section 3(2)(c) of RERA exempts from registration a project undertaken for the purpose of renovation or repair or re-development which does not involve marketing, advertising, selling or new allotment of any apartment, plot or building. Most society redevelopments in Mumbai do involve a sale component, the free-sale flats the developer sells to finance the project. That component requires RERA registration (unless the project falls within the small-project exemption in Section 3(2)(a)).

The rehabilitation component is a different matter. In January 2026, in Girish Shrikant Lad v. Ashwamedh Spaces, MahaRERA held that the rehabilitation component of a redevelopment falls outside RERA, that the complainant members, who had paid no sale consideration for their flat, were not “allottees”, and dismissed their complaint. The members’ rights therefore rest mainly on the contract. The agreement should:

• require the developer to register the sale component with MahaRERA before marketing or selling any flat, and to give the society the registration details;
• require disclosure of the project’s sanctioned plans, including the members’ flats, as approved; and
• prohibit the developer from selling free-sale flats in a manner that prejudices the members’ entitlements, for example by reserving members’ flats in the plans before any sale.

Area: define it precisely

Disputes over area are among the most common in redevelopment. The agreement should state each member’s entitlement flat by flat, and should define the measurement used. Using the RERA definition removes ambiguity. Section 2(k) of RERA provides:

“carpet area” means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

Points to cover:

• the existing carpet area of each flat, preferably verified by an architect’s measurement rather than old agreements;
• the additional area offered, expressed in square feet of RERA carpet area or as a percentage, and how fractions are dealt with;
• whether balconies, flower beds or other spaces count, and whether parking is allotted and on what basis;
• a mechanism for adjustment, with a price, if the final measured area is more or less than promised.

Possession, delay and the developer’s money on the table

The core commercial protections are matters of drafting. They are not prescribed by statute in a form that applies automatically, so each must be written into the agreement.

Possession date and delay compensation

The agreement should fix a period for completion and handing over of the members’ flats, running from a clearly identified trigger such as the issue of the commencement certificate. It should provide a defined, limited extension for genuine force majeure and specify the compensation payable for each month of delay beyond that. A delay clause without a figure is of little use.

Rent, transit accommodation and escalation

Members vacating their flats need either transit accommodation or a monthly rent. The agreement should set the amount per flat, the escalation (for example, annually) and how long rent will be paid, ideally until the occupation certificate is issued and possession offered, not merely until the agreed completion date. Advance payment of rent for a stated period, with post-dated cheques or a similar mechanism for the remainder, is a common protection. Brokerage and shifting charges should be dealt with expressly.

Corpus fund

Many agreements provide for a one-time corpus payment to each member or to the society, partly to meet higher maintenance costs in the new building. The agreement should state the amount, when it is payable, and whether it is paid to the member or to the society.

Bank guarantee

A bank guarantee from a scheduled bank secures the developer’s obligations if the project stalls. The agreement should specify the amount, validity, the events on which it can be invoked, and an obligation to renew it until completion.

Exit rights if the developer defaults

The agreement should say clearly what happens if things go wrong. Matters to cover:

• specific events of default, such as failure to obtain approvals within a stated period, failure to commence or complete work, or failure to pay rent for a stated number of months;
• the society’s right to terminate after notice, and to revoke the power of attorney granted to the developer;
• what happens to work in progress and to third-party purchasers of free-sale flats on termination;
• a bar on the developer mortgaging the members’ share of the building or creating third-party rights in it; and
• dispute resolution, usually arbitration, with a clearly named seat.

Developers often seek a power of attorney to obtain approvals and to sell free-sale flats. Its scope should be limited to the purposes of the agreement and should end with termination.

The PAAA and stamp duty

Each member’s entitlement is usually recorded in a Permanent Alternate Accommodation Agreement (PAAA) with the developer. In Adityaraj Builders v. State of Maharashtra (Bombay High Court, Division Bench, 17 February 2023), the Court held that once the development agreement has been stamped, a PAAA relating to the rebuilt premises given in lieu of the old premises attracts only the nominal Rs 100 duty under Section 4(1) of the Maharashtra Stamp Act, 1958. Additional stamp duty is payable only to the extent the member purchases additional area for consideration. The Court set aside the stamp authorities’ circulars of 23 June 2015 and 30 March 2017, which had taken a different view.

The development agreement should therefore require the developer to execute PAAAs with each member within a stated time, in an agreed form annexed to the development agreement, and should allocate stamp duty and registration costs.

Frequently Asked Questions

Does RERA protect existing members in a society redevelopment?

Only partly. The sale component generally requires registration, but under Section 3(2)(c) redevelopment that involves no marketing, selling or new allotment is exempt, and MahaRERA held in January 2026 that existing members who had paid no sale consideration were not “allottees” for their rehabilitation flat. Members should rely mainly on the development agreement and the PAAA.

What majority is needed to select a developer?

Under Rule 106C-13 of the MCS Rules, as amended in 2026, the developer must be selected by fifty-one per cent of the total members of the society, including those attending by video conference, at a meeting with a quorum of two-thirds of the total members held on fourteen clear days’ notice.

Is stamp duty payable again on each member’s PAAA?

Following Adityaraj Builders v. State of Maharashtra (2023), once the development agreement is stamped, the PAAA for the rebuilt flat attracts only nominal duty. Full duty applies to any additional area a member purchases for consideration.

Are the 2019 redevelopment directives still applicable?

They were replaced by a Government Resolution dated 30 September 2026 issued under Section 79A of the Maharashtra Co-operative Societies Act. Societies should read the new resolution itself before relying on any step or figure drawn from the 2019 directives.

Should the society insist on a bank guarantee?

A bank guarantee is not imposed by a statutory rule of general application, but it is one of the few protections that gives the society access to money if the developer defaults. Its amount, validity, invocation events and renewal obligation should be set out in the agreement.

This article is for general information and is not legal advice.

This article is for general information only and is not legal advice or an invitation to engage the firm. Laws and judgments change; please obtain specific legal advice before acting.