SANJAY KUMAR SINGH Many redevelopment woes for house owners

The society should ask for an adequate bank guarantee and an upfront payment for transit accommodation when getting its building redeveloped

The Maharashtra Real Estate Regulatory Authority (Rera) is planning to ask the state government for more powers to be able to adjudicate in the case of redevelopment projects that don't fall under its purview currently.

While changing the laws to give the powers to Rera will take time, residents need to exercise due diligence before entering into a redevelopment agreement with a developer.

In some redevelopment projects, the resale component (which the developer sells new customers) may be less than eight apartments. Such projects fall outside Rera’s purview. Second, the transaction between the original residents and the developer mostly does not involve any monetary deals. The latter takes their existing space, constructs more, and returns a bigger flat to the original owners.

Since no monetary transaction happens, the deals fall outside the purview of Rera. Thus, if a dispute were to arise on these two grounds, Rera is not able to adjudicate. “To bring such cases under a proper judicial process, as in the case of new homes, the scope of Rera needs to be expanded,” says Ashutosh Limaye, head, research services & REIS, JLL India.

Next, let us turn to some of the typical problems that arise between developers and customers in redevelopment projects. The developer could stop paying rent for the transit accommodation after some time. Sometimes, the project is delayed beyond its deadline. Disputes also arise over the area committed to original residents. “Though there is a development agreement with the society members, members could come back to their newly reconstructed flats to find that there is a discrepancy between the carpet area that was promised to them versus what is delivered,” says Amit Wadhwani, director, Sai Estates Consultant. Disputes also arise over the increase in the floor space index (FSI). “When society members read the news that the FSI has been increased, they demand more area from the developer. But sometimes there can be technical factors, such as limits on the height of the building, because of which the developer can't increase the amount of space,” adds Wadhwani. All such disputes have the potential to delay reconstruction projects.

The society members should do thorough due diligence before entering into a redevelopment agreement with a developer. “The developer should be financially strong. Do a search on the internet for his background and read reviews about him,” says Arun Saxena, founder and president of the International Consumer Rights Protection Council. Also check his track record — whether in the past he delivered the quality he promised, and delivered on time, or with minimal delay.

Customers also need to compare the proposal of one developer to those submitted by others. The society is required to ask for at least three bidders. If all the three bidders offer the same terms, quality and specifications, it is fine. But if one developer promises exceptional terms, that calls for caution. “The society should also ask for sufficient bank guarantees so that if the developer fails to fulfil any of the terms of the contract, the society can hold it accountable. Also recommended is sufficient upfront payment for transit accommodation,” says Limaye. The society should also appoint a good project management consultancy (PMC), as is mandatory under Rera, which can hand hold it through the entire redevelopment process. The agreement with the developer should be drafted carefully and should contain all the essential details.