Who is the developer and what is their track record?
This is the most critical question. Before anything else, the society must conduct thorough due diligence on potential developers. Don't be swayed by the highest financial offer alone. Investigate their history: How many redevelopment projects have they
successfully completed? Visit these completed sites and speak to the residents. Were the projects delivered on time? What is the quality of construction? Also, check the developer's financial stability and their RERA registration status. Many projects get stalled because small-time developers lack sufficient funds or have diverted money to other projects. A builder with a solid track record of timely delivery and quality construction is a much safer bet.
Is the Development Agreement watertight?
The Development Agreement (DA) is the single most important legal document governing the entire project. It must be vetted meticulously by an independent legal expert appointed by the society. The agreement should leave no room for ambiguity. It must clearly define the scope of the project, including the total FSI being used, the new carpet area for each member, and detailed specifications of materials and amenities. Vague clauses are a red flag. Ensure the entity signing the agreement is the parent company, not a newly formed shell company with no assets.
What are the timelines and penalties for delays?
Project delays are a major source of hardship for residents. The DA must specify a clear and realistic timeline, broken down into key milestones like obtaining approvals, demolition, and various stages of construction, culminating in a final handover date. More importantly, it must include a strong penalty clause for each day of delay. This clause should specify a significant daily or monthly compensation to be paid to members if the developer fails to meet the deadline. Without a robust penalty clause, societies have little leverage to ensure timely completion.
Are the financial terms clear and fair?
The financial offer has several components that need scrutiny. This includes the corpus fund, rent for alternate accommodation, and shifting charges. The corpus fund is a one-time payment to the society to cover the higher maintenance costs of the new building. This amount and its calculation method (usually on a per square foot basis) must be clearly stated. The monthly rent offered for temporary accommodation should be realistic for the locality and include a clause for annual escalation. Also, confirm the developer provides a substantial bank guarantee (often 20% of the project cost) which the society can encash if the developer defaults.
Does the Society have clear title to the land?
This is a surprisingly common and critical oversight. A society cannot enter a redevelopment agreement without legally owning the land it stands on. Many older societies function without a Conveyance Deed, which is the document that transfers land ownership from the builder to the society. Before initiating redevelopment, the society must ensure it has the title. If the original builder is uncooperative, the society can apply for a 'Deemed Conveyance'. Without a clear title, securing approvals is difficult and the entire project rests on a shaky legal foundation.
What is the exit plan if the developer fails?
While everyone hopes for the best, it's crucial to plan for the worst. What happens if the developer abandons the project midway? The Development Agreement must contain a clear termination clause. This clause should outline the specific conditions under which the society can terminate the contract—for example, if work stops for a continuous period of three months. It should detail the process for termination and the society's right to appoint a new developer to complete the remaining work, potentially using the bank guarantee provided by the original developer. This exit strategy is a vital safety net that protects the society from being trapped in a stalled project indefinitely.
