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Developers play fundamental role in redevelopment of housing societies. Currently, the redevelopment mania of residential properties is flourishing in full swing and one finds in Mumbai that compound wall of every third property of a housing society is covered with tins as number of small time Developers and Real Estate Companies has joined the battle in an effort to grab a share of this fast rewarding pastry. However, the saddest part of this transformation from ‘OLD’ to ‘NEW’ is a nightmare as hundreds of redevelopment projects in Mumbai are plagued with delay in its completion with many more are being added to this band-wagon every month.

The delay in completion of redevelopment projects by and large are chased by numerous complaints from the housing societies when redevelopment projects are inordinately delayed and flats are not delivered in time as documented in Development Agreement. What do the developers do when flats are not delivered in time? Some pay liquidated damage as part of a penalty clause in Development Agreement.

It is a non-ending tussle between the Developers and housing societies that due to delayed completion or where such projects are at a grinding halt, leaving behind the member of housing societies to suffer mentally, physically, financially and socially. There are unknown Developers of small means with insufficient funds or have pocketed redevelopment projects more than their financial resources or have diverted their funds to other projects that at a later date have stopped paying rentals to the members of housing societies due to inordinate delay.

When the stoppage of work is evident, the Developer’s team come up with numerous excuses each time the housing societies raise the issue. The common problems faced by the housing societies today are the constructions without proper approvals, difference in measurement in actual carpet area, built-up area and super built-up area and very often, the questionable and defective construction due to completing the project in substandard manner to save overhead expenses.

Unfortunately, most of the Development Agreements signed by the Developers with the housing societies tend to be one-sided i.e. in favour of the Developers with the lack of a proper penalty clause in case of delay in handing over the possessions.

We strongly recommend to add this term in Development Agreement that on account of any delay in completion of the project, it is the members who shall be the victims of distress and hence, if the Developers fail to complete the construction of the said intended new building/s within the stipulated period of completion of the project, save on and except on account of the delay due to force majeure, the Developers shall pay to the each of the members, a liquidated damages equivalent to the sum calculated at the rate of Rs._____/- (Rupees______________ only) per sq. ft. of the existing carpet area of their respective flats.

This amount as liquidated damages shall be paid by the Developers per month or any part thereof in addition to the regular Monthly Displacement Compensation per month that is due to the existing members till the full Occupancy Certificate is received simultaneously the Developers handing over the possession of new flats to the respective members.