MahaRERA Issues Key Circular on Execution of Deeds of Cancellation

MahaRERA Issues Key Circular on Execution of Deeds of Cancellation

One of the major problems faced by promoters is defaults made by the allottees in making timely payments of the installments towards the consideration for the purchase of the unit. As a result, promoters face uncertainty of fund flow causing delays to project completion. As a consequence of these delays, promoters could become liable to pay interest at the project level to other allottees. This may result in financial defaults towards obligations to lenders.

As a result of non-payment of installment by the allottees, promoters are left with no option but to terminate the agreement for sale under Section 11(5) of the Real Estate (Regulation and Development) Act, 2016 (“Act”) which permits a promoter to cancel the allotment only in terms of the agreement for sale. Proviso to section 11(5) of the Act provides that allottee may approach the Authority for relief, if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause.

However, a significant gap in the Act remained. The Act does not specify the process of a unilateral termination. Despite termination, the agreement for sale continues to remain a registered instrument on record until a deed of cancellation is executed and registered. As a result, promoters cannot resell the unit to a third party unless the cancellation is formally registered. In scenarios where allottees refuse to execute such cancellation deeds, promoters can approach Real Estate Regulatory Authority under Section 31 of the Act seeking directions compelling execution and registration of the deed.

One such complaint was filed by Macrotech Developers Ltd. (“MDL”) against the allottees bearing complaint no. CC0000005279868/2023 before the Maharashtra Real Estate Regulatory Authority (“MahaRERA”). On account of persistent defaults in making the payment of installments under the agreement for sale, MDL issued a termination notice dated May 13, 2021, and thereafter filed a complaint before the MahaRERA. MDL sought a direction to the allottees to execute and register a Deed of Cancellation in respect of the said agreement for sale. In the alternative to this main relief, MDL sought appointment of a fit person, including an officer of MahaRERA, with a direction that such person to execute and register an appropriate deed of cancellation in respect of the said agreement for sale, and a further direction to the concerned Sub-Registrar of Assurances to effect registration of the same.

The MahaRERA by order dated August 14, 2024 (“MahaRERA Order”) allowed the complaint and granted the reliefs sought in the said Complaint. Since the allottees failed to comply with MahaRERA Order, MDL filed a non-compliance application invoking the provisions of Section 40 of RERA. By order dated November 28, 2024, adjudicating officer (“Execution Order”) suo motu issued directions to the Sub-Registrar of Assurances to cancel the said agreement for sale.

When the Execution Order was served on the Sub Registrar of Assurances with a direction to comply with the same, the Sub Registrar of Assurances refused to comply interalia pointing out that MahaRERA did not have the power or authority to direct Respondent No. 1 to unilaterally cancel the registered instrument. Against such refusal by Sub Registrar of Assurances, MDL filed a Writ Petition (L) No. 18256 of 2025 before the Hon’ble Bombay High Court (“BHC”).

By order dated October 06, 2025 (“BHC Order”), Hon’ble BHC disposed of the writ petition observing that MDL sought the remedy as setout in clause c and as an alternate relief for appointment of a fit and proper person, including an officer of the MahaRERA Authority, with a direction to such person to execute and register an appropriate deed of cancellation. Although the said Complaint was allowed by the MahaRERA Order, the executing court, upon non-compliance of the main relief by allottees, overlooked the alternative relief and instead, erroneously directed Respondent No.1 to unilaterally make an entry in the concerned register for cancellation of the AFS.

As a result of the BHC Order, Hon’ble MahaRERA has now issued a circular no.50/2024 dated November 18, 2025 (“Circular”), prescribing a standard operating procedure for cases where orders are sought for a direction to the respondent (who may a promoter or an allottee/s to execute and register an agreement for sale or deed of cancellation (“the said document”), a fit and proper person of the Authority shall be appointed to execute and register the said document upon default by the respondent. The order shall specifically direct the Registrar of Assurances concerned to register the said document executed by the appointed fit and proper person. It further clarifies that this shall apply to pending non-compliance applications awaiting hearing and final disposal. However, it does not clarify what would happen to the monies already paid by the allottees.

IMPLICATIONS FOR THE REAL ESTATE SECTOR

For promoters

• It will clear up inventory for promoters.
• Enables faster turnaround of units stuck due to cancelled AFS.
• Improves cash flow and reduces interest liability arising from project delays.
• Creates procedural certainty and aligns MahaRERA practice with the High Court’s interpretation of its powers.

For sub-registrars

• Clarifies that unilateral cancellation cannot be ordered.
• Establishes a streamlined registration process when a fit and proper person executes a document.

For allottees

• Reinforces that non-compliance with MahaRERA’s directions will not grant them tactical or procedural leverage.
• Clarifies their right to challenge termination, but once decided, their cooperation is not essential for completion of registration formalities.

CONCLUSION

• The Circular marks a significant improvement in the enforcement machinery under RERA.
• Promoters facing deadlocks due to defaulting allottees now have a clear and effective remedy.
• By operationalizing the High Court’s ruling, MahaRERA has provided a consistent, lawful, and workable solution.
• This Circular also balances the interests of both the promoters and the allottees.
• However, ambiguity remains regarding applicability to cases where execution orders have already been passed or have attained finality.
• Further clarifications will help determine whether the benefit of the new SOP can be extended to such concluded matters.
• The authority should formalize the draft in the event of termination which has to be a fixed format and non-negotiable so that the allottee is not put in an extremely inconvenient position.
• Also, issuance of a public notice shall be made compulsory prior to execution and registration of deed of cancellation.

For now, the Circular provides long-awaited relief and a robust procedural pathway for resolving cancellation-related disputes under RERA.