Entire Gamut of Redevelopment in Mumbai 

 

by Joni Oraon, Legal Analyst at Brus Chambers, Advocates and Solicitors

 

Dated: February 13, 2024

 

 

Redevelopment, in the context of urban development, is a comprehensive process aimed at revitalizing and rejuvenating existing residential or commercial properties by replacing outdated or dilapidated structures with modern, efficient, and sustainable buildings. This involves the demolition of existing structures and the construction of new ones in their place, often incorporating additional floor space index (FSI) and other development rights provided by the local authorities. 

The need for redevelopment arises from various factors, particularly in densely populated metro cities like Mumbai: 

1. Dilapidated Condition: Many old buildings deteriorate over time due to wear and tear, exposure to natural elements, and lack of maintenance, posing safety risks to occupants. 

2. Structural Weakness: Buildings aged over 30 years may become structurally weak, vulnerable to corrosion, and unable to withstand adverse weather conditions or seismic activity. 

3. Economic Infeasibility of Repair: In some cases, the cost of major repairs exceeds the cost of reconstruction, making it economically unviable to restore the existing structure. 

4. Lack of Amenities: Older buildings may lack modern amenities such as elevators, parking spaces, and recreational facilities, which are increasingly demanded by occupants. 

5. Space Constraints: With changing demographics and family sizes, occupants often require more living space, which may not be feasible through horizontal expansion in land-constrained cities like Mumbai. 

6. Rising Property Prices: Skyrocketing property prices make it financially unfeasible for owners to afford larger homes or for developers to invest in new construction without additional incentives. 

7. Government Incentives: State governments and municipal authorities often provide concessions such as higher FSI, transferable development rights (TDRs), and streamlined approval processes to encourage redevelopment projects. 

8. Desire for Modern Living: Aspirations for modern living standards, including spacious and well-equipped residences with amenities like sports facilities and health clubs, drive the demand for redevelopment. 

9. Unused Development Rights: Many existing buildings have untapped development potential, allowing for the construction of taller structures with additional space that can be allocated to existing occupants or sold for profit. 

10. Vertical Expansion: In landlocked cities where horizontal expansion is not feasible, redevelopment offers the only viable option for expanding housing capacity and meeting the needs of a growing population. The redevelopment process typically involves collaboration between property owners, developers, architects, and government agencies to ensure compliance with zoning regulations, building codes, and environmental standards. It aims to transform aging urban infrastructure into vibrant, sustainable, and livable communities that meet the needs of current and future generations.

Despite its benefits, redevelopment can face challenges, particularly when some members of a housing society resist the process. Reasons for opposition may include concerns about transparency, suspicion of fraud or favoritism, reluctance to vacate premises, or dissatisfaction with proposed terms of the redevelopment agreement.

To address these challenges and ensure smooth execution, societies may opt for different models of redevelopment, such as self-redevelopment or redevelopment through builders. Each approach has its pros and cons, with factors like funding availability, technical expertise, and level of control influencing the decision.

Self-redevelopment involves members of the society taking direct responsibility for the project, including securing funding, overseeing construction, and managing legal and administrative aspects. While this approach offers greater control and potentially higher returns, it requires significant time, effort, and expertise from society members.

On the other hand, redevelopment through builders involves outsourcing the project to a professional developer who handles all aspects of the redevelopment process. While this can relieve the society of many logistical challenges, it may also entail giving up some control over the project and accepting the terms set by the developer.

Regardless of the chosen approach, successful redevelopment requires careful planning, transparent communication, and adherence to legal and regulatory requirements. Societies must conduct structural audits, assess market values, negotiate agreements, and ensure quality control throughout the construction process.

There are numerous challenges contributing to the stagnation of many building redevelopment projects. Among the most prevalent issues are legal entanglements, prolonged delays caused by builders, and difficulties in reaching mutually acceptable terms between residents and developers. Additionally, builders can exploit Floor Space Index (FSI) regulations and manipulate agreement terms to their advantage.

Builders frequently circumvent FSI rules and breach agreement terms by engaging in illicit practices such as unauthorized expansion beyond their allotted space. Consequently, unsuspecting buyers of these unlawfully extended properties often find themselves embroiled in legal disputes at a later stage. To mitigate such risks and ensure the successful execution of redevelopment projects within housing societies, meticulous attention to detail is required in documenting all demands and negotiations in the Development Agreement. The office bearers and managing committee members play a crucial role in overseeing this process.

Rebellious members obstructing the redevelopment of housing societies in Mumbai often cite various reasons for their resistance. These reasons can vary from concerns about transparency in the redevelopment process to suspicions of fraud or favoritism. Some of the common reasons why rebellious members may obstruct redevelopment include:

  1. Lack of Transparency: Members may raise objections if they feel that the redevelopment process is not being conducted in a transparent manner. This could include concerns about financial transactions, decision-making procedures, or the selection of developers.

  2. Reluctance to Relocate: Senior and aged members of the society may resist redevelopment because they are unwilling to vacate their homes and move to rental accommodations during the construction period. The prospect of moving to temporary housing can be daunting, especially for elderly residents.

  3. Suspected Fraud or Favoritism: There may be allegations of fraud or favoritism involved in the redevelopment process, leading some members to distrust the motives of the managing committee or the developer. Suspicions of underhanded dealings can fuel opposition to the project.

  4. Perceived Unfair Benefits: Some members may believe that the managing committee or certain individuals stand to gain disproportionately from the redevelopment project. This could include accusations of committee members receiving larger flats or other perks in the new building.

  5. Arm-twisting Tactics: Rebellious members may feel that they are being coerced or manipulated into accepting the redevelopment proposal, leading to resentment and resistance. High-handed behavior from the administrative body can exacerbate tensions within the society.

  6. Legal Recourse: Minority members may resort to legal action if they believe their objections are valid and have not been addressed through the normal channels of dispute resolution within the society. Legal proceedings can be costly and time-consuming, adding another layer of complexity to the situation.

Despite these objections, it is important to note that the Maharashtra Co-operative Societies Act empowers the majority of members to make decisions regarding redevelopment, with the consent of at least 75% of the members being sufficient to proceed with the project. While rebellious members may delay or stall redevelopment projects, the courts generally uphold the decisions of the majority unless there is evidence of fraud or unfair treatment.

In cases where objections are deemed valid by the court, it may order the society to restart the bidding process for redevelopment or address specific concerns raised by the dissenting members. However, it is essential for members to consider the potential costs and implications of legal action, as litigation can further prolong the redevelopment process and incur significant expenses for all parties involved. Ultimately, effective communication, transparency, and fair treatment of all members are essential for navigating the challenges associated with redevelopment projects in housing societies.

Types of redevelopment encompass a range of approaches aimed at revitalizing and improving existing structures and communities. These approaches vary in their implementation and objectives. Here are several types of redevelopment:

  1. Self-Redevelopment: Self-redevelopment involves flat owners taking on the responsibility of redeveloping their own building without the involvement of external developers. This approach allows flat owners to gain extra space and potentially receive a corpus from the sale of additional flats. However, it requires coordination and cooperation among members to ensure the smooth completion of the project.

  2. Redevelopment through Builders: Redevelopment through builders is a common model where developers are engaged to carry out the redevelopment project. While societies may prefer reputed developers, delays and other issues can sometimes arise, causing hardships for occupants.

  3. Slum Redevelopment: Slum redevelopment is an urban renewal approach aimed at transforming poor and low-income settlements into new developments or housing units. This often involves providing residents with new and improved housing options, typically of around 300 square feet in size, while also addressing issues of infrastructure and amenities.

  4. Redevelopment of Tenanted Buildings: Redevelopment of tenanted buildings involves upgrading or replacing existing structures while accommodating the needs of current tenants. This may include providing alternative housing during the construction phase and ensuring that tenants' rights are protected throughout the process.

  5. Cluster Development: Cluster development focuses on the economic growth of entire residential areas while safeguarding open spaces and environmental resources. This approach involves building houses closer together on specific plots of land rather than distributing them uniformly across vast areas. It may also include rehabilitating unsafe or dangerous buildings and expediting the resolution of legal disputes related to such properties.

Important Caveats:

  • For an old building to undergo redevelopment, it typically needs to have completed at least 30 years and must be certified by a government-approved architect as fit for redevelopment based on a structural audit.

  • The building should ideally have conveyance in its name, although many societies struggle to obtain this. Seeking resolution through consumer court cases against the builder can help expedite the conveyance process.

  • Income tax implications should be considered when deciding on redevelopment, as there may be potential tax liabilities on the money received and penalties for project delays beyond 36 months. Proper planning and consultation with tax experts are essential in navigating these issues.

The fever of redevelopment has taken hold of some of the most prestigious housing societies in the ultra-premium areas of south Mumbai, including Malabar Hill, Walkeshwar, Nepean Sea Road, and Altamount Road. These neighborhoods boast some of the highest property prices in the city, with new flats fetching prices upwards of Rs 1.5 lakh per square foot. Similarly, in Bandra, Andheri, affluent locales such as Pali Hill, Carter Road, and Mount Mary, Lokhandwala, where property prices rival those of the city center, numerous upscale societies are also opting for redevelopment, not to forget in the central line as Kanjurmarg, Powai, with many already securing agreements with top-tier builders.

Residents of these societies typically occupy flats ranging from 1,300 to 2,300 square feet and are anticipating significant additional space in the new constructions, ranging from 30% to 50%, depending on factors such as the already utilized floor space index (FSI) and the proximity to amenities like metro stations.

The preference for A-grade developers stems from past experiences with smaller developers who faced challenges in completing projects. Many top builders, who were previously not involved in society redevelopment, have now recognized the value they can bring to society members and are actively pursuing such projects.

In addition to the upscale areas of south Mumbai, redevelopment is also gaining traction in other prime locations such as Altamount Road, Carmichael Road, Walkeshwar, and Worli. This trend suggests that the supply of ultra-luxury units will continue to increase in these micro-markets in the future.

Furthermore, the redevelopment of MHADA buildings, which cater mainly to economically weaker and low-to-middle-income groups, is also undergoing significant changes. Tripartite agreements involving housing societies, developers, and the Maharashtra Housing Area Development Authority (MHADA) are now mandatory for all redevelopment projects. This shift aims to streamline the process and address long-standing issues such as stalled projects and rent payment disputes.

Moreover, a recent ruling by the Bombay High Court has implications for the cost structure of redevelopment projects involving MHADA colonies. The court has ruled that rehabilitation components of such projects will no longer attract premiums on common areas like staircases, car parks, fire escapes, lobbies, and lift rooms. This ruling is expected to significantly impact the cost dynamics of these projects, as up to 30% of a project's cost in Mumbai typically goes towards premiums collected by authorities. Consequently, this decision will lead to more transparent and cost-effective redevelopment processes for MHADA colonies.

Issues in housing society redevelopment are numerous and complex, posing risks and challenges that require careful consideration and management:

  1. Decision Dilemma: Societies often face the dilemma of whether to undertake self-redevelopment or entrust the project to a builder.

  2. Complex Process: The process of building redevelopment in housing societies is intricate and involves multiple stakeholders and regulatory requirements.

  3. Time and Effort: Redevelopment projects demand considerable time and effort to accomplish, leading to potential delays and frustrations.

  4. Risk of Failure: Failure to follow a proper and time-bound process or address risks and uncertainties adequately can result in project failure or significant delays, causing anguish to flat owners.

  5. Litigation: Many redevelopment projects become entangled in prolonged litigation in courts, leading to costly and time-consuming legal battles.

  6. Emotional Attachments: Every member is emotionally attached to their property, often leading to reluctance to compromise or trust others, hindering decision-making and progress.

  7. Influence of Individuals: Decision-making in societies may be influenced by a few individuals, rather than being based on a collective and rational evaluation of options.

  8. Builder Challenges: Builders may face unreasonable demands from members, leading to conflicts and delays in project execution.

  9. Lack of Member Involvement: Society members may relinquish decision-making to the builder, neglecting their own preferences and requirements for the redevelopment.

  10. Amenities Selection: Choosing amenities for the new construction requires careful consideration to ensure they meet the diverse needs of society members and contribute to the overall well-being of the community.

  11. Water Management: Given the criticality of water supply, proper planning for water storage, harvesting, and usage is essential to address future challenges.

  12. Flat Size Considerations: Balancing the size of flats to accommodate various needs while maintaining harmony in the society can be challenging.

  13. Post-COVID Needs: The pandemic has highlighted the need for separate spaces for work and study at home, requiring adjustments in design and connectivity.

  14. Flat Allotment: Deciding on flat allotment principles and addressing concerns about occupancy in the new construction requires patience and goodwill among members.

  15. Taxation Issues: Redevelopment projects are subject to various taxes such as GST and income tax, necessitating careful consideration of tax liabilities and implications on benefits received.

Self-redevelopment poses specific challenges that need to be addressed for a smooth execution:

  1. Financial Arrangements: Securing funds for approvals, premiums on higher FSI and TDR, and construction costs can be daunting, requiring careful planning and financial management.

  2. Technical Expertise: Construction oversight demands technical expertise and vigilance over a period of 2-3 years. Identifying responsible members willing to undertake this task can be challenging, particularly as most members are occupied with other commitments.

  3. Suspicions and Trust Issues: Active members involved in the redevelopment process may face suspicion regarding potential benefits from contractors or undue favoritism, impacting trust within the society.

  4. Disposition of Extra Space: Disposing of surplus space in the open market with transparency can present logistical and ethical dilemmas, requiring clear strategies and protocols.

  5. Money Laundering Concerns: Ensuring transparency and accountability in financial transactions is essential to mitigate risks associated with money laundering.

  6. Potential Frustration and Builder Reliance: Existing members may become frustrated with the complexities of self-redevelopment and opt to transfer the project to a builder, relinquishing control over decision-making.

To navigate these challenges effectively, societies can adopt the following strategies:

  1. Expert Project Management: Hiring a technical project manager to provide guidance and oversight on construction matters can ensure the project is executed efficiently and meets quality standards.

  2. Empowerment of Society Leadership: Designating a CEO within the society to oversee project execution and decision-making can streamline processes and represent the collective interests of members.

  3. Professional Financial Consultation: Engaging chartered accountants and tax consultants specialized in GST and income tax can provide valuable insights and ensure compliance with financial regulations.

  4. Innovative Fundraising: Exploring diverse avenues for fundraising, such as loans from banks, selling spare space to corporate entities, or partnering with venture capitalists, can help secure necessary capital for the project.

  5. Member Contributions and Collaboration: Members can contribute proportionately to construction costs based on their space allocation and introduce new members to alleviate financial burdens. Upon project completion, members can reclaim their contributions accordingly.

By addressing these issues proactively and implementing effective strategies, housing societies can navigate the challenges of self-redevelopment and achieve successful outcomes.

Before finalizing any decision regarding redevelopment, it's crucial to consider several key points:

  1. Structural Audit: Conduct a structural audit of the building to determine whether it requires redevelopment or major repairs. Without a technical report, it's legally impermissible to pass a resolution in the general body meeting for redevelopment approval.

  2. Market Value Assessment: Establish the market value of the property you'll receive post-redevelopment before negotiating with a developer. This ensures a fair deal and avoids conflicts during negotiations.

  3. Commercial Considerations: Evaluate the commercial aspects of the redevelopment, including compensation for higher property taxes, additional area, or alternative accommodation during construction. Ensure that agreements address these aspects clearly.

  4. Technical Specifications: Define quality parameters and technical specifications for the finished product. Appoint a lawyer to draft agreements detailing technical specifications, project timelines, and quality standards to avoid disputes later.

  5. Sustainability and Design: Consider eco-friendly and sustainable design principles in line with current trends. Ensure adequate provision for air, light, and wellness, minimizing pollution and chemical usage.

  6. Adaptation to Changing Trends: Anticipate changing fashions and technological advancements to ensure the building remains relevant for years to come. Consult foreign experts and publications to incorporate innovative ideas.

  7. Quality Control: Exercise due diligence to ensure construction adheres to agreed specifications. Collusion risks should be mitigated to maintain construction quality, reducing future maintenance issues.

  8. Tender and Agreement Drafting: Meticulously draft tender documents and agreements to avoid disputes between the society and developer. Seek professional legal and technical expertise to anticipate and address potential problems.

  9. Performance Guarantee: Insist on a performance guarantee from the builder to ensure timely construction and quality control. Clearly outline penalties for breaches of contract by either party.

  10. Builder Selection Criteria: Prepare a comparative analysis considering the builder's reputation, technical capability, financial status, and past project completion. Select a builder based on merit and experience.

  11. Vacating Premises: Ensure all members consent to vacate the premises as per the resolution passed in the general body meeting. Legal action may be necessary if any member refuses to comply.

By carefully considering these points, housing societies can make informed decisions and navigate the complexities of redevelopment effectively.

There exist numerous challenges hindering the progress of building redevelopment projects. Common issues include:

  1. Legal hurdles: Various legal complications can arise, such as disputes over property rights or zoning regulations, delaying the redevelopment process.

  2. Builder delays: Builders may prolong projects due to financial constraints, resource shortages, or mismanagement, leading to frustration among residents.

  3. Disagreements between residents and builders: Negotiations between residents and builders regarding terms and conditions can stall progress if consensus cannot be reached.

Builders may exploit Floor Space Index (FSI) rules and agreement terms in several ways:

a) Documentation awareness: Understanding the necessary paperwork and tax implications is crucial. Key documents like the Development Agreement and Power of Attorney must be registered with appropriate stamp duty.

b) Development Agreement execution: By entering into a Development Agreement with the Society, builders obtain permission to develop the land and initiate construction, while retaining some units for profit.

c) Clauses in Development Agreement: Important aspects such as Society and member participation, conveyance deed history, and registration details must be addressed.

d) Details of existing flats: Including information on carpet area, plot area, and estimated FSI available for construction using Transferable Development Rights (TDR).

e) Transparency in project status: Lack of transparency regarding floor area, project progress, construction quality, and design philosophy can lead to distrust among stakeholders.

f) Understanding area terminology: Carpet Area, Built-Up Area, and Super Built-Up Area definitions must be clear to all parties involved, preventing misunderstandings.

g) Specification of carpet area: The Development Agreement should specify the carpet area, payment schedule, and tentative vacating date for residents.

h) Completion timeline: Defining a timeline for project completion, including penalty clauses for delays, ensures accountability and adherence to deadlines.

i) Responsibility for municipal payments: The agreement should outline the builder's obligation to cover municipal rates, taxes, and other payments until residents take possession of their new flats.

By addressing these points diligently, both builders and residents can navigate the complexities of redevelopment more effectively and ensure smoother project execution.

The process for the redevelopment of a Co-operative Housing Society's building involves several meticulous steps to ensure smooth execution. Here's an expanded overview:

  1. Initiation: a) Requisition for a Special General Body Meeting (SGBM):

    • At least 25% of society members must submit a requisition to the Secretary, proposing a scheme for redevelopment. b) Convening the SGBM:

    • The Managing Committee must acknowledge the requisition within 8 days.

    • The Secretary convenes the SGBM, providing the agenda to members at least 14 days in advance.

  2. SGBM Proceedings: a) Preliminary Decision:

    • Members discuss proposals and suggestions for redevelopment. b) Selection of Experts:

    • Appointment of an expert Architect/Project Management Consultant from government/local authority panels. c) Outline Program:

    • Submission of a redevelopment program outline.

  3. Member Suggestions:

    • Members can submit written suggestions for redevelopment, endorsed by their chosen Architect/Project Management Consultant.

  4. Decision Making:

    • A quorum of at least 75% of members is required.

    • Preliminary decisions are made by majority vote.

    • If approved, further decisions are made regarding the appointment of consultants and the program outline.

  5. Dissemination of Minutes:

    • Secretary prepares meeting minutes within 10 days, distributing them to all members and the Registrar's office.

  6. Consultant Appointment:

    • Within 15 days, the Secretary issues an appointment letter to the selected Architect/Project Management Consultant.

  7. Initial Tasks:

    • The appointed consultant surveys the building and land, gathers conveyance information, and considers relevant policies and regulations.

    • A project report is prepared within two months and submitted to the society committee.

  8. Project Report Approval:

    • A joint meeting is convened to approve the project report, considering member suggestions.

    • Draft tender forms are prepared for further discussion.

  9. Tender Process:

    • Quotations are received and displayed publicly.

    • A special committee meeting is held to review tenders and select a minimum of 5 bids.

  10. Developer Selection:

    • A Special General Body Meeting is convened with an authorized officer present from the Registrar's office.

    • Developer selection, terms finalization, and tender approval are conducted by a majority vote.

  11. Agreement with Developer:

    • An agreement is reached within one month, outlining project timelines, bank guarantees, member accommodations, dispute resolution mechanisms, and other pertinent details.

    • The agreement is registered under the Registration Act, 1908.

    • RERA registration is ensured, and thorough research on the developer's track record is conducted.

By meticulously following these steps, Co-operative Housing Societies can navigate the complex process of building redevelopment, ensuring transparency, accountability, and successful project completion.

The pivotal role of a reputable Builder/Developer cannot be overstated in the successful execution of any Redevelopment Project for a Housing Society. Choosing the right Builder is akin to finding a suitable partner for marriageóa decision fraught with stress and complexity.

In urban landscapes like Mumbai, where skyrocketing costs and limited space render moving out of ageing and dilapidated Housing Societies impractical, the concept of redevelopment emerges as a beacon of hope. For residents, it represents the realization of a dream for new and improved living spaces.

Amidst the urgent need for redevelopment, concerns loom large regarding the reliability of Builders. While many promise the moon to Housing Societies, there have been numerous instances where such promises turned into nightmares for middle-class families. Even reputed Builders have faltered in fulfilling the terms of redevelopment projects.

Selecting an accountable and trustworthy Builder is a Herculean task crucial for the success of any redevelopment endeavor. A failed project can spell disaster for all involved, with the Managing Committee often bearing the brunt of blame.

In the realm of redevelopment, prevention is undoubtedly better than cure. Avoiding a botched redevelopment begins with a meticulous selection process for the Builder. Once chosen, it's imperative to incorporate all legal safeguards in the Development Agreement under the guidance of experts well-versed in redevelopment laws. This proactive approach significantly reduces the likelihood of future discrepancies.

In stark contrast to professions like plumbing and electrical work, Builders operate without the need for licenses, relying solely on charm and persuasion. There exists a glaring need for enhanced education and regulation within the builder community to curb unethical practices and safeguard consumer interests.

According to regulations, a society must complete conveyance before opting for redevelopment. However, Builders often exploit consumer ignorance, flouting rules by omitting property owners as confirming parties in agreements. Despite this breach, banks readily extend loans to Builders, perpetuating a cycle of corruption and malpractice.

Common challenges such as unrealistic promises, financial constraints, corruption, stakeholder management, and tax implications frequently plague redevelopment projects. Yet, with meticulous planning and foresight, each obstacle can be navigated and addressed effectively.

When it comes to selecting a Builder for the redevelopment of a Housing Society, it's crucial to consider both financial and qualitative aspects. While financial terms such as carpet area, corpus amount, rent for alternative accommodation, and penalties are often the focus, the qualitative aspects of the Builder's track record and experience are equally important. Here's a detailed checklist to guide the selection process:

  1. Brand Reputation: Assess whether the Builder has a strong brand presence in the market, indicating reliability and trustworthiness.

  2. MHADA Redevelopment Projects: Determine how many redevelopment projects the Builder has undertaken specifically for MHADA buildings, as this demonstrates experience with government regulations and procedures.

  3. Conversion Experience: Evaluate the Builder's experience in converting leasehold properties to freehold, particularly with MHADA properties, which can be complex and require specialized knowledge.

  4. Quality Standards: Ensure that the habitable area of the redevelopment matches the quality and brand standards set by the Builder for their saleable properties.

  5. Compliance Record: Research whether the Builder has a history of violating regulations or acts laid down by authorities, as this could indicate potential legal or regulatory issues during the project.

  6. Litigation History: Investigate the Builder's litigation history, including types of disputes, time taken to resolve issues, and any ongoing legal proceedings with other societies.

  7. Organizational Structure: Understand the Builder's systems, structure, and strategic approach to project execution, which can indicate their professionalism and ability to handle complex projects.

  8. In-house Teams: Assess whether the Builder has strong in-house construction and marketing teams, as this can impact project efficiency and quality.

  9. Project Management: Determine whether the Builder has a track record of cost and time overruns on previous projects, which can affect the overall success of the redevelopment.

  10. Implementation Expertise: Evaluate the Builder's level of expertise in project implementation, including the range of completion timeframes for previous projects.

  11. Approval Process: Assess the Builder's ability to obtain necessary approvals from various authorities on time, including MHADA, Fire Safety, Environment, and BMC, to avoid project delays.

  12. Local Knowledge: Determine whether the Builder is knowledgeable about and comfortable with the local environment, as this can help navigate unforeseen hurdles during the redevelopment process.

  13. Political Affiliation: Investigate any political affiliations of the Builder or their promoters/owners, as indirect control from politicians could impact project dynamics.

  14. Funding Abilities: Assess the Builder's abilities in raising equity and debt funding, which can impact project financing and execution.

  15. Financial Transparency: Ensure that the Builder follows transparent and consistent financial accounting policies, minimizing the risk of financial irregularities.

  16. Tax and Legal History: Investigate any history of tax litigation or raids from GST, Income Tax, or VAT authorities, as this could affect project stability.

  17. Safety Record: Research any history of accidents or safety incidents on the Builder's construction sites, prioritizing safety for all stakeholders.

  18. Funding Availability: Determine the Builder's current fund availability and funding pattern, ensuring they have the financial capacity to complete the project.

  19. Accessibility and Responsiveness: Assess whether the Builder is easily reachable and available to address any emergencies or concerns that may arise during the project.

When selecting a Builder for the redevelopment of a Housing Society, it's essential to conduct a thorough and analytical evaluation to ensure the project's success. Here's an expanded checklist to guide the selection process:

  1. Reference Check: Analyze at least two or three other Societies where the Builder has completed similar projects. Verify whether the Builder adhered to quality and timeline promises documented in the Development Agreement, and examine the infrastructure and finishes provided.

  2. Customized Approach: Recognize that each redevelopment project is unique and requires a customized, flexible, and transparent approach. Ensure that the Builder selection process aligns with the specific redevelopment rules and regulations governing the project.

  3. Competition-Driven Offers: Emphasize competition rather than price when evaluating commercial offers from potential Builders. Focus on selecting a genuine Builder based on merit, reputation, technical capability, experience, financial stability, and quality of construction.

  4. Website Evaluation: Visit the Builder's website to assess their reputation and clientele. Request references and review previous projects similar to yours to gauge the quality and durability of their work.

  5. Start Dates: Consider the Builder's availability and workload. Reputable Builders may have a waiting period before commencing new projects, indicating their demand and reliability.

  6. Avoid Cold Calls: Be cautious of Builders who approach you unsolicited. Established Builders with a strong reputation are typically in high demand and do not resort to cold calling.

  7. Construction Period: Discuss the estimated construction period with the Builder, considering the scale of the project. Ensure that the Builder commits to timely completion and obtaining necessary certificates from authorities.

  8. Experience: Prioritize Builders with extensive experience in the industry. Their accumulated knowledge and expertise will be invaluable during the redevelopment process.

  9. Technical Knowledge: Verify that the Builder possesses comprehensive technical knowledge relevant to the project. This includes understanding local regulations, permits, and building standards.

  10. Safety Measures: Confirm that the Builder prioritizes safety throughout the construction process. Compliance with safety regulations ensures peace of mind and adds value to the property.

  11. Quality Assurance: Ensure that the Builder maintains high standards of construction quality, including the use of quality materials and adherence to specifications outlined in the Development Agreement.

  12. Defects Liability: Require the Builder to include a defect liability clause in the Development Agreement, covering structural defects for a specified period after possession.

  13. Availability: Recognize that professional Builders may have a busy schedule. Be prepared to wait for their availability, as immediate availability may indicate a lack of demand or professionalism.

  14. Adherence to Plans: Confirm that the Builder adheres to approved plans and avoids unauthorized construction, which could lead to regulatory issues in the future.

  15. Tender Documentation: Review the tender document provided by the Builder, ensuring it contains comprehensive details on financial, technical, and general information. Request disclosure of any past or present litigation cases involving the Builder.

In the process of society redevelopment, a multitude of documents, both legal and technical, are required to ensure smooth and lawful execution. Below is an expanded and detailed list of these essential documents:

Legal Documents Required for Society Redevelopment:

  1. Conveyance Deed: Obtain conveyance in the name of the society. If the builder or landowner is unwilling, pursue the deemed conveyance route.

  2. Property Card (PR Card): Ensure that the property card reflects ownership in the society's name. Obtain a fresh property card if necessary.

  3. City Survey Plan: Obtain the latest city survey plan of the property from the City Survey Office.

  4. Lease Deed & Renewal of Lease: Renew the lease if it is expiring soon, especially if the plot is leasehold.

  5. Society Registration Certificate: Provide the society's registration certificate.

  6. 7/12 Extract: Submit the 7/12 extract of the property.

  7. Form No. 6 from Revenue Office: Obtain Form No. 6 from the Revenue Office.

  8. Search Report & Title Certificate: Provide a search report and title certificate.

  9. Index II: Submit Index II documents.

  10. N.A. Order: Include the non-agricultural order.

  11. Occupancy Certificate (OC): Provide the OC for the existing structure.

  12. Completion Certificate (CC): Submit the CC for the existing structure.

Documents (Copies) Required from Society Members:

  1. Stamp duty paid proof for all members.

  2. Proof of registration charges paid.

  3. Share certificate.

  4. Sale deed, allotment letter, or agreement to sale evidencing ownership of the flat.

Technical Documents Required for Society Redevelopment:

  1. Old BMC Plan: Obtain the old BMC and IODCC plans of the existing building to determine the existing carpet area.

  2. Physical Survey: Conduct a physical survey of the plot and flats to resolve any disputes regarding carpet area and plot size.

  3. DP Remarks: Obtain fresh DP remarks of the plot from the local BMC.

  4. Structural Audit Report: Obtain a fresh structural audit report to assess the existing structure's durability and identify necessary repairs.

Documents (Copies) Required from Developer/Builder:

  1. MCA or Registrar of Firmís Certificate.

  2. PAN Card.

  3. Last 3 years' Income Tax Assessment orders.

  4. Last 3 years' GST annual returns.

  5. Certificate from the company's auditor regarding pending tax dues and litigation.

  6. Company profile.

  7. Last 3 years' audited accounts and annual reports.

Documents Required During the Redevelopment Process:

  1. Feasibility report.

  2. MOU between Developer & Society.

  3. Indemnity from Committee members and the Developer.

  4. Development Agreement.

  5. Public notice for inviting tenders.

  6. Minutes of various meetings.

  7. Correspondence with different authorities.

  8. Permission from the deputy registrar.

  9. Tender form and summary of tenders received.

  10. Appointment letters to consultants.

Agreements & Letters Required During Redevelopment:

  1. Redevelopment agreement.

  2. Bank guarantee from the builder.

  3. Power of attorney from the society to the developer.

  4. Agreement for alternate accommodation.

  5. MOU between the society and builder/developer.

  6. Appointment letter from the society to the builder/developer.

Redevelopment under Section 33(7) of the Development Control and Promotion Regulations (DCPR) 2034 applies to cessed buildings in Mumbai where there is no cooperative housing society, and tenants reside in the building. This provision allows for the redevelopment of such buildings with the consent of the majority of the tenants and the approval of the competent authority. Here's a detailed step-by-step guide along with the required documents for redevelopment under Section 33(7) of the DCPR 2034:

Step 1: Preliminary Survey and Feasibility Study

  1. Survey of the Building: Conduct a thorough survey of the cessed building to assess its condition, structural stability, and the feasibility of redevelopment.

  2. Feasibility Study: Prepare a feasibility study to evaluate the economic viability, technical feasibility, and legal aspects of the redevelopment project.

Step 2: Consent of Tenants

  1. Engage with Tenants: Initiate discussions with the tenants residing in the building to explain the benefits and implications of redevelopment.

  2. Obtain Consent: Obtain written consent from a significant majority of the tenants (typically 70% or more) for the redevelopment project. This consent should be in the form of a signed agreement or resolution.

Step 3: Appointment of a Developer

  1. Selection Process: Choose a reputable and experienced developer through a transparent selection process. Consider factors such as track record, financial capability, expertise, and past experience in similar redevelopment projects.

  2. Execution of Agreement: Execute a development agreement between the landlord (or the owner of the building) and the developer. This agreement should outline the terms, conditions, and responsibilities of both parties.

Step 4: Application to the Competent Authority

  1. Submission of Proposal: Prepare and submit a redevelopment proposal to the competent authority, typically the Municipal Corporation of Greater Mumbai (MCGM).

  2. Documents Required: Include all necessary documents such as the development agreement, consent of tenants, building survey report, NOCs from relevant authorities, and other legal documents.

Step 5: Approval Process

  1. Scrutiny of Proposal: The competent authority will review the redevelopment proposal and conduct site inspections to verify compliance with regulations.

  2. Public Notice: A public notice may be issued inviting objections or suggestions from the public regarding the proposed redevelopment.

  3. Approval: Upon satisfactory review and resolution of any objections, the competent authority will grant approval for the redevelopment project.

Step 6: Commencement of Redevelopment Work

  1. Handover of Possession: The landlord or owner of the building hands over possession to the developer for the commencement of redevelopment work.

  2. Construction Phase: The developer initiates the construction process according to the approved plans and timelines.

Step 7: Completion and Handover

  1. Obtain Completion Certificate: Once the redevelopment work is completed, the developer obtains a completion certificate from the competent authority.

  2. Handover to Tenants: The redeveloped units are handed over to the tenants as per the terms agreed upon in the development agreement.

Required Documents Summary:

  1. Building Survey Report

  2. Written Consent of Tenants

  3. Development Agreement

  4. NOCs from Relevant Authorities

  5. Redevelopment Proposal

  6. Public Notice (if required)

  7. Completion Certificate

 

Here are some key considerations:

a) During the redevelopment process, it is imperative to understand the various documentation requirements and the tax implications associated with immovable property redevelopment. Principal documents such as the Development Agreement and Power of Attorney must be duly registered by paying the requisite stamp duty.

b) By executing the Development Agreement with the society, developers obtain the necessary permissions to commence land development. Subsequently, they undertake construction activities at their expense, retaining certain units for sale in the open market to generate profits.

c) When drafting the Development Agreement, it's essential to ensure the participation of the cooperative society, the developer, and ideally, all members. Key details such as the society's conveyance deed history and registration number under the Maharashtra Co-Operative Societies Act, 1960, should be included.

d) The Development Agreement should encompass particulars of existing flats, including their carpet area, as well as details of the plot area and the total estimated FSI area available for construction utilizing Transferable Development Rights (TDR).

e) Transparency in various aspects, such as floor area measurements (carpet, built-up, super built-up, etc.), project status, construction quality, and design standards, is crucial to avoid disputes.

f) Clear delineation of carpet area and additional areas available to members in the new building, along with a defined schedule of payment and tentative vacating dates for old flats, should be outlined in the Development Agreement.

g) The agreement should stipulate the time frame for completing construction, along with penalty clauses for delays. Additionally, provisions for the developer to bear municipal rates, taxes, and other payments until the project's completion and possession should be included.

In summary, navigating the complexities of redevelopment projects in housing societies requires meticulous planning, transparent communication, and adherence to legal and regulatory frameworks to ensure the protection of stakeholders' interests and the successful completion of projects.

The role of a builder in the redevelopment of housing societies is crucial, as they are responsible for transforming ageing and dilapidated structures into modern, safe, and habitable spaces for residents. However, selecting a trustworthy builder can be a daunting task for housing societies, as the wrong choice can lead to disastrous consequences. Hence, it is essential to follow a thorough process to ensure the selection of a reliable builder.

In Mumbai, where space is limited and costs are high, redevelopment offers a promising solution for residents of older housing societies. Thousands of such societies face issues related to safety, security, and the absence of modern amenities. Redevelopment projects provide an opportunity for residents to have new and improved living spaces. However, despite the promises made by builders, there have been instances where redevelopment projects have turned into nightmares for residents.

Selecting a builder requires careful consideration of various factors, including the builder's reputation, track record, experience, and adherence to legal regulations. It is essential to conduct extensive research on the builder's past projects, including their construction, marketing, and legal track record. Additionally, factors such as the builder's brand strength, experience in handling similar projects, and compliance with rules and regulations should be evaluated.

A checklist for selecting a builder should include qualitative aspects along with financial considerations. It should assess the builder's ability to deliver projects on time, their knowledge of local regulations, safety measures, and their financial stability. Societies should also analyze the builder's past litigation history, political affiliations, and funding patterns.

The selection process should involve analyzing multiple aspects, including the builder's construction quality, safety standards, and defect liability clauses. Societies should ensure that the builder has the necessary expertise, resources, and commitment to deliver the project as per the agreed terms and timelines.

Documentation is a crucial aspect of the redevelopment process, and societies should ensure that all necessary documents are in place before proceeding with the project. This includes conveyance deeds, property cards, city survey plans, and structural audit reports. Additionally, societies should obtain copies of documents from the builder, including their registration certificates, financial statements, and tax compliance records.

Throughout the redevelopment process, societies should maintain transparency and adhere to legal and regulatory requirements. They should actively participate in decision-making processes and seek legal advice when necessary. By following a systematic approach and conducting due diligence, societies can mitigate risks and ensure the successful completion of redevelopment projects.

In conclusion, selecting a reputable and trustworthy builder is crucial for the successful redevelopment of housing societies. By considering various factors and following a thorough process, societies can minimize risks and ensure that their redevelopment projects meet the expectations of residents. It is essential to educate residents about the complexities involved in redevelopment and empower them to make informed decisions to safeguard their interests.

Key Considerations:

  1. Tenant Welfare: Throughout the redevelopment process, ensure that the interests and welfare of the tenants are prioritized. Address their concerns and provide assistance as needed.

  2. Legal Compliance: Adhere to all legal requirements and regulations governing redevelopment projects, including those specified under Section 33(7) of the DCPR 2034 and other relevant laws.

  3. Transparency: Maintain transparency in all dealings with tenants, developers, and authorities. Keep all stakeholders informed about the progress and developments of the project.

  4. Quality Assurance: Ensure that the redevelopment project meets high-quality standards in construction, amenities, and infrastructure to enhance the living standards of the tenants.

Required Documents Summary:

  1. Resolution for Redevelopment

  2. Development Agreement

  3. Consent of Members

  4. Appointment Letter to Developer

  5. Project Feasibility Report

  6. No Objection Certificates (NOCs) from Authorities

By following these steps and considerations and ensuring compliance with all legal requirements, a cooperative housing society can successfully undertake the redevelopment of cessed buildings under Section 33(7) of the DCPR 2034, benefiting both the tenants, Landlord and the Developer.