Over the years, Mumbai’s skyline has transformed significantly—ushering in a new era of residential and commercial spaces. With this growth, the role of regulatory frameworks has become more important than ever. To ensure transparency and safeguard the interests of homebuyers and developers, government entities have implemented key acts that define and regulate how real estate functions in Mumbai and across India.
Two important regulatory terms often discussed are RERA and MOFA. While both aim to protect homebuyers and streamline real estate practices, they differ in many ways.
Let’s understand the two terms in detail.
What is RERA?
RERA, or the Real Estate (Regulation and Development) Act, took effect in 2016. It was developed to improve openness, accountability, and standardisation in the Indian real estate business. All residential and commercial projects must be registered with the RERA authority in their respective states, according to the laws.
Role of RERA:
- Project Registration: Developers must register projects above a certain size with the state RERA before advertising or selling.
- Transparency: Developers are required to disclose project-related information including approvals, layouts, and timelines on the RERA portal.
- Regulated Payments: The act ensures at least 70% of the homebuyers money is used solely for construction and land-related expenses.
- Grievance Redressal: Homebuyers can raise complaints against delays or discrepancies through a formal grievance mechanism provided under RERA.
Importance of RERA:
RERA helps instill trust in the real estate market by making developers more accountable. Also, it supports homebuyers to make better-informed decisions with digital access to verified project details.
- Promotes Accountability: Builders are held responsible for project delays, construction quality, and financial management.
- Protects Homebuyer Investments: As stated earlier, 70% of the homebuyers money is secured in an escrow account. They are exclusively used for construction and land expenses.
- Reduces Project Delays: Strict guidelines and penalties are imposed on buildings if projects are not delivered on time.
- Simplifies Dispute Resolution: Homebuyers can file complaints with the RERA authority and get timely redressal through a dedicated tribunal.
What is MOFA?
MOFA, or the Maharashtra Ownership Flats Act, was introduced in 1963—long before RERA—to regulate the sale, construction, and transfer of flats in Maharashtra. It is specific to the state and remains applicable for certain provisions, even today.
Role of MOFA:
- Sale Agreement: Developers must enter into a written agreement with the buyer before accepting over 20% of the total cost.
- Disclosure of Plans: Developers must provide sanctioned building plans and specifications to the buyer before finalising the sale.
- Title Certificate: The act requires builders to issue a certificate of title to the land to ensure that the buyer has ownership certainty.
- Timely Possession: The act requires timely possession, and buyers may seek compensation for delays.
Importance of MOFA:
MOFA was one of the earliest acts to provide basic protection to homebuyers in Maharashtra. It laid the groundwork for more structured real estate laws like RERA.
- Legally Binds Developer and Buyer: Developers must sign a written agreement with the buyer before collecting over 20% of the flat’s cost.
- Mandates Plan Disclosure: Buyers have a legal right to access sanctioned building plans and flat specifications before purchase.
- Ensures Title Clarity: MOFA requires the builder to provide a title certificate, reducing the risk of land ownership disputes.
- Addresses Delay in Possession: Buyers can claim compensation from developers for delayed handover of the property.
- Protects Buyer Interests Pre-RERA: MOFA was the foundation law that introduced buyer protection in Maharashtra before nationwide acts like RERA came into effect.
Difference Between RERA and MOFA
While both RERA and MOFA aim to protect homebuyers, there are several key differences between the two. Here’s a breakdown:
- Scope of Application
RERA: A central act applicable across all Indian states and union territories.
MOFA: A state-specific act applicable only in Maharashtra.
- Project Registration Requirement
RERA: Prior to advertising or selling, real estate developments must be registered.
MOFA: No provision for mandatory project registration.
- Transparency and Disclosures
RERA: Builders must update project status, approvals, and other details on a public online portal.
MOFA: Requires disclosure of sanctioned plans and legal titles but not through a digital platform.
- Financial Safeguards for Buyers
RERA: 70% of homebuyers payments must be secured in a separate escrow account for construction work.
MOFA: No escrow or fund utilization provision exists.
- Agreement to Sale Conditions
RERA: Standardised model agreement format to avoid unfair clauses.
MOFA: Requires a written agreement before collecting more than 20% of the flat cost.
- Redressal Mechanism
RERA: Features a specialised Appellate Tribunal and Real Estate Regulatory Authority for expedited dispute settlement.
MOFA: Disputes are handled through regular consumer courts.
- Timeline and Possession Clarity
RERA: Developers must declare possession dates and face penalties for delays.
MOFA: Also addresses possession timelines but lacks strict enforcement mechanisms.
Understanding the difference between RERA and MOFA helps homebuyers make better decisions and know their rights. As the real estate landscape continues to evolve, being informed is more important than ever.
At Surbhi Group, we believe in keeping homebuyers well-informed with accurate and meaningful insights. With every project, we aim to build not just homes, but also trust.
