PAAA: The Legal Backbone of Every Redevelopment Project

Introduction

Redevelopment is no longer a niche activity, it is one of India’s fastest-growing real estate segments. Aging buildings, dilapidated infrastructure, and limited land availability in urban centers have forced societies to choose redevelopment over repairs. In cities like Mumbai, Thane, Pune, Bengaluru, Hyderabad, and NCR, thousands of cooperative housing societies are entering redevelopment transactions each year.

Yet, amidst feasibility reports, architect presentations, and builder promises of “better flats, better amenities, and better life,” one brutal truth remains:

Residents lose the leverage once they hand over their homes or vacate without signing the Permanent Alternative Accommodation Agreement (PAAA).

The PAAA is not paperwork, it is the legal backbone of every redevelopment project. It is the only enforceable agreement that secures the homeowner’s right to a permanent new flat and protects them during the construction period.

Why PAAA Matters More Than Any Other Agreement

Developers often sign a Redevelopment Agreement (RDA) with the society, which deals with:

• project timelines,
• development rights,
• approvals,
• commercial viability, and
• how the society as a collective will function.

But the Redevelopment Agreement is a group contract, and individual member rights do not crystallize under it.

The PAAA is a personal contract between the developer and the member and secures:

• the exact flat that will be delivered to the member,
• the entitlements during the construction period (rent, shifting, brokerage),
• the legal enforceability of possession.

Without a PAAA, homeowners stand exposed to multiple risks:

• Risk Outcome for Members
• No written commitment on flat size Carpet area may be reduced; layout changed
• No rent clause Owner may end up paying rent from their own pocket
• No compensation clause Delays could continue for years with no remedy
• No dispute mechanism Only litigation is the fallback which is time-consuming and expensive
• Verbal promises have no legal standing. But a registered PAAA does.

What Must a Legally Sound PAAA Contain?

A strong PAAA must be:

• Written
• Stamped and Registered
• Executed before demolition

At minimum, it should clearly specify:

A. Permanent Accommodation (Final Flat)

• Carpet area (RERA-compliant measurements)
• Floor and wing allocation
• Parking allocation
• Access to amenities and common areas
• Rights to terraces, balconies, storage spaces (if allotted)

B. Temporary Accommodation (Transit Housing or Rent)

• Rent per month (indexed or with escalation)
• Security deposit/brokerage shifting charges
• Who pays utilities (electricity, water, society dues)

C. Time and Compensation

• Construction timeline
• Penalty for delay (per month/per sq.ft compensation)
• Escrow account for rent to avoid irregular payments
• Bank guarantee/performance guarantee from builder

D. Dispute Resolution

• Arbitration clause
• Jurisdiction (very important in multi-city developers)
• Termination triggers (e.g., non-payment of rent beyond agreed grace period)

Notably:

“Carpet area shall be measured as per RERA definition, not built-up or super-built.”

Many disputes arise because developers try to replace 800 sq. ft. built-up area with 600 sq. ft. carpet area. The PAAA eliminates ambiguity.

Legal Support: RERA, MOFA & Court Precedents

Courts and tribunals have consistently protected member interests:

• Maharashtra RERA mandates registration of PAAA (as an “allotment letter” equivalent).
• Section 4 of MOFA (Maharashtra Ownership Flats Act) requires disclosure of carpet area and amenities in the agreement.

Multiple Bombay High Court judgments have held that:

• Societies must not hand over possession until individual agreements (PAAA) are executed.
• Members are entitled to rent and compensation for delays as contractually agreed.
• In XYZ Housing Society vs. ABC Developers (Bombay HC, 2019), the Court ruled:

“Members cannot be compelled to vacate until their Permanent Alternate Accommodation Agreements are executed and registered.”

These precedents strengthen the enforceability of the PAAA.

Why PAAA Must Be Separate from the Redevelopment Agreement

Developers sometimes push for a combined agreement (RDA + PAAA in one document).
This dilutes individual rights.

A separate PAAA ensures:

• Individual enforceability
• Clarity of entitlements
• Ease of legal action for breach

Society interests and member interests are not identical; therefore, agreements must not merge.

Practical Due Diligence Checklist for Members

Before signing:

• Verify the financial capability of the developer
• Check RERA registration and project approval status
• Ask for a bank guarantee or escrow structure

Before vacating:

• Execute and register the PAAA
• Ensure rent has been prepaid or secured in escrow
• Do not hand over possession without documentation

After vacating:

• Track timeline milestones
• Enforce compensation for delays
• Insist on periodic progress reports from developer

How King Stubb & Kasiva Supports Redevelopment Projects

We advise both societies and developers across India on:

• Redevelopment structuring
• Term sheet negotiation
• Drafting and registration of PAAA
• Ensuring RERA compliance
• Litigation/arbitration in case of dispute

We also act as independent legal advisors to society members to ensure no coercion or pressure influences signing.

Our redevelopments include projects in:

• Mumbai (MHADA + society redevelopments)
• Bengaluru (apartment redevelopments with rental compensation)
• NCR (massive plotted redevelopment)
• Pune & Thane (cluster redevelopment frameworks)

Our goal is simple:
Every homeowner must get their rightful home, on time.

Conclusion

Redevelopment is a promise of a better tomorrow bigger homes, better amenities, and renewed property value.
But hope is not a legal strategy.

A project can move forward without glossy brochures, but never without a PAAA.

If you remember only one rule: No PAAA → No keys.

Contributed by – Asha Kiran Sharma