Verify the Builder's Credentials and Financial Health
Before anything else, conduct a deep dive into the developer's background. Don't just rely on glossy brochures. Check their track record with completed redevelopment projects, and if possible, visit these sites and speak to the residents. It's crucial
to verify their financial stability. A builder with weak financial health might abandon the project midway, leaving members in a lurch. Ensure the entity signing the agreement is the main company, not a shell company or a special purpose vehicle with no assets. An independent financial and technical feasibility report can help establish if the developer's promises are realistic.
Scrutinise the Development Agreement Thoroughly
The Development Agreement (DA) is the single most important document governing the entire project. Do not sign it without understanding every clause. This legally binding contract should have no ambiguity. It must clearly define the scope of the project, including the rehabilitation of existing members and any additional sale components. Ensure that crucial details like timelines, penalties for delays, and dispute resolution mechanisms are clearly specified.
Confirm the Exact Carpet Area
One of the most common areas of dispute is the carpet area of the new flat. The agreement must specify the exact RERA carpet area in square feet for your new home. Vague terms like "built-up area" or "super built-up area" can be misleading. The document should also clearly list the specifications of construction, including the quality of materials, fixtures, and finishes to be used in the new flats.
Secure Your Transit Rent and Corpus Fund
During construction, members have to move to temporary homes. The agreement must clearly state the amount of monthly rent the developer will pay. It's wise to negotiate for post-dated cheques or a lump-sum advance for rent to avoid payment delays, which are a common problem. Similarly, the corpus fund—a one-time payment to the society or members—should be clearly quantified, with a specific schedule for when it will be paid. Ideally, this should be paid before you vacate the premises.
Insist on a Solid Bank Guarantee
A bank guarantee is your society's biggest safety net. This is a guarantee from the developer's bank to pay the society a certain amount if the builder defaults or abandons the project. Most experts recommend insisting on a bank guarantee equivalent to at least 20% of the total project cost. This provides a crucial financial cushion and incentivises the developer to complete the project on time.
Check for MahaRERA Registration
The Maharashtra Real Estate (Regulation and Development) Act (MahaRERA) provides significant protection to homebuyers and society members. If the redevelopment project includes a component for sale to new buyers, it must be registered with MahaRERA. You can verify the project's registration status on the official MahaRERA portal. RERA registration ensures greater transparency and holds the developer accountable for timelines and project funds.
Define a Clear and Realistic Timeline
Redevelopment projects are notorious for delays. The agreement must specify a clear and realistic timeline for completion, broken down into key milestones like obtaining approvals, demolition, and construction phases. Crucially, there must be a penalty clause that specifies the damages the developer must pay for each month of delay beyond the agreed-upon completion date. Do not agree to open-ended timelines with no accountability.
Understand the Power of Attorney
Your society will be asked to grant a Power of Attorney (PoA) to the developer to obtain the necessary permissions and approvals. This is a powerful document that must be drafted carefully. Ensure its scope is limited strictly to activities related to the redevelopment project. It should not be an irrevocable or overly broad document that gives the developer excessive control. Including a revocation clause is a vital safeguard for the society's interests.
