The Developer's Track Record and Financial Health
Before you fall in love with the sample flat, investigate the developer. Redevelopment projects are fraught with potential delays stemming from funding issues or regulatory hurdles. A developer's past performance is the best predictor of future success.
Don't just look at their launched projects; ask for a list of completed and handed-over redevelopment projects. Check their reputation for quality and timeliness. A developer's financial stability is crucial, as a lack of funds is a primary reason projects stall. A bank guarantee of 20% of the total project cost, which developers are required to provide, offers a layer of security for the society. Due diligence on the developer's credentials, including their litigation history, reduces the risk of project abandonment.
Scrutinise the Development Agreement
The Development Agreement (DA) is the single most important document in the entire process. It outlines the rights and obligations of the housing society and the builder. As a new buyer purchasing a 'free-sale' unit, the developer's rights to sell you that flat flow directly from this agreement. Key clauses to examine include the project timeline, penalties for delays, the scope of redevelopment (including total FSI being used), and specifications for the new building. Any ambiguity can lead to future disputes that could stall the project and jeopardise your investment.
Verify the Society's Land Title and Approvals
A developer can't redevelop what the society doesn't legally own. The most critical document here is the Conveyance Deed, which proves the housing society owns the land and not just the building structure. Many older societies in Mumbai lack this, which can complicate or halt redevelopment. In such cases, the society may need to pursue a 'Deemed Conveyance'. Also, check the society's internal paperwork, such as the resolution passed by members to approve the redevelopment with at least 51% consent. Internal disputes among society members are a major hidden risk that can derail a project.
Check for RERA Registration and Key Sanctions
The Real Estate (Regulation and Development) Act, 2016 (RERA) is your biggest protection as a buyer. Any redevelopment project selling flats to the public must be registered with the state authority (MahaRERA in Maharashtra). You can verify the project's status, approved plans, and completion timeline on the MahaRERA portal. A lack of registration is a major red flag. Beyond RERA, verify that the developer has obtained critical municipal approvals like the Intimation of Disapproval (IOD) and Commencement Certificate (CC). Crucially, before you take possession, the builder must secure the Occupation Certificate (OC), which certifies the building is constructed as per approved plans and is safe for habitation. Living in a building without an OC is illegal and can lead to penalties or even eviction notices.
Understand Your Rights and Liabilities
As a buyer of a free-sale component, your rights are tied to the commitments made to the original residents. Ensure their agreements for Permanent Alternate Accommodation (PAAA) are being honoured, including the timely payment of transit rent. Delays or defaults in paying rent to existing members can become a source of conflict and project delays. Also, clarify all costs beyond the sale price. This includes Goods and Services Tax (GST), stamp duty, and registration charges. Ask about the proposed maintenance charges, property taxes in the new structure, and the corpus fund paid by the developer to the society, as these will impact your long-term financial outflow.
