REDEVELOPMENT OF HOUSING SOCIETY THAT YOU WANT TO KNOW

REDEVELOPMENT OF HOUSING SOCIETY THAT YOU WANT TO KNOW

What are the reasons that every housing society looks forward for redevelopment of their property? The most crucial phase the Mumbai presently suffers is growing population with continuous invasion of migratory population from other places which has made the Mumbai becoming over crowded creating acute shortage of space. The demand for residential and commercial units is ever increasing resulting in demand of accommodation more than supply.

The redevelopment of any property offers better facilities, privileges and amenities provided by developers with facility to live in same location preferred by people. Since the buildings are 30/40 years old, the Societies are unable to bear heavy cost of repairs. The cost of new flats in Mumbai is very high. Hence people would buy additional space in the existing place which is being redeveloped. The property prices of flats go up after redevelopment. The builders offer good corpus amount, new construction enriches living standards as also the redevelopment is the only way to meet the shortage of dwelling units

The future of redevelopment in Mumbai city is very bright since there are constraints on the availability of open land within the city and suburban limits coupled with fast growing demand for houses and shortage of housing stock. To overcome the above hurdles, the only solution is redevelopment of the existing property.

There are thousands of buildings which are in bad shape and dilapidated due to their age, atmospheric wear and tear and other reasons. They have reached a stage where it is not possible to carry out structural repairs and rehabilitation as the same are not economically viable and may not be guaranteed for more extended service life of the buildings.

Redevelopment of such old buildings has become a necessity since many buildings collapse each year, killing or injuring many people. The other reason being the requirement of an extra space by the Society members is due to increase in family members. The Government has allowed incentive FSI for carrying out redevelopment schemes in the city as well as in suburbs.

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 counselor who should be careful in vetting/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.

A Redevelopment Agreement, as the name suggests, is Principal Agreement executed for the redevelopment of an old building, between the Office Bearers of Managing Committee/Landlords and the Builder/Developer. But it's not as simple as it sounds; the Housing Societies/Landlords need to exercise necessary caution to ensure that the residents' corporate interest is safeguarded.

The legal documents concerning the redevelopment projects are essentially to be precise and leaving no room for any ambiguity on the agreed terms. Documents drafted meticulously ensure that the parties truly agree on the contents and prevent future disputes caused by differing interpretations of the document. Drafting/Vetting of legal documents accurately is our privileged skill requiring close attention to terms and conditions to be documented in favour of the Society.

The venture of redevelopment of any property involves a massive volume of multi-crores of rupees as also the fate and future of all the Resident Members of the Society. Once the property is handed over to the Builder/Developer, the Society has only legal documents in their hand to rely upon, in case of any adverse situation in accomplishing the successful task of the redevelopment. Our approach in respect of drafting/analyzing all the legal documents pertaining to the redevelopment is scientific and systematic.

While it is easy to draft terms addressing the primary purpose of a legal document, the best documents anticipate all those possible events that might interfere with the client’s intent. We anticipate these events to help our Client Societies/Landlords to determine and arrest such eventualities in documentation.

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.

If there are serious irregularities in the process of redevelopment and when they are noticed halfway, they can jeopardize the redevelopment and the consequences can be severe as what the law does not permit, cannot be done either by the Builder/Developer or by the Society.

TDR should be loaded in the name of Society before vacating of the premises but after execution of the Development Agreement and must obtain the consent of all members in respect of the terms and conditions documented in Development Agreement and the proposed plans. It is one of the steps to safeguard interests of the Society.

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.

There are many advantages for various bodies, for people, for Government and for the local Municipal Corporations as well. The advantages for the Developers are that, there is no huge investment regarding the TDR of such properties unlike new plot development and these projects are always with clear title.

Though the time frame for the agreement procedure from the occupants or Society members is more and the matter also requires frequent dealings with lawyers and court etc., the investment for such projects happens to be much lesser. The Society gets better standard of living and latest amenities for the members.

Better level of infrastructure and services like new and better construction with elevation grand entrance lobby and lifts of reputed make better productive plan for the new flats, more open space along with recreational facilities, separate society office/separate toilets available for servants, Provision for seismic design for the building with latest fire fighting systems, health club and gymnasium with ample car parking.

The other advantages being the increase in flat value and more saleable value of the flat with more carpet area than that of the existing building since the structure is new with provision of modern amenities and improved life style.

Maintenance of inherent features of existing project, no obstruction of the view, proper air ventilation catered in layout, natural light catered in planning and emergency of the building lights is maintained with a stand-by generator facility. Since all the redevelopments are providing either basements or podiums or stilts for parking the vehicles of the occupants, the traffic blockages due to vehicle parking on the road can be less thereby assuring better conditions for the traffic and lesser problems for the Municipal Corporation and the other Departments related. Due to redevelopments, Govt. also gets benefited with additional revenue of new taxes.

Society expects monitory compensation by way of Corpus so that the additional maintenance and the normal furniture expenses are covered. The reimbursement of rental expenses, brokerage and transportation is necessary for the alternate accommodation till the new flats are handed over.

The other facilities in redevelopment are high end security systems; stand by generators, concealed plumbing and electrical lines, latest fire fighting systems, anti termite treatments, u/g tanks with submersible pumps having sensors, provision for piped gas, cable TV, telecom, internet etc.

List of preliminary Documents required from the Society opting for redevelopment are Society Registration Certificate, Original Building Plan, Conveyance Deed/Lease Deed/Sale Deed, Copy of Resolution of SBGM, Documents/Papers/Deeds/Agreements etc. whatsoever in nature related to the plot, Property Card, D. P. Remark, Extract of 6/12, 7/12, Search report and Title certificate, Index II, N. A. Order and City Survey Plan.

The Housing Societies often get confused about choosing the best or right or so to say, one HONEST BUILDER / DEVELOPER. There are many cases where the dreams of Members of the Housing Societies are crashed when the terms of Development Agreement are breached and time schedule of completion of project is not maintained by such insatiable Builders / Developers.

There are types of voracious Builders/Developers of III tire who have abandoned or have delayed the redevelopment projects due to various reasons mainly due to paucity of inflow or diversion of funds from the assigned projects in order to acquire / pocket more and more projects beyond their financial means or are simply not capable to execute them due to lack of competency and precision.

Since the redevelopment of a property is an exigent issue now a days with offending Builders / Developers and their felonious and offending treats to inexperienced Managing Committees of Housing Societies, we especially impress our Client Societies to be vigilant on the issues like Delivery Delays, Broken Promises, Breach of Trust, Cheating, Unfair Trade Practice, Deficiency in Service, Abandonment of Redevelopment Projects half way, Corruption and Malpractice to pocket the Redevelopment Assignment, Illegal Constructions, Violation of Acts, Laws and Rules etc.  

Redeveloping a home is a major decision for the lifetime and one would not want to take chances. It is said that till you do not leave your Society, you are the KING. The day on which you handover your property to the Builder/Developer for redevelopment and leave your Society, the Builder/Developer is the KING. 

The following property documents can be obtained from respective departments: Property Card and CTS Plan from City Survey Office, Old Building approved Plans and other permissions from Building Proposal Dept of BMC, 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, Registration receipt and Stamp duty paid proof from the Registrar’s office, Registered conveyance / Index II from the Registrar’s office, Search Report and Title Clearance Certificate about the property to get prepared from an Advocate.

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