Society redevelopment: why RERA protects flat buyers but not existing members, and what protects you

Rules and rates as of 12 October 2026.

Two kinds of flat in one building

When a Mumbai housing society goes for redevelopment, the new tower usually holds two kinds of flat. The rehab component is the set of new flats handed back to existing members in exchange for their old ones. The sale component is the extra flats the developer builds with the additional FSI and sells on the open market to pay for the project and earn its profit.

The two are built by the same developer, often on the same floors. But the law treats them very differently, and as an existing member you sit on the less protected side of that line. This explainer sets out what the Real Estate (Regulation and Development) Act, 2016 (RERA) covers, what it does not, and what protects you instead.

What the RERA Act itself says

Three definitions decide the question.

• Allottee, section 2(d): a person to whom a plot, apartment or building has been allotted, sold or otherwise transferred by the promoter, and anyone who later acquires it. A tenant is excluded.
• Real estate project, section 2(zn): developing a building or apartments for the purpose of selling all or some of them.
• Exemption, section 3(2)(c): no registration is needed for renovation, repair or redevelopment that does not involve marketing, advertising, selling or new allotment of any apartment, plot or building.

Read together, a redevelopment that only rebuilds members' flats can sit outside registration. The moment the developer markets or sells new flats, that sale component is a real estate project and must be registered with MahaRERA under section 3(1) before any advertising, booking or sale.

What regulators and courts have said about members

MahaRERA, January 2026. In Girish Shrikant Lad and Tarang Girish Lad v. Ashwamedh Spaces Pvt Ltd (Complaint CC12502725, order of 5 January 2026), two members of a Pune society complained that their promised flats had been re-allotted and one sold to an outsider. MahaRERA dismissed the complaint as not maintainable. It held that the members got their entitlement through the development agreement, not an agreement for sale, and had not paid any sale consideration, so they were not allottees. It said the rehabilitation component of redevelopment projects does not fall within the scope of RERA, and that title and contract disputes of this kind cannot be decided in RERA's summary proceedings. The members were left free to go to an appropriate forum.

Bombay High Court, July 2026. In Ibrahmi Babubhai Chokiya and Ors v. Westinrely Developers Pvt Ltd (Appeal from Order (St.) 27813 of 2025, 1 July 2026), original members of a Mumbai society sued in the City Civil Court over which shops they had been allotted in the new building. The developer argued RERA barred the civil suit. The High Court disagreed. It said a RERA complaint first needs a promoter-allottee relationship, that new premises given in exchange for surrendered old ones are not a sale, and that treating members as allottees for that area would run against section 3(2)(c). The civil court, it held, has jurisdiction, and the suit was restored.

So the two primary rulings we read point the same way: for your rehab flat, RERA is generally not your forum, and the civil court is. One nuance in the MahaRERA order matters. It noted the members had not shown they paid consideration for extra area. If you buy additional area from the developer for money, your position on that extra area may be argued differently. That is a question for your lawyer, on your documents. The law is not entirely settled: press reports of two 2026 Maharashtra Appellate Tribunal rulings suggest the tribunal may not have taken a single view on when members can complain to MahaRERA. We could not read them and have not relied on them.

What protects the sale buyer

• Registration of the project with MahaRERA before marketing (section 3).
• The 70% account. Under section 4(2)(l)(D), 70% of the amounts realised from allottees must go into a separate scheduled-bank account, used only for construction and land cost. Withdrawals must be in proportion to completion and certified by an engineer, an architect and a chartered accountant.
• Refund or interest for delay under section 18(1): an allottee can withdraw and get money back with interest, or stay and get interest for every month of delay.
• A complaint to MahaRERA under section 31.

None of this money is ring-fenced for you. The 70% rule applies to what the developer collects from allottees, and members do not pay sale consideration for their rehab flats.

What protects existing members instead

The 4 July 2019 directions under section 79A. The Maharashtra Co-operation Department's resolution on redevelopment of co-operative housing society buildings (No. सगृयो 2018/प्र.क्र.85/14-स) sets out what the development agreement should contain. Among them:

• the developer gives the society a bank guarantee of 20% of the total project cost;
• members get alternative accommodation, preferably in the same area, or rent and deposit acceptable to them, or transit accommodation;
• the project is completed within two years, and three in exceptional cases;
• the development agreement and each member's permanent alternative accommodation agreement (PAAA) are registered under the Registration Act, 1908;
• the agreement clearly states the carpet area due, in RERA terms.

One caution. In Harish Arora and Ors v. Deputy Registrar (WP 3433 of 2025, 9 June 2025), the Bombay High Court held the 2019 resolution is directory, not mandatory. A lapse is not by itself actionable unless it defeats the purpose or breaches the statute. In practice, these protections bind the developer only as far as they are written into your registered agreements. That is why the agreement text matters more than the resolution.

The agreements and the courts. Your development agreement and PAAA are contracts, enforceable in civil court or, if they contain an arbitration clause, in arbitration. In Rajawadi Arunodaya CHS v. Value Projects Pvt Ltd (15 March 2021), the Bombay High Court called non-payment of transit rent a breach of a fundamental term, said there is no such thing as substantial compliance in these matters, and held that even a single default can justify termination. It ordered the developer off the site and appointed a court receiver.

Side by side

Protection	Existing member (rehab flat)	Sale buyer
Allottee under RERA s.2(d)	No, per MahaRERA (Jan 2026) and Bombay HC (Jul 2026)	Yes
Project registration (s.3)	Exempt if no sale, s.3(2)(c)	Required before marketing
Money ring-fenced	No sale money paid; 20% bank guarantee to society under 2019 GR, if in agreement	70% of receipts in separate account, s.4(2)(l)(D)
Delay remedy	Transit rent and terms of PAAA, enforced in civil court or arbitration	Refund with interest or monthly interest, s.18(1)
Forum	Civil court / arbitration	MahaRERA complaint, s.31

Worked example: what a delay costs, and what secures it

Take an illustrative member with a 500 sq ft flat whose PAAA promises transit rent of ₹90 per sq ft a month and completion in 36 months. The rent figure is an assumption for the arithmetic; yours is whatever your agreement says.

• Monthly rent = 500 × ₹90 = ₹45,000.
• Over the agreed 36 months = 36 × ₹45,000 = ₹16.2 lakh.
• If the building is 18 months late, the delay alone = 18 × ₹45,000 = ₹8.1 lakh, and the total rises to 54 × ₹45,000 = ₹24.3 lakh.
• If the developer stops paying after month 40, arrears by month 54 = 14 × ₹45,000 = ₹6.3 lakh.

Who secures that? Not the 70% account, which only holds a share of sale receipts. If the project cost in the agreement is ₹80 crore, a 20% bank guarantee is 0.20 × ₹80 crore = ₹16 crore, held by the society for all members, not by you individually. In a 40-member society that averages ₹40 lakh a member, but how and when it can be invoked depends entirely on the agreement's wording.

Before you sign, or if things go wrong

Ask your managing committee for the draft development agreement and your draft PAAA. Check that rent, rent escalation, the completion date, the bank guarantee and your carpet area are written in, with consequences for default. If disputes have already started, a lawyer who handles redevelopment matters can tell you whether your claim belongs in civil court, in arbitration under your agreement, or, for any extra area you paid for, possibly before MahaRERA.