Redevelopment projects often give existing members an option to purchase additional area over and above their entitled carpet area. However, the timing and legality of payments demanded by the developer must strictly comply with the law.
What Is a Permanent Alternate Accommodation Agreement (PAAA)?
A PAAA is the key document executed between:
- Society members and
- The developer
It defines:
- Your existing entitlement
- Additional area (if any)
- Compensation, corpus, rent, and other benefits
It is a binding agreement and should ideally be registered.
How Much Extra Area Can You Buy?
Typically:
- Developers allow up to 10% additional area over entitlement
- This is usually part of the redevelopment proposal approved by the society
If you are purchasing beyond this:
- It becomes a separate commercial transaction
- Terms depend on mutual negotiation
Legal Rule on Advance Payment
Under
Real Estate (Regulation and Development) Act, 2016
Section 13 – Restriction on Advance Payment
- Builder cannot accept more than 10% of the cost
- Unless:
- A registered agreement for sale is executed
Is 30% Demand at PAAA Stage Legal?
👉 Short answer: No, not in most cases
- If the developer is asking for 30% at PAAA signing:
- It is not legally valid
- Unless the agreement is registered simultaneously
Two Possible Scenarios
1. PAAA is NOT Registered
- Builder can take maximum 10% only
- 30% demand is illegal
2. PAAA + Agreement Registered Together
- Higher payment may be acceptable
- Provided:
- Terms are clearly mentioned
- Stamp duty & registration completed
Important Safeguards for Buyers
Before making any payment:
- Ensure agreement is registered
- Verify:
- Carpet area
- Total consideration
- Payment schedule
- Check if:
- Additional area is part of society-approved plan
- Or a separate deal
What Should You Do Now?
- Ask developer to:
- Register the agreement first
- Then accept payment beyond 10%
- Insist on:
- Written clarity on payment milestones
- Mention of additional area in agreement
- Avoid:
- Paying large amounts based on oral commitments
Why This Rule Exists
The 10% cap protects buyers from:
- Project delays
- Fraud or misuse of funds
- Lack of legal documentation
It ensures transparency under
Maharashtra Real Estate Regulatory Authority
Conclusion
A developer cannot legally demand 30% payment at the time of signing the PAAA unless the agreement is simultaneously registered. You should safeguard your interest by ensuring all terms are documented and legally compliant before making any substantial payment.
