It is not legal to buy a flat allotted under MHADA lottery until a completion of period of 5 years from the date of its allotment. Nevertheless, there are many transactions happening wherein the allottee transfers the property allotted by MHADA before completion of period of 5 years to the buyer on execution of various precautionary documents, but these all activity are on trust basis and does not guarantee any security to the ownership of a new buyer. And also, once the 5 years is completed the new buyer have to apply to MHADA to get the name transferred to his name. Hence, the moral of the story is that you will be taking a high risk by investing your money in such property
According to MHADA Regulations, there is a lock in period of 5 years for people who have purchased a flat under a lottery draw. If one wants to bypass the said lock in period, a buyer would be risking his hard earned money as the said sale can be challenged subsequently.