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Redevelopment Development Agreement Highlights

The Development Agreement should be properly stamped and registered as an unstamped and unregistered document is not enforceable in law.

Every detail pertaining to the construction specifications, construction and material, amenities should be specified in the redevelopment pact. Anything that is vague will work against the interest of Society members.

The Development Agreement should have a provision of arbitration.

TDR should be loaded in the name of Society before vacating of the premises but after execution of the Development Agreement and consent of all members in respect of the Development Agreement and the proposed plans. It is one of the steps to safeguard interests of the Society. Stamp duty provisions relating to TDR transactions need to be complied with.

The Society should appoint an architect or engineer for the verification of their carpet area and supervise the quality of construction, amenities promised by Developer of the proposed building. The architect should physically verify the area once the typical floor slab is casted.

The approved plans should be submitted to the Society within specific period after approval and to the architect to verify periodically that the construction activities are carried out as per the approved plans

No Amendments of plans without the consent of society members

Additional Carpet area excluding Door jambs , no. of Parking (open/covered) , Rent to be paid till O.C

 

Utkarsh Jani


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Redevelopment – Duration of Redevelopment

Redevelopment in Mumbai is very upbeat as there is a very limited possibility of open land within the city and suburban limits coupled with fast growing demand for houses and shortage of housing stock.
A large number of buildings exists that are in a bad shape or unkempt due to age, atmospheric consequences etc. This is a point where the building has reached the pinnacle at which point neither structural repairs nor the large sums of money that go into its restoration would guarantee its life span. Hence redevelopment is the best possible option for such buildings as to try and avoid hazardous consequences of collapsing and killing and injuring people. The optimistic side of redevelopment is to simply provide extra space for members with extended family. The Government has allowed incentive FSI for carrying out redevelopment schemes in the city as well as in suburbs

Redevelopment takes a rather good amount of time due to Consent of Society members, Extending EOI (Expression of Interest) by Society, Furnishing documents to developer, Addressing Society problems, Appointing consultants, Tendering/ short listing, Selection of best option, Extending LOI (Letter of Intent), Deal structuring, Municipal approvals, Execution of DA & POA, Shifting to Alternate accommodation, Demolition & re-construction,
Granting possession, etc.

Society members always ask one question in the first meeting with any PMC, how much time will it take to get through the entire process and come back in new building, and the answer of that question is quite complicated as above mentioned milestones have to be achieved only by the members of society, PMC or Architect may only guide but the decision has to be taken by society only .

 

Utkarsh Jani


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Redevelopment Motivation

 

A major financial benefit of redevelopment is sizable Corpus Fund which would take care of original member’s share of the revised maintenance cost of the new premises or to utilize it for other purposes as per the requirement of each individual member. Rental Charges including brokerage and transportation charges for the alternate accommodation is provided to each and every member of the Society while they are away when their building is being built Society members also enjoy the privilege of additional carpet area in the newly developed buildings as a token of compensation from the Developer. Also if any of the members would like to acquire additional living area could do so at best negotiated prices by the developer. This would enable the pre-existing families to enjoy modern amenities and extravagance with the warmth of their same old locality.
The Developers provide modern gadgets such as close in circuit cameras, intercom systems, smoke detectors, firefighting alarm system, metal detectors, high speed elevators etc. The redeveloped complexes and towers have excellent stilt parking or basement parking facilities which eases the traffic congestion in the Society premises. This not only saves precious space but also ensures discipline in the traffic flow in the Society premises.

 

Utkarsh Jani


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Redevelopment Simplified –

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Understanding the Redevelopment

 

Redevelopment is commonly described as “Adaptive reuse, where older structures which have outlive their uses are converted into new ones”. It is an opportunity for people living in old weak buildings to have a chance at living in modern contemporary building, making it a better place for people to live in and accommodate new people. Today a major amount of long standing buildings are in need of structural adjustments and enhancements, however the existing members of that society find it a daunting task to accumulate such large amount of funds to carry on such tasks.

 

Extension in families call for larger areas to dwell in, time worn hosing societies have certain hitches such as lack of proper security system, lack of modern amenities, play areas for kids, water seepage , dearth of parking lots, lack of toilets attached to apartments in chawl systems, etc. Redevelopment boosts these shortcomings with better refurbished amenities transforming dreaded establishments into modern buildings reaching the global high standards of living.

 

Redevelopment opens a whole new portal in the world of housing societies as vacant and un-encroached land seems only like a myth to carry out any further construction. On the other hand a number of old housing societies that have dilapidated buildings need augmentations to be done. However refurbishing estimates over the budget for society members and flat owners. This is the major reason behind societies willing to opt for redevelopment to acquire definitive safety.

 

Utkarsh Jani


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Redevelopment Project

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Criteria for selection of a Builder for Redevelopment Project – Utkarsh Jani.

Developer Selection is the most important thing as it is only the Developer/Builder, who will complete the project. we have asked this question to almost 1000 society members to know their pulse . We gave them four choices and asked them to suggest most important criteria according to them and the results are as follows:

What is the main selection criterion while selecting a developer for redevelopment project?

TABLE NO 5.11: SELECTION CRITERION

Financial standing 150
Reputation in the market 200
Experience of Redevelopment 150
Good offer 500
TOTAL 1000

 

CHART NO 5.11: SELECTION CRITERION

INTERPRETATION:

From above it clear that 50% respondents select  good offer as an important criteria while selecting a developer, 15% respondents prefer their financial standing and another 15% prefer Developer’s Experience of redevelopment and 20% respondents do select a developer for their reputation in the market for redevelopment project.

Further Reading : http://www.redevelopmumbai.com/

 


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Redevelopment – Precaution is better than cure

Before signing a Redevelopment Agreement the residents should ensure that they return to the redeveloped premises within a stipulated time as per the terms settled with the Developer. The members should also realise that Builders are equal beneficiaries and desist from taking any hasty decision which at a later date, culminate in to irreparable damage. The Society should be careful in drafting the Redevelopment Agreement and not leave the same to the Developer
The terms and conditions of the agreement should legally and practically be taken care of to protect the corporate interests of the Society and each of its members as also to avoid any litigation later. Every detail pertaining to the construction specifications, construction and material, amenities should be specified in the Redevelopment Agreement. Anything that is vague will go against the interest of Society members

 

 

A good number of cases have been reported where lay members of societies are crushed under the crafty builders when redevelopment assignments undertaken are neither accomplished in given time nor are the promised facilities made available or never provided. Many a times people are exposed to events for which the cause of redevelopment shortcomings are mainly lack of competency or due to paucity of inflow or diversion of funds from the assigned projects in order to acquire more and more projects beyond their financial means. Often, Builders have compensation clause that assures the members of the Society, daily/monthly damage for delayed possession beyond the specified date as mentioned in the Development Agreement. However, the Builders disregard the same. Builders who offer unreal excuses to escape paying penalty can be dragged in the consumer court for a breach of contract and cheating

 

 

Utkarsh Jani


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Redevelopment – Important Points

Since the redevelopment work is of common interest, it requires the major decisions to be taken by the Society with the consent of General Body. Necessary Resolutions should be approved in the General Body Meetings
The Government of Maharashtra has issued specific guidelines to streamline the process of redevelopment so that the problems in the redevelopment can be eliminated at the initial stage resulting in the reduction of the time required for the redevelopment process.

 

The Society should hire a professional and competent advocate who should be careful in drafting the Redevelopment Agreement and should not leave the same to the Developer. The terms and conditions of the agreement should legally and practically take care of the in interests of the Society and each of its members. While drafting, one needs to visualize every possible setback and should provide answers and remedies against possible eventualities so that the Builder’s interest in completing the project continues till the end.

 

The Bank Guarantee should be drafted simultaneously along with the Development Agreement. The draft of the Bank Guarantee should be simple and not tied up with conditions. It should state that except calamities like floods, earthquakes or a war, the reconstruction will be completed in the specific time or at the very least, within the grace period, Failing this, the Guarantee can be invoked. The Society should take PDCs for the future rent and compensation at the time of vacating. To ensure that the Builder completes the reconstruction project, he should be permitted to give possession of his sell portion only after offering possession to the existing flat owners.

 

Utkarsh Jani


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Redevelopment Documents

Redevelopment Documents :

Though the government is drafting the procedure for deemed Conveyance, the Society should appoint / hire professionally competent advocate having expertise in Conveyance Cases for legal solution.
The following property documents for redevelopment can be obtained from respective departments :

Property Card and CTS Plan from city survey office,

Old Building approved Plans and other permissions from BMC office,

Property tax paid From BMC’s Assessment Department.

ULC order from Collector’s office,

Non-Agricultural Order and N.A. Tax Paid Receipt from Collector’s office,

DP / TP remarks from respective departments (CST office),

Registration receipt and Stamp duty paid proof from the Registrar’s office,

Registered conveyance / Index II from the Registrar’s office,

Search report from an Advocate and

Title Clearance Certificate about the property by an Advocate

Utkarsh Jani