MHADA 2025: Beware of Illegal Flat Sales Before Lock-in Period Using Power of Attorney (PoA)

Every year, thousands of Mumbaikars apply for MHADA flats, hoping to secure an affordable home in Mumbai. But with limited inventory and high demand, very few actually win the lottery. The disappointment of missing out often pushes hopeful buyers to look for “shortcuts” in the resale market.

That’s when many fall into the trap of illegal flat sales using Power of Attorney (PoA). Sellers and agents offer tempting deals to these buyers, even before the 5-year lock-in period ends. However, MHADA has consistently warned that any sale before this period is invalid, and legal action can be taken against both the seller and the buyer.

What is the 5-Year Lock-In Rule That MHADA Flat Buyers Must Know?

Under MHADA guidelines, lottery winners are not allowed to sell their flats for 5 years from the date of allotment or purchase. This rule exists to prevent profiteering and ensure that homes go to genuine end-users, not investors.

Despite this, some flat owners try to bypass the rules by using PoA documents to unofficially transfer ownership. This move carries serious legal consequences. In many cases, people who win the lottery may already own property elsewhere, or don’t actually need the MHADA flat. Instead of living in it, they see it as a way to earn money, bypassing the law for convenience and profit.

How Do These PoA Deals Typically Work?

In many of these illegal transactions, the original MHADA allottee signs a Power of Attorney (PoA) document in favour of the buyer. This gives the buyer temporary control over the flat, including possession and utility connections, while the legal title remains with the original owner.

The deal is often sweetened with an “agreement to sell” or an affidavit, which may be notarised to appear legitimate. But in reality, they hold no legal weight in the eyes of MHADA or the law.

Meanwhile, real estate agents act as intermediaries, charging hefty commissions for enabling the deal. Buyers, thinking they’ve struck a bargain, move in without knowing that their home could be taken away anytime during an inspection or legal crackdown.

What Will Happen to Such MHADA Flat Buyers?

Such MHADA buyers risk losing both the property and the money they invested, with no legal remedy to reclaim either. In case MHADA officials carry out a site inspection (which they do periodically), the occupant can be evicted without warning or compensation. In some cases, legal proceedings may also be initiated against both the buyer and the original allottee.

Read more: MHADA Lottery 2025: Sale of 5,285 Flats; Check Eligibility and Documents Required.

Conclusion

If you're planning to buy a MHADA flat, don’t let disappointment push you into a risky deal. Always rely on a registered sale deal to buy your home. When it comes to affordable housing, patience and legality are your best safeguards.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.