Your Society Is Going for Redevelopment? Read This Before You Count on RERA

The owners of many old buildings have a notion that they can always refer to RERA in case something fails in the redevelopment process. According to a recent decision of MahaRERA, this assumption is not always true. In one of the landmark decisions, MahaRERA dismissed an objection by members of a housing society and indicated that conflict concerning the rehabilitation aspect of the redevelopment projects might not amount to RERA. This sends a grave caution to thousands of the society members in Maharashtra.

The case was of members of a Pune housing society whose building was in redevelopment. As it is the norm in such projects, the old building was demolished, members relinquished their flats and the developer assured them new flats in the new building. Subsequently the members claimed that they were to get certain new flats of a particular size but the developer had altered the allotment. They claimed that one of the promised flats was sold to some third party and that the space they were provided with was less. They had approached MahaRERA seeking refund of their flats, third-party sale cancellation and restitution under RERA since they felt cheated.

The developer did not begin to discuss area or promises. He instead brought a legal issue that changed the case. According to him, these people were not buyers but rather rehabilitation members. The society agreed with him that their rights were based on the agreement with the society rather than a sale to the buyer. then they could not be regarded as an allottee under RERA. Unless they were allottees, they would not enjoy the same level of protection by RERA.

MahaRERA accepted the developer and rejected the complaint, saying that it was not maintainable under RERA. The authority clarified that in redevelopment projects one tends to have two segments. One of them is a free sale division whereby flats are sold to external customers. The other one is the rehabilitation component where the current members of the society receive flats at the expense of their former houses. According to MahaRERA, the rehab aspect is never handled as a normal sale as the members do not purchase the flats, but receive them as an alternative to their old residence in the open market. Due to this fact, the rehab aspect usually becomes not the primary focus of RERA.

The authority also indicated that powerful protection is provided to allottees, that is, buyers of property. In this instance the members had been incorporated into the process by MoU and development agreements. Their standard of sale agreement was not similar to that of outside purchasers, and they were unable to demonstrate any evidential indication that they had acquired extra area by way of an acceptable deal. They were not legally considered as RERA allottees.

The other significant reason cited by MahaRERA was that the relief requested by the members entailed complicated civil matters. They would have required an announcement of the cancellation of the sale of a flat to third-party, the restoration of certain flats, and the prohibition of the third-party rights. MahaRERA indicated that these are cases of title disputes, civil rights and complex contracts. The proceedings by RERA are not intended to make such big decisions in terms of civil dispute.

Eventually, the complaint was denied. Nevertheless, the members were permitted to attend an adequate civil forum, which is a civil court. The battle was not over yet but it was made clear by MahaRERA that there was no right forum to use in this. Certainly, this ruling helps the society members to understand one thing clearly; Just because a redevelopment project is registered under RERA does not mean that all disputes of society members might be dealt with by RERA. Most of the redevelopment disputes might be addressed under the development agreement law, cooperative housing law, or even under the general civil law, as opposed to the RERA.

The housing societies can learn an easy and yet significant lesson. Do not take the development agreement lightly when your building is under redevelopment. Ensure that all the promises concerning area, flat number, parking and rent are in writing and properly documented. When you are purchasing additional territory, then you should have the right documents and evidence of payment. Should anything go wrong, you will be fighting in a civil court and not RERA. Relevant redevelopment does not only imply constructing a new development. It is a legal re-packaging of your rights to property. And, as this case explicitly demonstrates, a member of the society on rehabilitation aspect of the project is not identical to a buyer on free sale aspect of the project.