Developer's Credentials and RERA Registration
Before anything else, verify the developer's track record and financial stability. Don't be swayed by a high corpus fund offer alone. Check their past redevelopment projects, speak to residents of those buildings, and confirm their registration status
on the MahaRERA website. All redevelopment projects with a sale component must be registered. This registration provides transparency on project details, approvals, and timelines, offering a crucial layer of protection.
Carpet Area, Amenities, and Corpus Fund
This is where most future disputes originate. The agreement must explicitly state the exact carpet area of your new flat in square feet, not vague terms like 'bigger than before'. The definition of carpet area should be as per RERA standards. Similarly, all promised amenities—like parking spots, lift specifications, or clubhouse access—should be clearly listed. The corpus fund amount, a one-time payment to members, must be clearly mentioned along with the exact date or project stage when it will be paid.
Clear Timelines and Enforceable Penalty Clauses
Vague timelines are a major red flag. A solid agreement will have a detailed project schedule with specific deadlines for key milestones: obtaining approvals, demolition, completing construction, and securing the Occupation Certificate (OC). Crucially, this must be backed by a strong penalty clause for delays. This clause should specify the penalty amount the developer is liable to pay if they miss the committed completion date, ensuring they are held accountable.
Transit Rent and Bank Guarantee
During construction, the developer is obligated to either provide temporary accommodation or pay a monthly transit rent. The agreement must clearly define the rent amount, the payment schedule (e.g., in advance), and an annual escalation clause of 10-15%. To secure these payments and other financial obligations, the developer must provide a bank guarantee, often around 20% of the project's total cost. This guarantee acts as a safety net if the developer defaults on rent or other commitments.
Scope of Redevelopment and Plan Sanctions
The agreement should leave no room for ambiguity about what is being redeveloped. It must specify the total FSI (Floor Space Index) being utilized, including any purchased TDR (Transferable Development Rights), and detail the developer's free-sale component. Members have the right to inspect all sanctioned plans and approvals. Ensure that the plans annexed to your agreement are the ones approved by the municipal corporation. Any changes to these plans should require the society's explicit consent.
Power of Attorney and Title Clarity
The housing society typically grants a Power of Attorney (PoA) to the developer to obtain project approvals. This PoA must be carefully drafted and limited in scope, aligned only with the development agreement's objectives. It should include revocation clauses to protect the society's interests in case of a major default by the developer. Furthermore, ensure the developer has conducted due diligence and the property has a clear title, free from any pre-existing legal disputes or encumbrances.
Termination and Dispute Resolution
While you hope for the best, you must plan for the worst. A robust redevelopment agreement includes a clear termination clause that outlines the conditions under which the society can end the contract due to developer default. It should also specify the dispute resolution mechanism, whether through arbitration or the appropriate court. Having these exit clauses provides a crucial remedy if the project stalls or if the developer fails to meet their obligations, preventing residents from being trapped in a failed project.
