RERA vs. MOFA: A Key Comparison for Maharashtra Real Estate (By CA Lalit Pawar)
Prior to the enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA), the Maharashtra Ownership Flats (Regulation of Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA), was the primary legislation governing real estate transactions in Maharashtra. While MOFA aimed to protect homebuyers, it had limitations that RERA sought to address.
As a Chartered Accountant and RERA consultant, I, CA Lalit Pawar, frequently encounter questions about the differences between these two Acts. This blog post provides a comprehensive comparison of RERA and MOFA, highlighting the key improvements and benefits that RERA offers to both homebuyers and developers in Maharashtra.
🕰️ MOFA 1963: A Look Back
MOFA, enacted in 1963, aimed to regulate the promotion, construction, sale, management, and transfer of ownership flats in Maharashtra. Some of its key provisions included:
- Registration of projects
- Disclosure of information to homebuyers
- Execution of agreements for sale
- Formation of cooperative societies or companies
- Transfer of title to the society or company
RERA 2016: A Modernized Approach
RERA, enacted in 2016, is a more comprehensive and robust legislation that aims to bring greater transparency, accountability, and efficiency to the real estate sector across India. RERA builds upon the foundation laid by MOFA but introduces several significant improvements and new provisions.
Key Differences Between RERA and MOFA:
| Feature | MOFA 1963 | RERA 2016 |
| Scope | Primarily focused on regulating the sale of flats in cooperative housing societies. | Covers a wider range of real estate projects, including residential, commercial, and plotted developments. |
| Registration | Registration requirements were less stringent. | Mandatory registration of projects exceeding a certain size (typically projects with a plot area of 500 square meters or more, or with more than eight apartments). |
| Escrow Account | No provision for escrow accounts. | Requires developers to deposit 70% of the funds collected from buyers in a separate escrow account to ensure that the funds are used only for the specific project. |
| Agreement for Sale | Did not prescribe a standardized agreement for sale. | Mandates the use of standardized sale agreements between developers and buyers to ensure fairness and transparency. |
| Grievance Redressal | Limited avenues for grievance redressal. | Establishes Real Estate Regulatory Authorities (RERAs) and Appellate Tribunals to provide efficient and effective dispute resolution mechanisms. |
| Project Completion | Less emphasis on timely project completion. | Imposes penalties on developers for project delays and empowers RERAs to take corrective measures to ensure timely completion. |
| Transparency | Less stringent disclosure requirements. | Requires developers to disclose detailed project information, including project plans, specifications, and financial details, on the RERA website. |
| Penalties | Penalties for non-compliance were less severe. | Imposes stricter penalties for non-compliance, including financial penalties and imprisonment. |
| Definition of Promoter | The definition of a promoter was not clearly defined. | The definition of a promoter is well defined. |
| Ongoing Projects | Addressed ongoing projects less comprehensively | RERA has specific provisions to regulate and bring ongoing projects under its umbrella. |
Benefits of RERA over MOFA:
- Enhanced Homebuyer Protection: RERA provides greater protection to homebuyers by ensuring transparency, accountability, and timely project completion.
- Increased Transparency: RERA’s stringent disclosure requirements empower homebuyers to make informed decisions.
- Efficient Dispute Resolution: RERA’s dispute resolution mechanisms offer a faster and more effective alternative to traditional legal channels.
- Improved Project Management: RERA’s escrow account requirements and penalties for delays incentivize developers to manage projects more efficiently.
- Greater Accountability: RERA holds developers accountable for their commitments and imposes stricter penalties for non-compliance.
Conclusion: RERA – A Significant Step Forward
While MOFA laid the groundwork for regulating the real estate sector in Maharashtra, RERA represents a significant step forward. RERA’s comprehensive provisions, stringent enforcement mechanisms, and focus on transparency have created a more trustworthy and reliable market for both homebuyers and developers.
For More information, please refer original order @ MahaRERA Website:
Blog by CA Lalit Pawar
RERA vs. MOFA: A Key Comparison for Maharashtra Real Estate (By CA Lalit Pawar)
Disclaimer: This blog provides general information about the differences between RERA and MOFA. For specific legal advice and guidance related to your situation, please consult with a RERA expert or refer to the official MahaRERA website (maharera.mahaonline.gov.in).
Note: As per ICAI guidelines, please remember that this content is for informational purposes only and does not constitute professional advice. Consult a qualified professional for specific guidance related to your situation.