Verify the Developer's Credentials First
Before you even look at the commercial offer, investigate the developer. The most attractive proposal is worthless if the builder lacks the experience or financial stability to complete the project. Start by checking their registration number on the MahaRERA
website. This is a mandatory requirement for most redevelopment projects involving the sale of new flats. Look into their track record: have they completed similar projects on time? Visit their past projects to assess construction quality. A financially sound developer will be able to provide a bank guarantee, typically around 20% of the project cost, as security against delays or non-performance. Do not proceed if the developer is not RERA-registered or is hesitant to provide a substantial bank guarantee.
Scrutinise the Carpet Area Calculation
This is one of the most common sources of disputes. The proposal must clearly state the exact carpet area of the new flat in square feet. Vague promises like “a larger flat” are not enough. Ensure the area specified is the RERA carpet area—the net usable floor area within the apartment, excluding external walls, service shafts, and balconies. This is a standardized definition under the Real Estate (Regulation and Development) Act, so there should be no ambiguity. The agreement should specify the additional carpet area you will receive over your existing flat. Be wary of calculations that include flower beds, dry yards, or balconies in the main carpet area figure.
Analyse the Financial Terms Carefully
A redevelopment offer typically has three main financial components for residents: the corpus fund, transit rent, and other costs. The corpus fund is a one-time, tax-free payment made to each member to cover the increase in maintenance costs in the new building. The agreement must specify the exact amount and when it will be paid. Transit rent is the monthly compensation paid to you for alternate accommodation during the construction period. The agreement must detail the monthly rent amount, a clear payment schedule (e.g., in advance), and an escalation clause (usually 10-15% annually) to cover rent hikes if the project is delayed. Also, check if the developer will cover related costs like brokerage and transportation for moving.
Confirm the Project Timeline and Penalty Clause
Delays are a major risk in redevelopment, potentially leaving you in rental housing for years. The development agreement must have a clearly defined timeline, with a specific start date and a firm completion date for handing over possession. Crucially, this timeline should be backed by a strong penalty clause. This clause should state the interest or penalty the developer is liable to pay for every month of delay. Under RERA, developers are required to pay interest for delays beyond the date committed in the agreement, giving residents significant protection. Ensure this is explicitly written into your agreement.
Check the Fine Print on Amenities and Specifications
The proposal will list the amenities and internal flat specifications for the new building. Do not settle for generic terms like “high-quality fittings” or “modern amenities.” The agreement should provide a detailed list: the brand and model of bathroom fittings, the type of flooring, the make of the elevators, and the specifics of the security system. It should also clearly list all promised common amenities, such as a gym, community hall, or dedicated parking space for your flat. What is promised verbally must be documented in the legal agreement to be enforceable.
Understand the Legal Framework of the Agreement
You will be signing two main documents: the Development Agreement (DA) between the society and the developer, and a Permanent Alternate Accommodation Agreement (PAAA) for your individual flat. The DA should not give the developer an irrevocable power of attorney that cannot be cancelled even in case of default. There must be a termination clause that outlines the society’s rights if the developer fails to meet obligations. Both agreements must be registered to be legally enforceable. Given the complexity, the housing society should appoint an independent Project Management Consultant (PMC) and a legal advisor to vet all documents on behalf of the members before anyone signs.
