1. Definition of Carpet Area
This is a frequent point of conflict. The agreement must explicitly state the exact carpet area of the new flat in square feet, as defined under the Real Estate (Regulation and Development) Act (RERA). Vague terms like 'super built-up area' or 'saleable
area' should be avoided, as they can be misleading. The document should detail the existing carpet area of each member's flat and the final, increased area they are entitled to, ensuring there is no ambiguity about the size of the home you will receive.
2. Corpus Fund Details
The corpus fund is a one-time, tax-free payment made by the developer to each society member or the society itself to cover the increase in future maintenance costs. The agreement must clearly specify the exact amount of the corpus fund per member, the payment schedule, and the trigger for its release (e.g., upon handover of possession). This clause should be non-negotiable and fixed, preventing the developer from reducing the amount later.
3. Transit Rent and Relocation Costs
During construction, members must relocate. The agreement must detail the developer's responsibility for providing temporary accommodation or paying monthly transit rent. This clause should specify the rent amount, a clear payment schedule (such as advance yearly or post-dated cheques), and an escalation clause (typically 10-12% annually) to account for rising rental costs if the project is delayed. It should also cover associated costs like brokerage and transportation charges.
4. Bank Guarantee for Security
This is a critical safety net for the society. New redevelopment rules mandate that the developer must provide a bank guarantee, typically equivalent to 20% of the total project cost. This guarantee acts as financial security for the society, which can be encashed if the developer abandons the project or fails to pay transit rent. The agreement should ensure this clause is included and that the terms of the guarantee are robust.
5. Project Timeline and Penalty Clause
Delays are a major risk in redevelopment, with some projects dragging on for years. The agreement must lay out a clear and realistic timeline with specific deadlines for key milestones: obtaining approvals, demolition, construction phases, and final possession. Crucially, it must include a stringent penalty clause that holds the developer financially accountable for each day or month of delay beyond the agreed completion date. Members should not vacate their homes until all major approvals, like the Intimation of Disapproval (IOD), are secured.
6. Specifications and Amenities
The promise of a modern home includes specific fittings and amenities. The agreement should annex a detailed list of specifications for the new flats, including the brand and quality of materials for flooring, windows, plumbing, and electrical fittings. It must also explicitly list all promised common amenities like parking spaces (specifying the type, e.g., stilt or open), elevators, security systems, and any clubhouse or gym facilities. General terms should be avoided in favour of precise details.
7. RERA Registration and Compliance
Under Maharashtra RERA rules, most redevelopment projects must be registered. This registration provides a layer of protection, mandating transparency on project timelines, approved plans, and fund usage. The agreement should state the project's MahaRERA registration number. This allows members to independently verify project status and provides a formal channel for grievance redressal if the developer fails to meet obligations.
8. Power of Attorney Limitations
The society grants the developer a Power of Attorney (PoA) to obtain necessary approvals for the redevelopment. However, this power must be strictly limited. The agreement should clearly define the scope of the PoA, ensuring it is used only for redevelopment purposes and does not grant the developer the right to sell or mortgage the entire property without restriction. The PoA should be non-transferable and should automatically terminate upon the project's completion and conveyance.
9. Termination and Exit Clause
While societies hope for smooth execution, it is vital to plan for the worst-case scenario. The agreement must include a clear termination or 'exit' clause. This section should outline the specific conditions under which the society can terminate the contract, such as excessive delays, non-payment of rent, or bankruptcy of the developer. It should also detail the process for termination and the financial recourse available to the society to recover its losses and appoint a new developer.
