Redevelopment: Rules that need to be followed

Mumbai: With limited availability of open land parcels in Mumbai, major developers are now looking at venturing into the redevelopment space.

Dilapidated buildings on the verge of collapse are a grim reality for thousands of housing societies across Mumbai. Developers, as an incentive to owners of older buildings, offer additional area, money, and the promise of a new flat with better amenities.

Housing redevelopment refers to the process of reconstruction of a residential premise by demolition of the existing structure and construction of a new one as per approvals from the Municipal Corporation of Greater Mumbai (MCGM). It ideally works best when a society is in dire need of extensive repairs but is starved of the necessary funds for it.

As per the terms of the agreement between the developer and the society in question, existing members of the society receive new flats in the reconstructed building of an area equal to or more than the area of their existing flats. But redevelopment can only take place if 75 per cent of the members tender their consent.

There are certain rules that need to be followed:

• 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.

• 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.

• 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.

• 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 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. According to redevelopmumbai.com, successful bidder has to give a bank guarantee equivalent to 20 percent of the total project cost.

• 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.

• 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 dishonored, the society has the right to prevent the builder from either selling or allowing any new flat purchaser to occupy their respective flats.

• 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 to the competent court.