RERA and Redevelopment: How the Law Protects Flat Owners in Mumbai
Before RERA came into effect, society redevelopment in Mumbai was a bit like the Wild West. Builders made grand promises, took possession of buildings, and then — in far too many cases — either delayed construction for years or abandoned projects entirely. Society members had limited legal recourse, and the courts were backlogged with redevelopment disputes that dragged on for a decade or more.
The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, changed the game. For the first time, India had a comprehensive law specifically designed to protect the interests of homebuyers and regulate the real estate sector. And for society members in Mumbai and Maharashtra, RERA has become a powerful tool in ensuring that redevelopment projects are completed on time, as promised, and to the agreed specifications.
If your society is undergoing or considering redevelopment, understanding RERA is essential. Here’s how this law protects you.
Is Your Redevelopment Project Covered by RERA?
The first question every society member asks is whether their redevelopment project falls under RERA. The answer, in most cases, is yes.
Under MahaRERA (Maharashtra’s implementation of RERA), all redevelopment projects that involve construction of new flats for sale to third parties must be registered. Since virtually every redevelopment project in Mumbai involves the construction of sale flats (that’s how the builder makes their profit), the registration requirement applies.
There are some limited exemptions — for example, projects where the total area of land being developed does not exceed 500 square meters, or where the number of apartments to be developed does not exceed eight. But most society redevelopments in Mumbai far exceed these thresholds.
The key point is this: if your builder is constructing sale flats as part of the redevelopment, the project must be registered with MahaRERA. If it’s not registered, that’s a serious red flag, and you should demand registration before proceeding.
RERA Registration: What It Means for You
When a redevelopment project is registered with MahaRERA, the builder is required to provide detailed information about the project — including the approved plans, the layout, the specifications, the timeline for completion, and the details of all stakeholders.
This information is publicly available on the MahaRERA website. Any member of the society — or any prospective buyer of sale flats — can look up the project and verify the builder’s claims. This transparency alone is a significant protection against fraudulent or misleading promises.
RERA registration also means the builder must deposit 70% of the funds collected from buyers of sale flats into a designated bank account. This money can only be used for the construction of that specific project, based on the percentage of completion certified by an architect and a chartered accountant. This prevents builders from diverting funds collected for your project to finance other ventures.
Timeline Protection: No More Endless Delays
One of RERA’s most important provisions is the requirement for builders to commit to a specific completion timeline. When registering the project with MahaRERA, the builder must declare the expected date of completion.
If the builder fails to complete the project by this date, they are liable to pay interest to the allottees for every month of delay. The interest rate is determined by the State RERA Authority and is typically linked to the State Bank of India’s marginal cost of lending rate plus a margin.
For society members, this means the builder has a direct financial incentive to complete the project on time. Every month of delay costs the builder money — not just in terms of construction costs, but also in terms of interest payments to members.
Moreover, if the delay is unreasonable, society members can approach MahaRERA for an order directing the builder to complete the project or to withdraw from the project entirely, allowing the society to appoint a new builder.
Quality Protection: Building What Was Promised
RERA requires builders to construct exactly what they promised. The specifications mentioned in the agreement — the quality of materials, the brand of fittings, the type of flooring, the amenities in common areas — must be adhered to. Any deviation requires the consent of the allottees.
If the builder uses inferior materials or changes specifications without consent, members can file a complaint with MahaRERA. The authority has the power to direct the builder to rectify the deficiency, provide compensation, or even revoke the builder’s registration in cases of persistent non-compliance.
Furthermore, RERA provides a five-year defect liability period after possession. If any structural defect or quality issue is discovered within five years of taking possession of your new flat, the builder is obligated to fix it at their own cost within 30 days of being notified.
Financial Protection: Where Does Your Money Go?
In a society redevelopment, the builder’s primary revenue comes from selling the additional flats constructed on the extra FSI. RERA’s financial provisions ensure that this revenue is used for the project and not siphoned off.
The 70% escrow requirement means that a significant portion of the sale proceeds from free-sale flats must remain in a designated bank account and can only be withdrawn based on actual construction progress. This is verified by an engineer and a chartered accountant.
Additionally, the builder must submit quarterly progress reports to MahaRERA, updating the physical and financial status of the project. These reports are available on the MahaRERA website, allowing society members to track the project’s progress independently.
How to File a Complaint with MahaRERA
If your builder violates any RERA provision — delays the project, changes specifications, fails to pay transit rent, or breaches the development agreement — you can file a complaint with MahaRERA.
The complaint process is designed to be accessible and relatively quick. Complaints can be filed online through the MahaRERA website (maharera.mahaonline.gov.in). The filing fee is nominal — Rs. 5,000 for individual complaints and Rs. 50,000 for complaints by groups or associations.
MahaRERA aims to resolve complaints within 60 days, though in practice it may take longer for complex cases. The authority has the power to issue orders directing the builder to comply, impose penalties, and even attach the builder’s properties in cases of non-compliance.
Appeals against MahaRERA orders can be filed with the Maharashtra Real Estate Appellate Tribunal (MREAT) within 60 days. Further appeals lie with the High Court.
RERA and the Development Agreement
Your development agreement should explicitly reference RERA compliance. Key RERA-related clauses to include are the builder’s obligation to register the project with MahaRERA before starting construction, the commitment to maintain the 70% escrow account, the timeline for completion as declared to MahaRERA, the builder’s liability for delays including interest payments, the defect liability period of five years, and the right to file complaints with MahaRERA for any breach.
Having these clauses in the agreement creates a double layer of protection — you can enforce your rights both through the contractual provisions of the agreement and through RERA’s regulatory framework.
Limitations of RERA in Redevelopment
While RERA provides significant protections, it’s important to understand its limitations in the redevelopment context.
First, RERA primarily protects buyers of new flats. While existing society members are increasingly recognized under RERA’s framework, some provisions are more clearly applicable to new buyers than to existing members getting reconstructed flats.
Second, RERA’s enforcement depends on the capacity and willingness of the state authority. While MahaRERA has been proactive in Maharashtra, the speed and effectiveness of enforcement can vary.
Third, RERA doesn’t cover every aspect of the redevelopment relationship. Issues like transit rent disputes, corpus fund disagreements, and society internal conflicts may need to be addressed through other legal forums like the Cooperative Court or Civil Court.
Despite these limitations, RERA remains the most powerful legal tool available to society members in redevelopment disputes. It should be seen as a complement to, not a replacement for, a well-negotiated development agreement and vigilant society management.
Practical Tips for Using RERA Effectively
Verify your project’s RERA registration before vacating your flat. Note down the MahaRERA registration number and check the project details on the website.
Monitor the quarterly progress reports filed by the builder. These are available on the MahaRERA website and give you an objective picture of how the project is progressing.
Document everything. Keep copies of all correspondence with the builder, minutes of meetings, payment receipts, and photographs of the construction site. Good documentation strengthens your case if you need to file a RERA complaint.
Don’t wait too long to file a complaint. If the builder is violating RERA provisions, file a complaint sooner rather than later. Early intervention is more effective than waiting until the project is in serious trouble.
Consider filing collective complaints. A complaint filed by the society (representing all members) carries more weight than individual complaints and is more likely to get prompt attention from MahaRERA.
Conclusion
RERA has fundamentally changed the power dynamic between builders and homeowners in India. For society members in Mumbai, it provides a level of protection that simply didn’t exist before 2017. But RERA works best when you understand your rights and are willing to use them.
Don’t think of RERA as something you’ll use only if things go wrong. Think of it as a framework that should guide every aspect of your redevelopment — from selecting the builder and negotiating the agreement, to monitoring construction and taking possession.
At Asahi Legal, we help housing societies leverage RERA’s protections throughout the redevelopment process. From RERA registration verification to complaint filing and representation, we ensure your rights are fully protected under the law.
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.
