For Regular Updates Please Follow Our WhatsApp Channel Click Here
Last updated on October 11th, 2024 at 05:36 am
It has been observed that there exists a lot of confusion about the housing society redevelopment and building redevelopment process rules among Society Members.
For the financial safety & security of the Flat Owners, it is necessary to follow a set of important guidelines for the purpose.
In this present article, we delve deep into the subject to understand the safety guidelines.
For the society’s redevelopment process, technical experts and legal experts need to be appointed.
The technical experts are known as Project Management Consultants, and the legal experts are lawyers.
The PMC & Legal Experts must be experienced & well-versed in the intricacies & problems related to the housing society redevelopment.
People also ask what is the procedure for Redevelopment of Building?
In this article, we outline in detail, the procedure for / redevelopment rules/redevelopment of buildings.
[Also Read: Real Estate Redevelopment: Avoid Delays & Hurdles In Society Redevelopment Process]
Issue of Appointment Notice For PMC & Legal Experts For Building Or Society Redevelopment
You first need to issue Notices in local well-circulated newspapers inviting bids from competent Project Management Consultants (PMCs) and Legal Experts to assist your Cooperative Society for the process of redevelopment.
This Notice should provide the details about their professional role/service expected by the housing society.
The three most competent PMCs and Legal Experts should be short-listed and the best ones should be selected in the Special General Body Meeting of the Cooperative Housing Society. Thereafter the Managing Committees should appoint the selected PMC and Legal Experts.
Issue of Tender Notice Inviting Competent Developers For Redevelopment
For the purpose of your building redevelopment and/or society redevelopment, with the help of the appointed PMC & Legal Experts, the Managing Committee / Society Members should draft & prepare a Tender Notice inviting Bids from Competent Developers for the Redevelopment of Housing Society.
Most Importantly this Tender Notice should contain all the details of the services expected by the Society.
[Also Read: The Functions & Duties Of A Redevelopment Committee In Redevelopment Of Cooperative Housing Society]
The most important safeguards/terms & conditions in the said tender notice:
Area Increment
The Tender Notice should contain that the Developer should specify the amount/percentage of increment being proposed from his/her end over the existing usable carpet area of the house / Flat.
This comparison should be the amount of usable carpet area that the Developer proposes to provide against the presently existing usable carpet area of each house/Flat and the overall existing used area.
Please note that this existing or proposed usable carpet area means the internal area of the house/Flat + Balcony area.
This Usable Carpet Area is also known as or called as MOFA Carpet Area in the State Of Maharashtra.
Transit Accommodation Rent / Hardship Allowance
The minimum amount of Transit Accommodation Rent/Hardship Allowance per sq. ft. expected from the Developer per month.
Please note that this transit accommodation rent also known as hardship allowance is a little higher than the rent received by the Flat Owner / House Owner is the house / Flat is given on rent by the House / Flat Owner.
The tender conditions should also specify the annual increment expected in this transit accommodation rent/hardship allowance.
Corpus Fund
The tender conditions should specify the minimum amount of corpus fund amount expected per sq ft. from the Developer, this corpus fund amount is to enable the house owner/Flat Owner/Society Member to pay the increased Maintenance of his/her redeveloped Flat, after issue of Occupation Certificate (OC).
Security Deposit / Bank Guarantee
This should be a mandatory condition included in the terms & conditions of the tender document. Developers normally provide the security deposit by way of a bank guarantee for the period of the redevelopment after the signing of the Development Agreement and before the commencement of the redevelopment work.
As far as possible it is always better to ensure that this Security Deposit/Bank Guarantee Amount is a little higher than the entire rent amount of all the Eligible Rehab Tenements/Houses/Flats taken together for at least one year or more.
Earnest Money Deposit Amount (EMD)
The Earnest Money Deposit (EMD) Amount should be substantial but not fully deposited/submitted with his bid.
The EMD amount could run into a few crore Rupees, but only a part of the same around Rs. Ten Lacs should be deposited/submitted with the bid, and the balance amount should be given within one month upon selection.
Shifting Charges & Brokerage
The minimum expected Shifting Charges & Brokerage should be mentioned in the Tender Notice.
Shifting Charges are the expenses to be made by the House/Flat Owner/Society Member while vacating the house/flat, as well as while taking possession of the redeveloped house/flat after the issue of the Occupation Certificate (OC).
The brokerage charges are the charges by the house/flat owner/society member whose services are employed while procuring a house on rent during the period of redevelopment.
Cost / Charges of Tender Document
The cost/charges of the Tender Document to be borne by the Bidders / prospective Developers normally should not exceed Rs. 10,000/- to Rs. 20,000/ to fairly ensure that the maximum number of competent Developers are able to submit their bids.
Shortlisting of Developer for Redevelopment
Among the bids received, the best way is to shortlist the top three financially & technically sound developers having a solid background, are technically competent, and have good experience in the field of redevelopment.
[Also Read: Carpet Area Vs Built Up Area In Booming Real Estate Development & Redevelopment Process]
Selection of Developer
Once the Managing Committee shortlists the three most competent developers, then the meeting of the Special General Body should be convened and the most competent developer selected by the general body of the society, as per the laws in force / prevailing laws.
Please note that Section 79A of the Maharashtra Cooperative Housing Societies Act makes a provision for the necessary process of the Selection of a Developer.
Once the Developer is selected, then with the Managing Committee is supposed to finalize the terms and conditions of the Development Agreement with the aid and assistance of the selected and appointed legal experts.
[Also Read: How to Become a Real Estate Developer With No Experience? Start Now]
Letter Of Intent (LOI)
After the Selection of the Developer in the Special General Body of the Society, vide Section 79A of The Maharashtra Cooperative Act, the Cooperative Society / Managing Committee has to issue a Letter of Intent to the Selected Developer.
Development Agreement (DA) With Selected Developer For Building Redevelopment / Society Redevelopment
The Development Agreement (DA) should contain all the necessary terms & conditions, essential for the safety and security of the House Owners / Flat Owners / Society Members, to be signed by the Developer with the Cooperative Housing Society.
The most important terms & conditions are:
Area Increment
The Developer should clearly state the amount/percentage of increment of area in usable carpet area against the existing usable carpet area for each existing house/flat.
Area Certification
The Developer should also mention that the increment of the area shall apply to the existing area of the house / Flat as shall be certified by the Planning Authority / Housing Authority of the State.
Common Spaces / Parking
The Developer should provide all details of the vehicle parking spaces allotment/allocation per flat.
List of Amenities
The Developer should provide a list of all the amenities that he going to provide and clearly state all the details of all the amenities to be provided by them including the area of the amenity – per amenity space.
Payables
The Developers should clearly state all the details of the amount payable to the flat owners / Flat Owners / Society Members, including Transit Accommodation/Hardship Allowance, Corpus Fund, Shifting Charges & Brokerage, besides the details of the Security Deposit / Bank Guarantee and Earnest Money Deposit (EMD).
Increment in Payables
The Development should contain the details of the finalized Annual Increment in the payable Transit Accommodation/Hardship Allowance. Normally the Annual Increment has been observed to be a minimum of 5% per annum, on the existing Transit Accommodation/Hardship Allowance, which appears to be quite fair & just.
Final Plans / Layout Plan
The Developer should agree and state in the Development Agreement (DA), that they will submit their final plan/layout plan to the House Owners / Flat Owners / Society containing the Area Statement, showing the Projected / Eligible Internal Usable Carpet Area (MOFA) Against the Existing Usable Internal Carpet Area (MOFA) for approval, before they submit their layout plan / final plan for sanction/approval to the Planning Authority / Housing Authority / MHADA / Municipal Corporation.
It is not at all mandatory that the Developer prepare Tentative Layout Plans along with the Area Statement, before the signing of the DA and Power of Attorney, because the same even if prepared, are very much likely to change after the survey and certification of the internal existing carpet area of the houses/Flats by Planning Authority / Housing Authority / MHADA / Municipal Corporation etc.
Tenure of Work of Building Redevelopment / Society Redevelopment
The Developer should clearly state the tenure/period it will take them to procure all the necessary permissions and the time of commencement and end of the redevelopment work along with the time within which he will procure the Occupation Certificate from the Planning Authority / Municipal Corporation / Government.
Taxes / LTCG / GST on Development Agreement
The Developer should state the details to be paid by him to the government which includes the Long Term Capital Gains Tax (LTCG), GST, etc on the redeveloped house / flat / gst on redevelopment of housing society.
Please note that the entire period for completion of building redevelopment/society redevelopment is 3 years or less then, as per the present laws in force, the Long Term Capital Gains Tax will not be applicable on the Redeveloped Rehab Unit/House/Flat.or its owner.
FSI Area In Building Redevelopment / Society Redevelopment
There is a lot of misunderstanding/confusion prevailing about the various types of FSI / Area calculations in Redevelopment. Meaning misunderstanding of terms like: carpet to built up, carpet area to super built up area, super built up, super built area, built up area to carpet area
For a Full Clarification / Understanding on this subject, you may please read our article titled: Revealed: RERA Carpet Area, MOFA Carpet Area, Super Built Up Area In Redevelopment.
Conclusion
To ensure the financial safety and security of the Flat Owners / Society Members, it is necessary to follow the above guidelines to ensure your safety as well as the safety of your house /flat in the building redevelopment & society.
Your FAQs Answered Here
What is Development Agreement?
Development Agreement: A Legal Contract
A development agreement outlines the terms between a landowner and developer for a project. Key components include land purchase, project scope, timeline, financial arrangements, permits, and dispute resolution.
The agreement’s complexity may differ based on the project and the involved parties. Understanding development agreements is crucial for landowners and developers.
After how many years building goes for redevelopment?
Building Redevelopment: A Matter of Time
The lifespan of buildings varies significantly. Factors influencing redevelopment include age, maintenance, local regulations, economic conditions, and community input.
While many buildings may require major renovations or redevelopment after 25 to 30 years, some can last longer with proper care.
Redevelopment is a complex process that can take several years to complete.
How To Stop Redevelopment Of Society
Preventing Redevelopment of Society: A Guide for Residents
Redevelopment often involves demolition and reconstruction. To protect your community, consider these strategies:
Community Organization:
Unite with neighbors to voice concerns and negotiate with authorities.
Legal Action:
Consult legal experts and explore legal avenues to challenge
redevelopment plans.
Heritage Preservation:
Identify historic value and seek heritage status to safeguard buildings
.
Alternative Solutions:
Explore renovation, shared amenities, and energy efficiency to enhance living conditions.
Public Advocacy:
Inform neighbors, engage with media, and lobby for policies that protect existing communities.
Early action is crucial. By acting promptly, you can increase your chances of preserving your society from redevelopment.
