MahaRERA introduces stricter SOP: Defaulting builders may face jail for not paying compensation

MahaRERA's new SOP can jail developers for up to three months for failing to pay homebuyer compensation, aiming to enforce compliance and restore trust.

MUMBAI: The Maharashtra Real Estate Regulatory Authority (MahaRERA) has issued a new Standard Operating Procedure (SOP) that could see developers landing in jail for up to three months if they fail to pay compensation awarded to homebuyers.

MahaRERA introduces stricter SOP: Defaulting builders may face jail for not paying compensation

In a circular released earlier this week, MahaRERA laid out a step-by-step mechanism to enforce compensation orders passed by its designated Adjudicating Officers. Homebuyers can approach the regulator on a range of issues, including delayed possession, poor construction quality, inadequate parking, or missing amenities, following which adjudicating officers determine compensation based on the merits of each case.

Despite thousands of orders directing builders to compensate homebuyers, recovery has remained a persistent problem. Many buyers have struggled for months or even years to actually receive the dues, prompting the Bombay High Court, in an order dated October 6, to ask the authority to ensure time-bound enforcement.

A senior MahaRERA official said the new SOP marks a significant shift. “For the first time, cases where developers fail to pay compensation despite sufficient opportunities will be referred to the Principal Civil Court of the area. Developers may face imprisonment of up to three months. This is expected to greatly improve compliance and offer timely relief to homebuyers,” the official told Hindustan Times.

What changes for homebuyers

Under existing rules, a developer must pay compensation within 60 days of MahaRERA’s order. The new SOP outlines the process that will follow if a builder does not comply: The homebuyer may file an application seeking recovery of the compensation amount, interest for delayed possession, or any other dues.

MahaRERA will now hear such applications within 30 days. If the developer is found prima facie in default, the authority will give a reasonable deadline to pay.

If the builder still does not comply, they may be directed to file an affidavit disclosing all movable and immovable assets, bank accounts and investments.

A recovery warrant will be issued to the District Collector to initiate attachment or seizure of the developer’s assets and accounts.

If the builder refuses to provide financial details or continues to default, MahaRERA will forward the case to the local Principal Civil Court, which can invoke provisions of the Civil Procedure Code and order imprisonment for up to three months.

Regulator hopes to restore homebuyer confidence

The authority says the tougher enforcement mechanism is aimed at addressing one of the biggest pain points for homebuyers, the gap between orders passed and compensation actually received. Officials believe that the threat of asset attachment and a possible jail term will ensure that developers take compliance seriously.