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The Real Estate (Regulation and Development) Act, 2016 (RERA) brings transparency, accountability, and fairness to India’s real estate sector. Under this law, developers must register their projects with the respective state RERA authorities, disclose details like carpet area, layout plans, and delivery timelines, and ensure protection for homebuyers against delays or frauds.
Yet, one important exception often goes unnoticed — RERA does not cover redevelopment projects. In this blog, we’ll explain why this exemption exists and what it means for both buyers and tenants.
✅ What Is a Redevelopment Project?
Redevelopment typically occurs when developers demolish an old building, society, or chawl and reconstruct it into a modern structure. This practice is common in metro cities like Mumbai, where unsafe aging buildings and limited land supply push the need for renewal.
In these projects, developers sign agreements with existing society members or tenants, offering them rehabilitation flats in the new building along with modern amenities. At the same time, developers sell the surplus flats in the open market to recover costs and generate profits.
⚖️ Why RERA Does Not Apply to Redevelopment Projects
According to the Maharashtra RERA authority and multiple legal rulings, redevelopment projects remain exempt from RERA registration because:
- No Sale to the Public (Rehab Portion): Developers do not treat flats allotted to society members or tenants as a real estate sale. Instead, they provide them as rehabilitation under contractual terms.
- Not a Commercial Transaction: Society members do not pay money for their new flats, so the transaction falls outside the scope of real estate marketing and selling covered under RERA.
- Contractual Agreement: The development agreement signed between the society and the developer governs the relationship, not buyer–seller dynamics.
As a result, RERA does not regulate the rehabilitation component of redevelopment projects.
🏠 But What About the Sale Flats?
Here’s where the nuance lies:
- Rehab Flats: Flats allotted to existing tenants/society members are exempt from RERA.
- Sale Component: Any new flats sold in the open market (beyond the rehab quota) must be registered under RERA. Developers cannot sell these flats without a valid RERA number, proper disclosure, and adherence to delivery timelines.
This means that while society members depend on their contract with the developer, new homebuyers get full RERA protection.
📌 Implications for Homebuyers & Society Members
For Society Members
The development agreement, IOD, and municipal approvals protect your rights—not RERA.You must resolve delays or disputes legally or through arbitration stated in the contract.
Appoint a competent project management consultant (PMC) and conduct proper due diligence before signing agreements.
For Homebuyers of Sale Flats
Claim all benefits under RERA, including compensation for delays, if the developer fails to deliver on time.
Always verify the RERA registration number before booking a flat.
Check details like carpet area, possession timeline, and project layout directly on the RERA website.
🔎 Key Legal Precedents
- MahaRERA Orders have consistently clarified that rehabilitation flats in redevelopment are not “real estate transactions” under RERA.
- Courts have also upheld this view, reinforcing that only sale units in redevelopment require RERA compliance.
📝 Conclusion
The RERA Act is a landmark law protecting homebuyers, but its scope is limited when it comes to redevelopment. Society members entering redevelopment agreements must rely on strong legal contracts, experienced consultants, and careful developer selection to safeguard their interests.
For buyers of sale flats in redevelopment projects, however, RERA protection is fully applicable – making it safer to invest in such homes.
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