Redevelopment Issues, Malpractices, Concerns
What is Redevelopment?
Redevelopment refers to the process of reconstruction of the residential/commercial premises by demolition of the existing structure and construction of a new structure in its place. This is done by utilizing the potential of the land by exploiting additional TDR, higher FSI as specified under the latest Development Control Regulations (DCR). Redevelopment of old buildings is changing the face of Mumbai. In traditional practice redevelopment is done through a developer, where the part of the benefits of the additional floor space index (FSI) accruing to the building are shared between the members of the society & developer.
In most metro cities of developing country like India, residents of old buildings generally tend to look at redevelopment for following objectives:
a. Building in dilapidated condition
b. After certain age (Building after 30+ years), due to wear and tear and exposure to natural elements, building become weak
c. Impact from corrosion particularly in cities like Mumbai which reduces life of building and old buildings are unable to withstand adverse conditions like severe weather (very heavy rains, windy weather from frequent storms, seismic zones with frequent earth quakes etc.)
d. Uneconomic to repair as cost of major repair is sometimes more than reconstruction
e. Current building has no Lift causing hardships to aged residents needing redeveloped tower with Lift
f. Structural repair is not economically feasible to take care of seepage, weak walls and foundations, leaking water pipes, etc
g. Occupants (owners or tenants) need more area due to expansion of family size with change of generation
h. Aspiration of many occupants have gone up with Indian Economy doing well and they crave for more space and luxurious building with modern & luxurious amenities like Sports, Clubs & health related facilities
i. Property prices have sky rocketed making it unaffordable for many owners to look for larger which may be beyond their budget
j. With redevelopment, the members get a new building, more space and monetary benefits without spending any money from their own pockets
k. Building has unused development rights where they can build a new and higher structure where the additional space can be partly given to existing members and partly sold for a tidy profit (particularly in self-redevelopment)
l. Horizontal expansion is not feasible in a landlocked island city like Mumbai and thus vertical expansion through redeveloping existing building in a tall towers become only option
m. Even in the case of non-landlocked city, horizontal expansion means need of more roads, transportation, drainage pipe lines and that comes with heavy cost.
n. State government and municipality is giving concessions (of higher FSI, TDRs with lower premium, transparent & speedy approvals) for Redevelopment Projects
Why few Rebellious Members Obstruct Redevelopment of Housing Societies
Many judgments delivered by the Bombay High Court have shut the doors for the minority members who have been obstructing the redevelopment of their societies on flimsy grounds. The prime observation of Court is that few members cannot be permitted to hold the Developer and the whole of the society to ransom and are bound by the Development Agreement executed between the society and the Developer. The Maharashtra Co-operative Societies Act (MCS Act) says that if a redevelopment proposal has been passed by following a proper procedure in the society’s General Body Meeting and at least 75% of the members present have agreed and hence, the decision automatically binds the minority members not agreeing to the redevelopment.
Redevelopment of housing societies in Mumbai witnesses a number of issues, lack of co-operation from the members being one of the many. Many housing societies are unable to undergo redevelopment since senior and aged members refuse to shift themselves to rental houses and try to avoid redevelopment. On the other hand, forcible eviction from old and dangerous building of any housing society cannot be executed by civic authorities since it is not legally possible. According to the Mumbai Municipal Corporation Act of 1888, BMC cannot enforce forcible eviction of any member from private buildings i.e. housing societies.
The only option for such minority members is to take the legal recourse (which comes with associated costs of legal fees, which in city like Mumbai can be unaffordable) if they have substantial reasons over the protest, acceptable to the Court as also normally they take the stance that they have their flats and should have a say in the redevelopment.
Reasons of these rebellious members
Ø The process of redevelopment being not taken up in transparent manner
Ø Senior and aged members refuse to shift themselves to rental houses
Ø Elements of frauds or favouritism involved
Ø Suspicion & allegations of Ungrateful benefits received by members managing Committee as also are being offered larger flats in the new building with free furnishing
Ø Arm-twisting tactics or high handed attitude by the administrative body etc.
However, it has to be proved that there is some prejudice caused with an act of deception meted out to them. If the reasons for objection are valid, the Court may ask the society to restart the bidding process for redevelopment. These members should remember that litigation costs in Bombay High Court are very high in terms of cost of drafting the petition and fees of Advocates. Objections by a few members are the main reasons why redevelopment projects get held up or stalled. But generally when the majority of the members are in favour of the redevelopment proposal, the Court allows them to go ahead with the project.
Types of Redevelopment:
2) Redevelopment through Builders
3) Slums redevelopment (used as an urban renewal approach to redevelop and transform poor and low income settlements into new developments or housing of approx. 300 sq. ft.)
4) Redevelopment of Tenanted Buildings
5) Cluster Development
In self-redevelopment, flat owner get extra space and corpus and builder’s profit could be shared in terms of every member gaining 20 % to 30% extra space and Society or their individual members can expect some corpus (from sale of some flats) to mitigate increase in maintenance cost & property taxes. However one basic issue is who amongst members takes responsibility for the smooth completion of project.
Redevelopment through Builders is widely followed model due to inherent issues in self redevelopment. Society would generally prefer reputed Developers but they would not be interested in small size project. However there have been many cases of long delays causing hardships to occupants.
Cluster Development is the economic growth of entire residential area to safeguard open spaces and environmental resources and houses are built closer together on a specific plot of land rather than distributed uniformly across vast areas. Unsafe and dangerous buildings would be "rehabilitated" as soon as possible and courts would be asked to speed up the resolution of on-going litigation surrounding such buildings.
Important Caveat: For an old building to go for redevelopment in city like Mumbai:
1. The building should have completed 30 years or are beyond and
2. To be certified by the Govt. approved architect on the basis of his “Structural Audit” as fit for Redevelopment.
3. Building should have Conveyance in its name. Over the years many societies struggle to get conveyance or deemed conveyance done. For a speedy resolution, experts strongly recommend filing a consumer court case against the builder. Simply file a consumer court case with a prayer for conveyance and the delay from the builder. Since conveyance requires property card to be in the legal entity’s name, your case will also look at such other formalities while the issue of conveyance is considered. In the end, when the matter is resolved other important formalities will also be completed prior to taking on redevelopment.
4. Income tax impact on redevelopment has to be factored in while deciding the development as there would be potential Income Tax liability on money received and project delay beyond 36 months.
Housing societies in ultra-premium south Mumbai, Bandra localities go in for redevelopment, tap top builders. Raheja, Rustomjee are among marquee names for redevelopment.
Redevelopment fever has now gripped some of the top housing societies in the silk stocking enclaves of south Mumbai such as Malabar Hill, Walkeshwar, Nepean Sea Road and Altamount Road. These are upscale neighbourhoods where new apartments sell for over Rs 1 lakh a square foot. And chasing these societies are many of the city's A-list developers, rushing to submit their bids to bag lucrative redevelopment projects. In Bandra's affluent neighbourhoods of Pali Hill, Carter Road and Mount Mary, where property prices are among the highest in the suburbs, many upscale societies are up for redevelopment with several of them already sewing up agreements with top builders.
The residents occupy flats ranging from 1,300 sq. ft. to 2,300 sq. ft. and are expecting 30-50% additional space in the new construction depending on already used FSI & width of Road & proximity to Metro station.
Societies prefer A Grade developers because of the experience with many small developers who were unable to complete the projects. Some housing societies in south Mumbai are tying up with top builders to redevelop their buildings. There has been huge traction for quality builders who have learnt how to navigate redevelopment process. Earlier, they weren't really involved in society redevelopment but many have realised they can bring the best value for society members.
Several societies at ultra-premium locations such as Altamount Road, Carmichael Road, Walkeshwar and Worli are going for redevelopment, which suggests the supply of ultra-luxury units will increase in the future in these micro markets.
Redevelopment of MHADA Buildings
All redevelopment agreements in the MHADA layout will now have to be tripartite agreements Housing Societies, Developers & Maharashtra Housing Area Development Authority (MHADA). Until now such agreements were signed with the residents of the society and the developer. MHADA, as the zamindar, issued the NOC for redevelopment only.
The state’s housing department issued a GR on the change on 16th March 2021. MHADA has 56 layouts in Mumbai, and from 2018 there are plans for complete authorization for the redevelopment of old and dilapidated buildings. The redevelopment of MHADA buildings is regulated by Regulation 33 (5) of the Development Control and Promotion Regulations, 2034.
MHADA mainly constructs residential buildings for economically weaker (EWG), low-income (LIG), and middle-income groups (MIG) that are allocated to citizens on a lottery basis. The land is leased to the Co-operative Housing Society set by the residents. Since many buildings are old and dilapidated, many housing societies went for redevelopment. But in many cases, the redevelopment has been stuck for years, leaving many families homeless and financially stressed.
“Since MHADA only issues NOCs, in case of breach of the terms of the agreement, it can do nothing to help in the redevelopment. Not only have redevelopment projects been stuck for years, but even rent payment issues also cannot be resolved. Therefore, trilateral agreements will now be mandatory” the GR said.
Builders pay a premium to MHADA for getting more construction space and concession in rules of having large open spaces and staircases pushing fast redevelopment of oil and dilapidated MHADA-led buildings and the agency asked to issue an offer letter in a time-bound way.
MHADA had cleared many stalled projects and had given out offer letters, making way for many redevelopment projects, including Patra Chawl, Chikhalwadi, Motilal Nagar and BDD chawls. People living in old buildings will get new homes due to the fast-track redevelopment approvals.
Allowing redevelopment of non-cess buildings under 33(7) will result in the provision of over 3 Floor Space Index (FSI). Redevelopment under 33(7) means the board will not be burdened by maintenance anymore. Also, under 33(7), these buildings can be developed by the tenants themselves. Earlier, these reconstructed MHADA-acquired buildings could be developed only under DCR 33(5) which has a 1.33 FSI limit. As a result, carrying out redevelopment was not a viable option.
The Bombay High Court has ruled that rehabilitation components of redevelopment projects involving Maharashtra Housing and Area Development Authority (MHADA) colonies will not attract premium on areas such as staircase, car parks, fire escape, lobby & lift rooms. This benchmark ruling would change cost structures of such projects because up to 30% of a real estate project’s cost in Mumbai goes towards more than 22 premiums collected by authorities. In response to a petition filed by developer SD Corp, a joint venture of Shapoorji Pallonji and the Dilip Thacker Group, the court has directed Municipal Corporation of Greater Mumbai (MCGM), MHADA and the state government to refund the premium collected on above-mentioned common areas because these are free of floor space index (FSI) area calculations.
This judgment will be treated as an exact interpretation of existing provisions of Development Control Regulation (or DCR, which governs redevelopment of MHADA colonies) and would stop the practice of charging premium on such areas. If premium is charged on such areas, it will be a bad practice because such areas occupy almost 30-40% of total construction and when government gives 2.5 to 3.5 FSI for rehabilitation schemes, in such cases maximum area is covered under such portion means staircase, lift, etc.
What are the issues in Redevelopment?
There are Risks and challenges in building redevelopment project in housing society.
1. Societies are in a dilemma whether they should self-build or entrust it to a builder.
2. Process of building redevelopment is quite complex in housing society
3. It takes considerable efforts and time to accomplish the project
4. If a proper and time bound process is not followed, or if the risks, uncertainties and challenges are not handled properly, even a seemingly simple project can fail or delayed, thereby causing great anguish and hardship to the flat owners and their family
5. Many Redevelopment projects have witnessed prolonged litigation in courts with costly (cost of Lawyers is very high in metro city like Mumbai) and time consuming litigation
6. Every member is emotionally attached to property and in matters of property usually they think long, for next 2-3 generations. The emotional bond is so strong that he is not willing to settle or compromise a bit. He is not willing to trust even his own brother. Also, he feels that he has a veto power, though limited, as a member of the society. If majority of members resolve then dissenting member has limited options. It becomes difficult for the society to proceed further taking everyone along and that is what courts also have suggested.
7. In a society, decisions are not necessarily taken by the application of mind by all. Many times some individuals influence the majority as only a handful are able to evaluate right and wrong and distinguish between what is talked about and what is actually being done.
8. Builder is known to face reasonable as well as unreasonable demands of the members, which have resulted into his becoming extremely shrewd, thick-skinned and always ready to face any intricate problem. If need be, he can be extremely tough and make flat owners’ life miserable.
9. At present it is the builder who decides what shall be offered whereas it should the other way round as to what exactly the society members require from the builder. Understand the construction and buildings would stick with members for generations. Hence Society cannot leave the decisions to builder. Members should not succumb to his bullying or sweet talks and take decisions judiciously and stick with these decisions.
10. Amenities. Society & Flat owner should prepare a list of amenities and should exercise discretion in selection.
a) Building should have 1-2 amenities which would continually generate revenue for the society such as Party Hall, Mini theatre, advertisement hoarding/display space, putting up Mobile Tower etc.
b) Some of the amenities are specific such as separate area for senior citizens, women, youths, children, toddlers;
c) A large Hall for various activities; Conference Hall cum Auditorium cum Mini-theatre;
e) Solar energy;
f) Rain water harvesting,
g) Waste treatment plant,
h) Library; Yoga Centre; Jogging track;
i) Security (electronic as well as physical);
j) Intercom; CCTV;
k) Space for Indoor & Outdoor games;
l) Landscape Garden;
m) Club House (if need be, in collaboration with other neighbouring societies);
n) Sufficient Parking for members & their guests;
o) Ceiling height 10.5’ to 11.0’, false celling;
p) Guest House;
q) Concierge services; tiffin Services:
r) Common Washing Machines;
s) Compound Wall;
t) Security Cabins;
u) Common toilet;
v) Meter Rooms;
w) Pump Room;
x) Society’s Office;
y) Plumber, electrician etc.
z) Medical-Yoga Centre & Quarantine facility which offers relief in various ailments.
11. Water problem is going to be critical over the period. Society should have underground, over-ground tanks; Borings, Storage Tanks, water Harvesting & swimming pool should be considered after considering all these things.
12. The size of flats to be built. One of the aims of Redevelopment was to reunite the separated families. For want of space, the children who have moved out can now come back and experience the warmth of a joint family. Hence at the outset, a survey should be conducted as to the requirements of various members and the size of flats required by them. It is essential that harmony is maintained in the society. It is not necessary that all the flats be of equal size. But too big or too small size flats may create complex issue. The common interests, language, religion, food habits, traditions encourage collective activities and celebrations.
13. Post Covid 19, there are needs to consider separate rooms for Work from Home & Study from Home with appropriate décor, size & internet connectivity.
14. Who will stay where in the new construction? How the flats would be allotted. This is a very complex problem requiring patience, goodwill and spirit of let go in common interest. To eliminate conflict, ask the architect/PMC to draw provisional maps and decide about the principles of allotment.
15. Taxation issues: Redevelopment attracts taxes such as GST & Income tax. These laws are developing and complications and tax liabilities have to be factored in. Income Tax is actively pursuing taxation on monetary benefits received and delay in receipt of possession beyond 36 months to deny benefit u/s 54.
What are the specific issues in Self Redevelopment?
There are difficulties in self-redevelopment.
1) Arranging funds for expenses on approvals, premium on higher FSI & TDR & construction cost.
2) Construction demands technical expertise in terms of supervision, care, alertness & vigilance etc. for 2 -3 years, and who all amongst the members would take responsibility? Rest of the members would expect that to be done at no cost or nominal cost. Most members are already occupied in their job & business and only retired persons would be available and there are attitude issues with such people.
3) There are always needle of suspicion towards these active members as regards some benefits from Contractors, monetary and special attention for their units including free or concessional furnishing
4) There would be problems of disposing of extra space in open market and with transparency.
5) The perennial problem of money laundering would also haunt.
6) Existing members may get frustrated and give away the project to the builder, hoping that he would manage everything and we have to be just prepared to pay his price
Consider these points before arriving at final decision.
1. 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 for approval of Redevelopment.
2. Establish the market value of the property: Before you negotiate with a Developer, you need to establish the market value of the property you will receive on completion of redevelopment. This is a better approach than quoting a random figure to the builder that would make them feel short-changed or the high amount would make the builder shy on the new project.
3. Commercial angle in Redevelopment: A Developer usually assures a certain amount of cash by way of corpus to take care of higher property taxes payable post redevelopment, an additional area or a mix of both. He may give an alternative accommodation for your temporary stay, foot your rentals or give you a monthly compensation within which you have to find your temporary accommodation. The monthly compensation should suitably be agreed upon, which is equivalent to the prevalent rate of rentals in the same vicinity. The developer usually pays post-dated cheques. In case this advance rental is dishonoured, the society has the right to prevent the builder from either selling or allowing any new flat purchaser to occupy their respective flats.
4. Technical angle: Does the finished product match the quality parameters assured by the builder? In fact, at the agreement stage itself, the society residents should appoint a lawyer to draft and finalize the agreement along with PMC detailing the technical specification and amenities. The society members should ensure the timely completion of the project which is the most important detail to be mentioned in the agreement. Decide upon the quality of buildings you are aiming at. New technologies are coming into use adding to durability and strength and also saving construction time. Now pre-fab technology is also gaining currency. You would have noticed that corporate houses are ranked according to their quality or excellence. Thus we come across symbols like AAA, AA, A+, A, B, B-, which give indication of their underlying quality. However, it seems, Architects’ or Engineers’ Associations have not laid down similar standards for quality of construction. Sometimes, we do meet cluster of buildings labelled A Type, B Type, but they refer to area or size and not their quality. If we look around, we can notice buildings built by SRA, MHADA and by small builders as also those huge towers built by reputed builders. Some buildings meet only immediate needs, some are luxurious and take into account future needs, some give indication of opulence and status. At present, with rapid climate change, there is a real apprehension of tsunami, earthquakes, occurring often. The intensity of an earthquake is measured on Richter scale. The buildings should either be earthquake-proof or should be able to withstand minimum up to 8 on the Richter scale. Ask your Architect/PMC to give 2-3 alternatives including about the life of the buildings. It is the durability that decides the quality of the material to be used as also the cost. Perhaps more than 500 items are required in construction. We should be clearly guided as to their quantum, quality, prices and also as to from what sources the materials would be procured. If the designated quality material is not available when needed, the details of the alternative material to be used and sources thereof should be on hand. These specifications should be got scrutinized in detail by at least four different specialist agencies of architects-engineers to ensure that the final outcome are buildings of our dreams. The specifications should be open to scrutiny by the members of the society to ensure their participation in this far-reaching decision.
5. At present the trend is towards buildings which would be eco-friendly, environment-compliant and which would follow Vastu and Green norms. The design should make enough provision for air, light, sunshine with minimum sound pollution and be conducive to wellness. Minimum use of chemicals is desirable. Also surroundings should be clean and pollution free. Pollution is a silent killer and thus an enemy of humanity and hence should be treated accordingly.
6. Fashions are changing. Technology is also fast changing. Hence there should be no hesitation to refer to foreign magazines or to consult foreign architects, engineers. The building should not become obsolete in a short period of 15-20 years. Also due consideration should be given to interior decoration to avoid alterations later.
7. Due diligence would have to be exercised to ensure that the construction is as per the specifications agreed to. There is always a danger of collusion taking place. The quality of construction is the life-line of a building and would determine our peace in future! If the quality is maintained, there would be fewer problems of leakage, repairs, for the next 15-20 years.
8. Drafting of the Tender & agreements: The main parties involved in the any redevelopment project are Society and Developer. Committee Members dealing on behalf of cooperative housing society are mostly non-technical and are laymen. It is very important that the drafting of the Tender / agreement is done meticulously so that there is no chance of dispute and/or difference between both the parties. Excellent skills and vast Legal & Technical knowledge is required to draft such an important document. It is very important to avail the services of the professionals like PMC & Lawyer, who are legally as well as technically qualified and a person who has the vision to anticipate future problems and requirements. Bye Law No 158 recommends need of tender document for construction of building. Redevelopment is usually burdened with bitterness and complaints of high-handedness and corruption against the Managing Committee of the society, which is why society members should always appoint a lawyer before signing a contract with the builder. Builder should be transparent, reliable and trustworthy. The most recommended way to choose a builder is to go by the tendering system. If the carpet area, as documented in the agreement, is not given by the builder, the owner can claim appropriate compensation through a consumer court by filing a complaint against the builder under the counts of Breach of Trust, Cheating, Unfair Trade Practice and Deficiency in Service. The agreement should mention the time of completion of the project, the size of the new houses, the mode and nature of monetary compensation, if it's a one-time payment, reimbursement of rent, or a mix of both. The developer also has to offers a monthly compensation in advance along with the brokerage and transportation charge that the tenant has to incur while securing an alternate accommodation.
9. Guarantee of performance: In any scheme of redevelopment, the primary objective is to ensure guarantee of performance. Performance is principally in the area of timely construction, quality control and adherence to rules, and regulations. The contract should clearly mention the obligations of the builder and the society members and the penalty or consequences of any breach of the contract by either of the parties. Once the agreement is accepted in terms of area and corpus fund, it cannot be revised. The housing society should insist on a bank guarantee, which would take care of monetary compensation to ensure the project is not delayed or stopped midway. "The successful bidder has to give a bank guarantee equivalent to 20 % of the total project cost.
10. Criteria for selecting a the builder: The society should prepare a comparative chart and, after checking the merit, reputation, technical capability, experience, financial status, quality of construction and successful completion of projects, it should select the builder.
11. At the time of vacating the premises, all the members have to give consent and vacate as per the resolution passed in the general body meeting. In case, a member refuses to do so the society or the builder may move the competent court.
There are several issues pertaining to why many building’s redevelopment is on hold. Some of the common reasons are:
Ø Legal issues;
Ø Builder is delaying the project;
Ø Residents and builders aren’t able to settle on agreeable terms.
How builders can manipulate FSI rules and terms of the agreement
Builders often twist and grossly violate the rules of by unlawful planning and constructing additional/unauthorised areas that are beyond their entitlement. The buyers of such unlawful flats/properties land themselves in deals that lead to litigation at a later date. All the demands and negotiations have to be carefully recorded in the ‘Development Agreement’ for successful execution of redevelopment in a housing society and the office bearers and the managing committee members have a strong role to play. Consider these points:
a) In any process of redevelopment, one must be aware of various documentations that are required and also one must understand the tax implications on redevelopment of immovable property. The principal documents are ‘Development Agreement’ and ‘Power of Attorney’ which are to be registered by paying appropriate stamp duty.
b) By executing the Development Agreement’ with the Society, the Developer gets the required permission to develop the land and submits the papers to concerned civic authorities. Upon various sanctions available to him, the Developer constructs the buildings at his cost, retains some flats for him to be sold in the open market and earn profit.
c) When drafting a Development Agreement, some of the important points and clauses of a Development Agreement are to be taken care of. The cooperative Society, the Developer and preferably all the members should be parties to this agreement. There should be a brief history of how the conveyance deed was given to the Society. The registration number of the cooperative Society under the Maharashtra Co-Operative Societies Act, 1960, should be mentioned in the agreement.
d) There should be particulars of the existing flats with carpet area of the flats occupied by each of the member of the buildings. The area of the plot as per the ‘Property Register Card’ should be mentioned. The total estimated FSI area that can be constructed by utilizing TDR on the plot should be mentioned.
e) Lack of transparency in floor area, (Carpet, Built-up, Super built-up, Hyper Built-up, saleable area), status of project (cause of delay, approximate completion time etc), quality of products used, design philosophy adopted, quality standards adopted in construction etc.
f) Carpet Area: This is the area of the apartment/building that does not include the area of the walls. Built-Up Area: This is the area of the apartment/building including the area of the walls. Super Built-Up Area: This includes the Built-Up Area along with the area under common spaces such as the lobby, lifts, stairs etc. This term is therefore only applicable for multi-dwelling units.
g) The agreement should clearly mention the carpet area, including the additional area which will be made available to the members in the new building. The schedule of payment of the total consideration should be specified in the Development Agreement. There should be a mention of the tentative date for vacating the flats in the old building by the members which shall be linked with the plans being approved by the concerned authority.
h) The time period for completion of the new building on the plot owned by the Society shall be defined in the Development Agreement. In the event the Developer fails to complete the entire work within the stipulated period, a penalty clause can be mentioned in the agreement. It should be specified in the Development Agreement that from the date of taking complete vacant possession of the existing structure till the date of receipt of occupation certificate in respect of the new building and till such time that the Developer intimates the members to take possession of their respective flats, the Developer shall bear and pay all municipal rates, taxes and other payments required to be paid to the concerned authorities.
Steps required for Redevelopment of Building of Co-operative Housing Society
1. Requisition for convening Special General Body Meeting for Redevelopment of Society’s Building:-
Not less than ¼ members (25%) of the Society the building of which is to be redeveloped should submit a requisition to Secretary on the Managing Committee elected as per provisions of Bye-Laws and lawfully formed along with their scheme and suggestions for redevelopment of the Society’s building for convening Special General Body Meeting to finalize the policy on redevelopment of the building.
2. Convening Special General Body Meeting:-On receipt of an application as per Directive No. 1 above, Managing Committee should take a note thereof within 8 days and Secretary of the society should convene General Body Meeting of all the members of the society, Agenda of the Meeting should be furnished to each member 14 days prior to the day of meeting and acknowledgement thereof should be kept on record of the society.
Before convening the said meeting, Society should obtain list of Architects / Project Management Consultants on the panel of Government / Local Authority and obtain quotations from minimum 5 experienced and expert persons for preparing project report for redevelopment work of the building and one expert person from among them will be selected in the Special General Body Meeting
3. Following business will be transacted in the said Special General Body Meeting:-
1. To take preliminary decision by taking into consideration demand of the members for redevelopment of society’s building and suggestions received in respect of the same.
2. To select expert and experienced Architect / Project Management Consultant on the panel of the Government / Local Authority for work of redevelopment of the building and to finalize items of work to be done by them and terms and conditions of work.
3. To submit outline of the program for redevelopment of the building.
3. To accept written suggestions from members relating to redevelopment of the building:-
Members of the Society will be entitled to submit in writing to the committee eight days prior to the meeting their realistic scheme, Suggestions and recommendations for redevelopment of the building in the name of experienced and expert Architect / Project Management Consultant known to them. However, that Architect / Project Management Consultant should submit a letter that he is desirous of doing work of redevelopment.
4. Decisions to be taken in the Special General Body Meeting:-
Quorum for the Special General Body Meeting convened for redevelopment of building of the Co-operative Housing Society will be ¾ of the total members of the society. If quorum is not formed, meeting will be adjourned for eight days and if there is no quorum for the adjourned meeting, it will be deemed that members are not interested in redevelopment of the building and meeting will be cancelled.
On formation of quorum for the meeting, Suggestions, recommendations and objections from all the members with regard to redevelopment of the society’s building will be taken into consideration and opinions expressed by all the members will be recorded in the minutes book with names of concerned members. Therefore a preliminary decision will be taken whether to redevelop society’s building or not. Such decision must be taken with majority vote of more than ¾ of the members. On preliminary resolution about doing the work of redevelopment getting passed, following business will be transacted in the meeting:
a) To selected expert and experienced Architect / Project Management Consultant from the panel of the Government / Local Authority for work of redevelopment of the building and to finalize items of work to be done by them and terms and conditions for the same.
b) To submit an outline of the program for redevelopment of building.
5. Providing minutes of Meeting to all members:-
Secretary of the Society should prepare minutes of Special General Body Meeting as above within ten days and a copy thereof should be furnished to all members and acknowledgement therefore be kept on record of the society. Also one copy should be forwarded to the office of the Registrar.
6. Issuing Appointment Letter to the Architect / Project Management Consultant:-
Secretary of the society will within 15 days of the meeting issue Appointment Letter to the Architect / Project Management Consultant selected in Special General Body Meeting and Society will enter into an agreement with Architect / Project Management Consultant incorporating therein terms and conditions approved in Special General Body Meeting.
7. Work to be done in the initial stage by Architect / Project management consultant:-
a) To survey Society’s building and land.
b) To obtain information about conveyance of land to the society.
c) To take into consideration prevailing policy of the Government and the regulations applicable from time to time depending on ownership of the land (MHADA/SRA/Municipal Corporation) and to obtain information about FSI and TDR, which would be available in relation to building and land of the society.
d) To take into consideration suggestions and recommendations from the members for redevelopment of the building as also the residential area to be made available to the members, commercial area, vacant area, garden, parking, building specifications etc. and to prepare a realistic project report.
e) Architect / Project Management Consultant should prepare the project report within two months of date of his appointment and to submit the same to committee of the society.
8. Action to be taken on receipt of redevelopment Project Report:-
a) On receipt of Redevelopment Project Report as above, Secretary of the society will convene a joint meeting to approve the Project Report with majority vote by taking into consideration suggestions received from Committee Members and Architect / Project Management Consultant. Notice in that behalf will be published on the Notice Board of the Society mentioning time venue etc. of the meeting.
b) It should be mentioned in the notice that a copy of the Project Report is available in the society’s office for members to see and the notice should be served on all the members that they should submit their suggestions eight days prior to the next Committee Meeting and acknowledgement of such notice should be kept on record of the Society.
c) Seven days prior to joint meeting, suggestions received from the members will be forwarded by Society’s Secretary to the Architect / Project Management Consultant for his Information.
d) There will be a detailed discussion in the Joint meeting on the suggestions / recommendations from members and opinion thereon of the Architect / Project Management Consultant and project report will be approved with necessary changes. Thereafter draft of tender from will be prepared and date of next joint meeting will be fixed for discussion on draft tender form and finalizing the same.
e) While preparing draft tender form, in order to get competitive quotations from renowned experts and experienced Developer, either carpet area or corpus fund fixed (not to be changed) and by finalizing other technical matters, the Architect / Project Management Consultant will invite tenders. Society’s members will be entitled to furnish information about it to the reputed and experienced Developer known to them.
9. Preparing List of Bids Received:-
a) On the Last day for receiving quotations, Secretary of the Society will prepare a list of offers received and display the same on the notice board of the society.
After 15 days of the last day for receiving quotations, Secretary of the society will convene special meeting of Managing Committee of the society. Authorized representatives of bidders and members of the society desirous of remaining present can remain present for the meeting as observers.
Tenders so received will be opened in the presence of all and the Architect / Project management consultant will scrutinize all tenders and prepare a comparative chart and after checking merit, reputation, experience and comparative rate etc. and select minimum 5 bids and if the bids received are less than 5, all the bids for putting up before Special General Meeting and concerned bidders will be informed about it immediately.
10. Selection of Developer:-
a) Office of the Registrar to appoint Authorized officer for attending General Body Meeting:-
An application with list of the members should be sent within eight days to the registrar for appointment of Authorized officer to attend the Special General Meeting of the Society for selecting a Developer out of those selected by committee of the Society with the help of the consultant, by taking into consideration his experience, merit, financial capacity, technical capacity and competitive rate etc.
b) Convening Special General Body Meeting for finalizing tender:-
After appointment of authorized officer, with his prior permission Secretary of the Society will fix the time and venue convene Special General Body Meeting for appointment of Developer and Agenda of this meeting will be sent to all the members 14 days prior to the meeting by hand delivery and by registered post and keep acknowledgement thereof on record of the Society. Also, office of the Registrar will make arrangement to keep his authorized representative present for the meeting.
Also arrangement will be made for video shooting of the meeting at the cost of the Society. Any person other than formal members will not be entitled to attend this meeting. Therefore members will be required to present at the venue of the meeting with their Identity Cards. At the time of submitting redevelopment proposal to the concerned authority for sanctioning, selection of Developer and other work should have been done in the presence of authorized officer from Registrar’s office.
c) If there is no quorum for Special General Body Meeting:-
If the quorum of ¾ members out of total members is not formed for Special General Body Meeting, the meeting will be adjourned for eight days. If quorum does not get formed for adjourned meeting, it will be deemed that the members have no interest in redevelopment of the building and the meeting will be cancelled and thereafter the said subject will not be taken up before the Special General Body Meeting for approval.
d) In the Special General Body Meeting to be convened for selection of Developer, authorized representative from the office of the Registrar will be present and observe proceedings of the meeting. Also, on concerned representatives and authorized officer remaining present at the venue and at the time of meeting and on quorum of ¾ members getting formed, following business will be transacted in the meeting.
a. Providing comparative information in respect of tenders selected for presentation (for redevelopment work).
b. Presentation by bidders one by one.
c. To select Developer for redevelopment of the building, to finalize terms and conditions and finalize the tender.
d. To obtain consent from the selected Developer.
e. Give information about further work. It will be essential to take written approval by ¾ majority vote of the members present for the meeting for selection of Developer. If the selected Developer of his representative does not remain present for the meeting, further action will be taken by presuming that they have given their consent for the project.
11. Agreement to be entered into with Developer:-
Subject to the terms and conditions approved by General Body Meeting of the Society, an agreement should be entered into with the Developer within one month under guidance from the Architect / Project Management Consultant. Along with the points suggested by the Architect / Project Management Consultant appointed by the Society, following points will also be included in the agreement.
(1) The period for completing redevelopment project of the Society will not exceed more than two years and in exceptional cases, it will not exceed three years.
(2) Developer will give a Bank Guarantee for amount equal to 20% of the project cost.
(3) During the period of redevelopment, the Developer will make available to the members alternative accommodation in the same area as far as possible or arrange to pay monthly rent and deposit as acceptable to members or make available transit camp accommodation.
(4) The said agreement will be registered under Registration Act, 1908.
(5) On completion of redevelopment project, new members will be admitted in the Society only with approval of General Body Meeting of the Society.
(6) Carpet area to be allotted should be clearly mentioned in the agreement.
(7) Development right vested in the Developer will be non-transferable.
(8) Members will vacate their respective premises only after all legal approvals are received for redevelopment of the building.
(9) Rights of those who are in possession of the flats will remain unaffected.
(10) If any dispute arises in the work of redevelopment, provision should be made in the agreement to resolve the same as per provisions of Section 91 of the Act.
(11) After receipt of Occupation Certificate, flats in the redeveloped building should as far as possible be allotted as per present conditions floor-wise and if it becomes necessary to allot flats by drawing lots, on completion of construction, Developer should make arrangement drawing lots, and at that time flats should be allotted in the presence of Registrar’s representative and this process be recorded by video shooting.
(12) Any Committee member or Office Bearer of the Society should not be the Developer or relative of the Developer.
(13) Building plans sanctioned by the Municipal Corporation / Competent Authority should be put up before the General Body Meeting for information and if any member wants copies of approved documents, he should submit application for the same to the Society and it will be binding on the Committee to furnish the information by charging necessary fee.
(14) Please ensure the project is RERA-registered and that sufficient research is done about the builder to ensure they have a good track record.
Builder/Developer of Redevelopment of 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 finding a bride or groom, good family, settled and 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 concerns with regard to repairs and upkeep of depilated & deteriorating building. 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.
Concerns about Builder
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 interests of the Society and its Members. This can eliminate the possibility of discrepant situation at a later date to a significant extent.
A plumber requires a licence, and so does an electrician. But a builder only requires a sweet tongue and a smiling face. They do not require a licence to operate. With MOFA (Maharashtra Ownership Flats Act) in place, education is there for estate agents, but I believe that more education is required for the builder community. They do so many wrong things just for profit,”
As per the stipulated rules and regulations, for a society to opt for redevelopment, its conveyance has to be completed first. To complete conveyance, society needs to have the property card in the name of the rightful legal entity, and the property owner should join as a ‘confirming party’ as per the clauses in the model agreement.
However, builders have continued to exploit the ignorance of consumers blatantly. While the law stipulates that the property owner should be joined as a confirming party in an agreement, Despite this clause, the rules are being openly flouted by the builders. Banks are more than willing to give loans to the builder, even when they know it is a mistake being committed by them. It is, unfortunately, a very corrupt process.
Problems such as “promise of unrealistic targets, insufficient funds, corruption, the difficulty of pleasing all stakeholders, tax burden and stamp duty implications, are unfortunately common when opting for redevelopment.” But each issue can be handled and addressed if planned for in advance.
To sum up, 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 neighbours 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 MHADA, BMC, Flagrant violation of Rules and Regulations by the Builders, how to beware of Cheat and Fraud Builders and their criminal and felonious acts.
CA Harshad Shah, Mumbai email@example.com