HOW TO SELECT A GOOD BUILDER FOR REDEVELOPMENT OF ANY HOUSING SOCIETY

One of the prime factors for successful completion of any Redevelopment Project is a selection of a good Builder. One of the things that cause the most stress when any Housing Society starts a redevelopment process, is finding a good and reliable Builder. Selecting a Builder, negotiating various terms and dealing with them and their team is one of the most stressful things is like organizing a wedding.

In Mumbai, increasing costs and short of space make it impossible for residents to move out of ageing and dilapidated Housing Societies and for them, the concept of redevelopment has become dream come true to have new and better houses to stay.

Thousands of older Housing Societies are showing signs of serious inattention with regard to repairs and upkeep. There are distinct safety and security issues and a complete absence of modern amenities. Under the circumstances, redevelopment is the only solution being a sensible and practical.

However, while many Builders sell the dream of redevelopment to Housing Societies, there have been several cases where the dream has turned into a nightmare for middle class families residing in these Societies. Even the reputed Builders have dodged in maintaining the terms of redevelopment projects.

Selecting an accountable and trustworthy Builder is a difficult task to ensure successful redevelopment. A redevelopment project going wrong can have disastrous consequences for all residents and it is invariably the Housing Society's Managing Committee that becomes the scapegoat.

In redevelopment, prevention is most definitely better than the cure. A failed redevelopment can be avoided by adhering to a proper process while selecting a Builder to partner with. Once the Builder is finalized, it is important to incorporate in the Development Agreement all the legal terms through an expert who is well versed with various laws of redevelopment that safeguard the corporate interest of the Society and its Members. This can eliminate the possibility of discrepant situation at a later date to a significant extent.

While selecting a Builder, both financial and quality aspects need to be considered. Most societies focus on only quantitative financial terms which include the carpet area offered to each society member, the corpus amount offered, rent for alternative accommodation, shifting charges and penalties. What ignored here are the qualitative aspects of the Builder which would include past experience and track record. Extensive research needs to be done on the Builder's construction, marketing and legal track record. Some of such alert areas that need to be pondered:

v Does the Builder have a strong brand?

v Is the habitable area of the redevelopment at par with the quality and brand of the Builder's saleable portion?

v Is the Builder known for violation of acts and rules laid down by authorities?

v What are the systems, structure and strategy of the Builder?

v Does he have strong in-house construction and marketing teams for execution?

v Does he have a record of cost and time overruns?

v What is his level of implementation expertise?

v How well-connected is he and how adept at obtaining necessary approvals from various authorities on time?

v Is he knowledgeable about and comfortable with the local environment? He may have to handle unforeseen hurdles that are always potentially a part of redevelopment projects.

v What are the Builder's abilities in terms of raising equity and debt funding?

v Does he use a transparent and consistent financial accounting policy?

v What is his current fund availability and funding pattern?

v Is he easily available to the Society in case of any emergency?

The Society should carry out analytical check of at least two or three other Societies where the Builder has constructed and delivered the similar projects. It is essential to establish whether he adheres to promises on quality and timelines as documented in the Development Agreement and provides sound infrastructure and finishes.

Given the complexities involved in the Mumbai real estate market, there is no single, standard solution in redevelopment. The process involved in a Builder search should be customized, flexible, transparent and in line with the redevelopment rules. The commercial offers from potential Builders should be driven by competition rather than price.

Here are certain important criterions to observe about a selection of a genuine Builder. Never ever select a Builder simply on the basis of his financial offers and exorbitant increase in carpet area and promises to provide amazing and astonishing amenities etc. His selection should be exclusively being based on his merit, reputation, technical capability, experience, financial status, quality of construction and successful completion of his earlier projects etc.

Visit their Website – Visit their website to know whether they have good reputation and who are their clients. Ask for those references and see if you can view work they have done previously that is similar to the project you are starting. This will give you the opportunity to speak to other clients and look at the quality and durability of the work.

Start dates – A reputed Builder will always be busy. You should be prepared to have to wait several weeks or even a few months before your Builder is able to commence the redevelopment process. When you ask them to quote for the same, talk to them about when they might be able to start. Someone who can start immediately may not be the Builder for you.

Builders who “cold call” – Good Builders are always in demand and always busy. They never turn up on your doorstep asking if they can undertake your redevelopment project. If a Builder knocks on your door and offers to do a job, turn them away.

Construction period – A redevelopment project may take couple of years or maximum three for completion, depending on the scale of property, after the work commences on the site. The Builder should ensure timely completion, physical possession, as committed to the Society. It shall be Builder’s responsibility to obtain Occupancy Certificate from the Municipal Authority. However, the Builder will have to pay the rent for the period until he delivers the new property after the Occupancy Certificate is received.

Experience – As within any profession, a Builder will have a certain amount of experience for their progression within the trade. This experience is what the well known and reputed Builder will draw upon when redevelopment project is undertaken and that is why it is important to hire an eminent Builder who has the type of experienced team you can rely upon.  

Knowledge – A professional Builder will always do their best to ensure that they have this level of knowledge throughout every part of their work and service. This means that not only will they have the necessary technical knowledge but they will also have knowledge of other professional local tradesmen working within the area, various permits required in the construction work being undertaken on your property and the specialized building regulations which will need to be adhered to at all times during the construction work. This in-depth knowledge possessed by the professional Builder will help guarantee that your construction work will be at the right time, using the right materials for the right price. Needless to say knowledge is invaluable. 

Safety – The knowledge which is possessed by a professional Builder is also a vital part of the customer having the peace of mind that the construction work has been undertaken with all safety measures at the forefront. This means that not only will the completed work on your property safely adhere to all the relevant building regulations but it will also ensure that it should add value to your home.

Quality of Construction –The Builders must ensure good quality materials and proper workmanship. Specifications as per Development Agreement should be adhered to and statutory specifications of the Local Planning Authority should be complied with. Proper technical supervision on site should be ensured through qualified and experienced technical personnel in addition to usual qualified structural engineers and architects. 

Defects Liability Clause – Builder should incorporate in Development Agreement, a clause for defect liability for a minimum period of 36 months or as per prevailing laws from the date of handing over of possession or intimation to the Society upon receiving the Occupancy Certificate from Municipality regarding the readiness to hand over possession, whichever is earlier and which shall be limited to the defects in the construction (i.e. structure) and not on the bought out materials most of which are covered under varied warranty periods by the manufacturers themselves.

However, in the event of recurring problem with the bought out materials, the member shall co-operate with the purchaser in sorting out the issue. This defect liability shall not cover force majeure situations such as damage resulting from war, flood, earthquakes etc.

Availability – A professional Builder will probably be busy with other jobs and you may have to wait for them to fit you in. If a Builder says they can start the next day, they may not be the professional Builder you are looking for.

Plans – A professional Builder adheres to the plans and ensures that no unauthorized construction is carried out which may subject the Society for distasteful and repulsive action from the Municipal Authorities at a later date. Builders who don’t want to work from plans should be regarded with suspicion – particularly as the planning department and building regulations officers will want to ensure that the building is going up exactly as approved.

Tender Document – Tender Document should contain extensive and genuine details on Financial, Technical and General Information of the Builder. Make sure to get the information on present or past litigation cases in any Court against the Builder by way of declaration.

To sum up this article, we once again stress that a good Builder is expected of lot of thoughtful process of redevelopment, knowledge, experience and expertise in design, planning, construction and executing the same with passion to deliver human friendly projects. The Builder selected, should be of unshakable reputation for quality, efficiency, trust, meticulous planning, top quality amenities, superlative designs, timely completion, guaranteed possessions and handing over of property of the Society for rehabilitation of its members.

Please educate yourself and caution your friendly neighbors to be vigilant from Irregularities and illegalities in Redevelopment by the Builders, Illegal gratifications showered by Builders on corrupt members of Managing Committees, Rampant Corruption in BMC, Flagrant violation of Rules and Regulations by the Builders, how to beware of Cheat and Fraud Builders and their criminal and felonious acts.

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Redevelopment of Housing Societies...the evil side of fairy-tale

In cases of redevelopment, it is said that till you do not leave the society, you are the KING. The day on which you handover your property to the builder for redevelopment and leave the society, the builder is the KING.

Mumbai has become the capital of corruption, especially in the construction business, perhaps, because of the highest property rates in India. Cheating property buyers, flouting the rules, getting the requisite papers and plans approved sometimes in advance, selling refuge and other free of FSI areas and construction and sale of illegal floors are common these days in the financial capital of India.

Redevelopment is the hot issue today as vacant and un-encroached land is now hardly available to carry out further construction. A number of Housing Societies have old and dilapidated buildings that need redevelopment. The cost of structural repairs by demolishing and reconstructing such buildings is often beyond the reach of any Housing Society and flat owners. This is the prime reason why many Housing Societies are willing to opt for redevelopment to acquire ultimate safety.

The Housing Societies having old buildings are having many weaknesses and vulnerabilities such as lack of services like security, cleaning, absence of common facilities like Society office, unavailability of proper playing area for children in the compound, persistent leakage problems, absence of elevators in high rise buildings, poor and underprivileged interior planning of rooms and low resale value on sale of flat due to the poor condition of the buildings. Therefore, redevelopment in Mumbai has huge potential for Builders and Property Developers as there are constraints on the availability of open land within the city limits owing to the growing demand for houses and an acute shortage of housing stock.

On the other hand, there are various advantages for the Housing Societies who opt for redevelopment of their existing properties in to new structures having lavish grand entrance lobby, latest amenities in rooms, exclusive Society office as per norms, enhanced view from flats, spacious common passages and staircases, availability of modern elevators, generous car parking space, health club and gym if agreed, landscape garden for recreation, high end security systems, stand by generators, efficient fire fighting system, underground water tanks with submersible pumps having sensors, provision for piped gas, cable TV, telecom, internet connection, concealed plumbing and electrical lines.

There are numerous instances where firstly, the members of the Managing Committee are hooked and enticed of unlawful gratifications in substantial amount by certain unscrupulous Developers and use these Managing Committee Members as agents to pursue and pass over the rosy dreams and benefits to innocent members of the Society and criminally ensure that the redevelopment project is bagged by the concerned Developer.

The corrupt members of the Managing Committees also resort to arm twisting, harassment and threatening method to the flat owners into submission as per the builder’s orders. Scared by such hounding tactics, most society members accept and offer their consent towards the redevelopment of their society without any protest and prefer to go along with whatever the members of the whole Managing Committee decides.

It is well known fact that the illegal gratifications and lavish spending by a large cartel of unscrupulous Builders entice the members of the Managing Committees of Cooperative Societies and provoke them to turn against their own members of the Society in the matter of obtaining consent and force implementation of redevelopment.

Numerous cases are on record of press where the dreams of innocent middle class families are crashed when the redevelopment assignments undertaken are neither accomplished in given time by Builders chosen by Housing Societies nor are the promised facilities made available or never provided. There are types of voracious Builders of III tire who have delayed the redevelopment projects 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 or are simply not capable to execute the projects due to lack of competency.

It has been often noticed that during the process of redevelopment, the terms of Development Agreements as agreed upon are twisted and unhealthy attempts with ulterior motives are made by the Builders to twist and grossly violate the rules of MRTP and DCR by unlawful planning and constructing additional / unauthorized areas that are beyond their entitlement (i.e. beyond the plot FSI and the TDR / FSI loaded) for their hidden financial gains. The buyers of such unlawful flats / properties land themselves in deals that lead to litigation at a later date as also it is not viable to pull the builder to court and wait for years to get fair justice.

Once the buyers sign on the dotted line and pay the cost, he is at the builder’s mercy. It is not expected of a common man to analyze the hidden risks in a redevelopment scenario. His knowledge is zero to know the judiciary system and its intricacies. The builders on the other hands have fleet of highly paid advocates and experts to advise and protect them.  

The Builder selected, should be of unshakable reputation for quality, efficiency, trust, meticulous planning, top quality amenities, superlative designs, timely completion, guaranteed possessions and handing over of property of the Society for rehabilitation of its members.

It is worth to mention here that in the name of redevelopment of old housing societies in Mumbai, the various authorities, in last few years have carpeted free ground to breed rampant corruption to benefit the private builders to sub serve their illegal and deceitful objectives to garner huge profit. This is most required of the Government to impede the members of Managing Committees to enjoy the sleep with the builders for few greens and thrust redevelopment idea on the innocent and gullible members.

Major laws required to be kept in mind include the Transfer of Property Act, 1882, Registration Act, 1908, Indian Contract Act, 1872, CRZ laws, State laws like Maharashtra Ownership Flats (Regulation of Promotion of Construction, Sale, Management and Transfer) Act, 1963, Maharashtra Co-operative Housing Societies Act, 1960, stamp duty laws, Development Control Rules, Environmental Law, Tree Cutting Laws, Municipal Laws, Slum Redevelopment Scheme etc. If there are serious legal irregularities in the process of redevelopment and when they are noticed halfway, they can jeopardise the redevelopment and the consequences can be severe as what the law does not permit cannot be done either by the Builder or by the Society.

Housing Societies should remember that going in for redevelopment without knowing the precise procedures and processes involved is like walking on the edge of a cliff blindfolded - they have no idea when a wrong step could send the Society tumbling downwards. Essential information is one concept where half knowledge is infinitely more dangerous than ignorance. Even if the Society takes the right step but without following the necessary guidelines, all efforts would be rendered null and void. Clearly, the need of the hour is that those standing on the threshold of redevelopment receive advice from Industry Leaders having both, the Experience and Expertise.

Last, but not the least, the successful execution of any redevelopment project primarily depends on the management by the members of the Managing Committees with transparent efforts to protect the corporate interest of the society and 100% co-operation of each and every member. This, in turn is again depends on the capacity of the members of the Managing Committees who are entrusted with the management of entire process of the redevelopment with their honesty and integrity.

We wish to educate Housing Societies and caution them to be vigilant from Irregularities and illegalities in Redevelopment by the Builders, Illegal gratifications showered by Builders on corrupt Members of Managing Committees, Rampant Corruption in BMC, Flagrant violation of Rules and Regulations by the Builders, how to beware of Cheat and Fraud Builders and their criminal and felonious acts.

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WHY REDEVELOPMENT PROJECTS OF HOUSING SOCIETIES ARE BEING DELAYED

It is a long ending tussle between the Developers and Societies that never seem to end delivering Redevelopment Projects on time as documented in the Redevelopment Agreement. There are umpteen cases where Developers abandoned or delayed the redevelopment projects due to paucity of inflow or diversion of funds from the assigned projects in order to acquire more and more ventures beyond their financial means or are simply not capable to execute the projects due to lack of competency leaving the buyers suffer mentally and financially.

It has also been noticed that certain Developers, due to sudden liquidity crunch or improper planning, drop the project half way or the project is badly staggered and the paucity is worst affected to the Members of the Society for long, may be years. Such Developers stop the further payment of rent for the alternate accommodation hired by the Members or do not offer any monitory compensation for the delayed period.

Once the new buyers in such projects under redevelopment, sign on the dotted line and pay the cost, he is at the Developer’s mercy. It is not expected of a common man to analyze the hidden risks in a redevelopment scenario. His knowledge is zero to when it comes know the Indian judiciary system and its intricacies. The Developers on the other hands have fleet of highly paid advocates and experts to advise and protect them.

The Developer selected to assign the project, should be of unshakable reputation for quality, efficiency, trust, meticulous planning, top quality amenities, superlative designs, timely completion, guaranteed possessions and handing over of property of the Society for rehabilitation of its Members.

Never ever select a Developer simply on the basis of his financial offers and exorbitant increase in carpet area and promises to provide amazing and astonishing amenities etc. His selection should be exclusively based on his merit, reputation, technical capability, experience, financial status, quality of construction and successful completion of his earlier projects etc.

Numerous cases are on record of Press where the dreams of innocent middle class families are crashed when the redevelopment assignments undertaken by them are neither accomplished in given time by Developers of III tier chosen by Housing Societies nor are the promised facilities are made available or never provided. There are types of greedy Developers of III tire who have delayed the redevelopment projects 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 or are simply not capable to execute the projects due to lack of competency.

The another reason for the stagnation stage or a halt in Redevelopment project is that during the process of Redevelopment, the unhealthy attempts with ulterior motives are made by the Developers to twist and grossly violate the terms of Development Agreements as agreed upon, blatant violation of Rules of MRTP and DCR by unlawful planning and constructing additional / unauthorized areas that are beyond their entitlement (i.e. beyond the plot FSI and the TDR/FSI loaded) for their hidden financial gains impelling the Society for litigation at a later date.

The benevolent officials at MCGM always are in readiness to approve any plan tabled by such Developers. The tycoons of MMRDA, MHADA, Banks, Politicians and Senior Bureaucrats, Police, Local Goons and all concerned are the core harvesters in most lucrative money spinning business involving billions of  crores of rupees in the name of redeveloping our mother land.

The Bombay High Court recently declined to grant relief to Mana Developers who failed to take any steps for more than two years to get the construction plans for redevelopment of Firdous Park Cooperative Housing Society approved and obtain Intimation of Disapproval from MCGM.

Justice SJ Kathawalla noted that the Development Agreement had been executed by the Housing Society in favour of the Developer in March 2008, but the Developer did not take any further step despite the Society extending every co-operation to the Developer.

Mana Developers had approached the High Court in April 2011 seeking Specific Performance of the Development Agreement. They also filed a plea for interim orders restraining the Housing Society from appointing some other Developer. Mana Developers had contended that the delay was a result of the Housing Society failing to obtain Individual Agreements from each of its Members.

The judge, however, found that during the initial stage, the Developer himself had informed the Society that he had entered Individual Agreements with its Members and each of the Members had consented for the redevelopment work. Justice Kathawalla, therefore, concluded that the Housing Society was not under any obligation to get Individual Agreements executed by each of its Members.

The judge further noted that at a particular stage prior to filing of the suit, the Developer was not ready and willing to perform its obligations as agreed under the Development Agreement, and therefore, the Developer was not entitled to any relief. The Housing Society, which has 138 Members and a plot admeasuring 5,335 square meters, had decided to go for redevelopment as its building was dilapidated, and the BMC had issued notices for its demolition.

Continuing its crackdown on sloppy work, the BMC has now outlined a policy limiting the maximum time of completion of any redevelopment project within four years and slapping penalties on Developers unable to meet deadlines. 

The Estate Department in their circular have listed out seven steps to be taken against Developers if they slip up, including cancellation of proposals for delays in the planning stage and fines if construction is not completed on time. However, it is a question giving rise to billions of doubts whether the policy shall be implemented with its stringent steps or shall remain on paper gathering the dust in course of time.

Among the steps listed, the MCGM has revised its charges for a Developer from Rs 1,000 to Rs 5 lakh every year for revalidation of the Letter of Intent (LOI) if he fails to get a Commencement Certificate (CC) within a year. For further delay, a show cause notice will be issued for cancellation of the project. It will be implemented with retrospective effect from 2010. 

The MCGM has taken a lenient view on delays resulting from litigation, but ordered a stiff 18% interest levy on the remaining capitalized value (the amount the Developer has to pay for the sale component in a redevelopment project) and an additional Rs 1.00 lakh per month for any extension a Developer might seek in a smoothly progressing project. 

The new policy also links a project's deadline to the plot area. Redevelopment on a plot up to 4,000 Square Meters has to be completed within three years and those that must in four years. 

 It is realized that the delay in completion of projects embarrasses the BMC as rehabilitation of tenants cannot be done on time. Moreover, as time passes, the value of the flats in the sale component of the project increases for the Developer, but leads to delay in paying up the capitalized value that he owes to the MCGM. This policy will ensure that the capitalized value is paid on time and as per schedule. 

 It is for the benefit of the Members that they educate themselves and remain vigilant from irregularities and illegalities in execution of redevelopment projects by the Developers, illegal gratifications showered by them on corrupt Members of Managing Committees, be aware of rampant corruption in MCGM, flagrant violation of Rules and Regulations and how to beware of Cheat and Fraud Developers and their criminal and felonious acts.

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VIGILANCE AND WARNINGS IN REDEVELOPMENT

With the real estate prices beyond the reach of common man in Mumbai, residents in old buildings are now realizing that they have an opportunity to fetch considerable value from their existing property by offering it to a Builder/Developer for redevelopment. Redevelopment is most practical, economical and long-term solution in circumstances where old structures are proving uneconomical for repairs.

As the real estate prices continue to zoom and land in most cities becomes scarce, builders have begun to look at the existing structures that can be redeveloped.

The people enjoy improved lifestyle in modern structures with landmark elevations and latest amenities in every room, extra carpet area, increase in flat’s value with financial benefits like Corpus Fund, Rent Compensation for Transit Accommodation, Brokerage and Transportation Charges during the period while the building is under construction. However, there are many factors/questions that arise during the ongoing process of redevelopment and they are to be taken care of diligently while opting for Redevelopment.

1. PREVENTATION IS BETTER THAN CURE

In fact, as an incentive to demolish older buildings and construct a new edifice with more floors, the developers are offering additional area, money and the promise of a new flat to the existing owners. While the offer may seem exciting, there are some things you should keep in mind before agreeing to have your property redeveloped.

The main parties involved in any Redevelopment Project are the Landlord of Tenanted Buildings, Cooperative Housing Societies and Developers. The landlords of tenanted buildings in South Mumbai negotiate directly with the Developers for redeveloping their property whereas the old Housing Societies with thousands in numbers in suburban areas, predominantly the Managing Committee Members are handling the entire process. The distressing fact is that they are mostly non-technical and laymen without any legal knowledge or expertise over the subject of redevelopment.

It is advised to get educated of the various Acts, Laws and Rules governing the societies and the redevelopment to facilitate them to be vigilant from irregularities and illegalities in redevelopment as also how to beware of cheat and fraud builders with their criminal and felonious acts.

Because of such rampant irregularities and corrupt practices found during the process of redevelopment in many Housing Societies and to ensure transparency in process of redevelopment, Dr. Sudhirkumar Goyal, Principal Secretary, Co-operation Department, has come out with a Do’s and Don’ts to be STRICTLY followed by Societies going for redevelopment vide Govt. of Maharashtra notification no. CHS 2007/CR554/14-C dated 3rd January, 2009.

Following are not exhaustive but certain important areas of precaution which provide cover to the Societies against getting cheated by the Developers.

a) Selection of a Genuine Developer: Never ever select a Builder simply on the basis of his financial offers and exorbitant increase in carpet area and promises to provide amazing and astonishing amenities etc. His selection should be exclusively based on his merit, reputation, technical capability, experience, financial status, quality of construction and successful completion of his earlier projects etc.

b) Hiring an experienced Counselor or professional and competent Advocate: The Counselor/Advocate helps in drafting the Redevelopment Agreement and shall not leave the same to the Developer. The terms and conditions of the agreement should legally and practically take care of the corporate interest of the Society and each of its members. While drafting, it is emphasized to visualize every possible setback and remedies against likely eventualities so that the Developer’s interest in completing the project continues till the end.

c) Appoint Civil/Structural Engineer: It is advised to appoint Civil/Structural Engineer to monitor the progress, supervise the onsite quality of construction with standard material used, constructed area to be in conformity with the approved plans, to be vigilant against unauthorized and illegal construction or violation of rules, verify the amenities provided as promised by Developer etc.

d) Transparency in Managing Committee: It must be ensured that the interests of the members are protected as the Managing Committee handles the entire process. Often there is a suspicion of their being hand in gloves with the Developer and at times, it is assumed to have been true as the Managing Committee members also look forward for their personal gains rather than ensuring a fair deal for members and the corporate interest of the Society.

e) Arrest the violation of Laws and Rules by Developers: During the process of redevelopment, the terms of Redevelopment Agreement as agreed upon, unhealthy attempts with ulterior motives are made by the Developers to twist and grossly violate the rules of MRTP and DCR by unlawful planning and constructing additional/unauthorized areas that are beyond their entitlement (i.e. beyond the plot FSI and the TDR/FSI loaded) for their hidden financial gains. The buyers of such unlawful flats/properties land themselves in deals that lead to litigation at a later date.

f) Delayed Possession of flats: It is a long ending tussle between the Developers and societies that never seems to end delivering projects on time as documented in the Redevelopment Agreement. There are umpteen cases where Developers abandoned or delayed the redevelopment projects due to paucity of inflow or diversion of funds from the assigned projects in order to acquire more and more ventures beyond their financial means or are simply not capable to execute the projects due to lack of competency leaving the buyers suffer mentally and financially.

g) Liquidity crunch: It has also been noticed that certain Developers, due to sudden liquidity crunch or improper planning, drop the project half way or the project is badly staggered and the paucity is worst affected to the members of the Society for long, may be years. Such Developers stop the further payment of rent for the alternate accommodation hired by the members or offer any monitory compensation for the delayed period.

h) Protection under Law: Cheated Societies can initiate action under Sections 415 and 420 of The Indian Penal Code, 1860 for Breach of Trust and Cheating, for Deficiency in Service, Unfair Trade Practice and violation of contracted terms under Indian Contract Act, 1872.

2. WHAT TO NEGOTIATE WITH DEVELOPER:

a) The main focal area is payment of rent by the Developer for transit accommodation. No buildings are completed within 24 months and hence, make sure that an advance rent of 24 months is received in advance and a suitable penalty clause in the Development Agreement is inserted on default in handing over the possession within the stipulated time

b) The Managing Committee to demand that all financial benefits like Corpus Fund, Rent, Transportation and Brokerage as agreed must be paid by the Developer to the members before they leave their flats and Society hands over the property to the Developer for redevelopment

c) Insist on providing the Bank Guarantee from Nationalized Bank equivalent to the estimated construction cost of all the flats in case the Developer fails to deliver the redeveloped flats to the members

d) The other areas where the Managing Committee should emphasis are to provide adequate numbers of Car Parking, Additional Carpet Area and Purchase of TDR in Society’s name, execution of individual agreement etc.

3. ALERT AREAS TO BE TAKEN CARE OF:

a) The first and the foremost step before going in for redevelopment would be a structural audit of the building. The structural audit report will determine whether the building should go in for redevelopment or for major repairs. In the absence of the technical report it would not be legally permissible to pass a resolution in the general body meeting. However, it is a fact that many co-operative Societies suddenly call for General Body meeting and decide to go in for redevelopment in the absence of a structural audit report

b) It must be ensured that before initiate the process of redevelopment, the land is conveyed in the name of Society and it has been suitably recorded in the Property Card issued by MCGM. The non-availability of conveyance from the old owners/Builders renders the societies subjects the entire process of redevelopment break down instantly

c) Many redevelopment projects have often collapsed due to the growing demands of the members in majority as there is a high level of expectations amongst the members when the idea of Redevelopment is proposed. This should be restricted or avoided

d) Selection of Developer should not be scaled on the basis of various exorbitant offers but should be according to his standing/reliability/integrity and market credibility

e) Avoid the internal rifts between the Managing Committee and resident members during the progression of the process of redevelopment

f) Managing Committee should desist from negotiating directly with the Developer keeping the other resident members uninformed of

g) The successful execution of any redevelopment project primarily depends on the management by the members of the Managing Committees with transparent efforts to protect the corporate interest of the Society and 100% co-operation of each and every member. This, in turn is again depends on the capacity of the members of the Managing Committees who are entrusted with the management of entire process of the redevelopment with their honesty and integrity

h) Avoid litigation with the Developer since it is basically the Society and its members who may be at a loss due to time consuming process of Law

i) Housing Society Members must ensure that they elect the Managing Committee Members strictly as per the Election Rules specified as per Bye Laws governing the Housing Societies and are known for their integrity, clean, honest records. Care should be taken not to elect office bearers who have consistently flouted provisions of Co-operative Act, Rules and Byelaws to further their own self-interest, committed serious financial irregularities with the society funds and members with dubious records who have corrupt background

j) The task of satisfactory completion of redevelopment of any Housing Society and to get back their members in their dream houses is not difficult provided the Office Bearers and the Committee Members are sincere and honest and justify their respective posts in the welfare and well being of the members of the Society

4. THE THINGS TO BE AWARE OF WHILE SIGNING A REDEVELOPMENT DEAL:

a) Redevelopment Agreement (Also known as Development Agreement) which should be well worded and un-ambiguously drafted to ensure that the overall interest of the residents is protected with all the precautions to avert litigation at a later date

b) Thorough study and factual verification of details of Financial and Technical Data furnished by the Developers in the Tender Document is must

c) To specify the period within which the Developer shall procure the IOD and CC in the Agreement and in case of failure, the Society shall have the exclusive option to cancel the Agreement

d) Stipulate the exact time schedule for completion of project

e) Ensure to include inflexible compensation clause for delay in completion of project/possession of flats is included as penalty clause in the Redevelopment Agreement

f) Every detail pertaining to the construction specifications, material to be used, branded amenities should be specified in the Redevelopment Agreement. Anything that is vague will go against the interest of Society members

g) TDR should be loaded in the name of Society before vacating of the premises but after execution of the Development Agreement

h) The care taken that the necessary permissions are obtained and legal formalities are fulfilled to secure the project by the Developer before he asks the members to vacate the premises so that the project doesn't stuck up after demolition of the building

i) In case of defective material used in redevelopment, the Defect Liability Clause must be included in the Agreement

j) The Bank Guarantee should be drafted simultaneously along with the Redevelopment Agreement. The Bank Guarantee document should be simple and not tied up with unwarranted conditions

k) Major laws required to be kept in mind include the Transfer of Property Act, 1882, Registration Act, 1908, Indian Contract Act, 1872, CRZ laws, State laws like Maharashtra Ownership Flats (Regulation of Promotion of Construction, Sale, Management and Transfer) Act, 1963, Maharashtra Co-operative Housing Societies Act, 1960, stamp duty laws, Development Control Rules, Environmental Law, Tree Cutting Laws, Municipal Laws, Slum Redevelopment Scheme etc. If there are serious legal irregularities in the process of redevelopment and when they are noticed halfway, they can jeopardise the redevelopment and the consequences can be severe as what the law does not permit cannot be done either by the Redeveloper or by the Society.

5. WHO HAVE BEEN CHEATED?

There are numerous criminal cases registered against the erring Developers where the flat buyers/housing societies have been deceived and cheated in maintenance of terms of Development Agreement like not providing the agreed amenities, using defective materials, delayed possession, financial irregularities, frauds in area measurement of flats, violation of laws acts and rules, unauthorized and illegal construction etc.

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