1. What is your financial stability and project track record?
This is the most critical starting point. A developer's proposal, no matter how attractive, is worthless if they lack the financial capacity to see the project through. A redevelopment can span several years, and the developer must be able to handle construction
costs, statutory payments, and transit rent commitments without fail. Ask for their credit rating, inspect audited financial statements, and understand their funding sources. Do they rely solely on pre-sales from the new inventory, or do they have backing from stable financial institutions? Equally important is their track record. How many redevelopment projects have they successfully completed? Visit their past projects to assess construction quality and speak to residents of those societies about their experience. Check the developer’s registration and project details on the MahaRERA portal to verify their compliance record and delivery timelines. A history of stalled projects or significant delays is a major red flag.
2. Can we scrutinise the Development Agreement and its key clauses?
The Development Agreement (DA) is the single most important legal document governing the entire project. It is a binding contract that outlines the rights and obligations of both the society and the developer. Do not rely on verbal promises. Every commitment must be in writing. Key clauses to scrutinise include the exact RERA carpet area promised for new flats, the specifications for construction materials and amenities, and a clear project timeline with phased milestones. Most importantly, the agreement must have a penalty clause for delays in completion and handover. This ensures the developer has a financial incentive to stick to the schedule. The DA should also clearly define the scope of the Power of Attorney given to the builder, limiting it only to what's necessary for approvals and sales of the free-sale component, not giving them unchecked control over the society's property.
3. How are you securing our rent, corpus fund, and other commercials?
Financial terms go beyond just the extra area offered. The agreement must explicitly state the monthly transit rent payable to each member during the construction period. Will it be paid monthly, quarterly, or as advance cheques? Is there an escalation clause if the project is delayed beyond the agreed-upon completion date? The corpus fund—a one-time payment to the society or its members—should also be clearly defined in amount and payment schedule. A crucial safety net is the bank guarantee. A developer is typically required to provide a bank guarantee, often amounting to 20% of the project's total cost. This serves as security for the society against non-performance or project abandonment. Ensure this is an irrevocable bank guarantee from a reputable bank and that the terms are clearly specified in the DA.
4. What is your process for approvals and ensuring a clear title?
A redevelopment project requires a host of approvals from municipal and other government authorities, from the Intimation of Disapproval (IOD) to the Commencement Certificate (CC) and finally the Occupation Certificate (OC). Before asking members to vacate, the developer must have all essential pre-construction permissions in place. The society should ensure it has a clear and marketable title to the land, preferably with the Conveyance Deed registered in its name. The developer's team should demonstrate expertise in navigating the approval process efficiently. Ask for a tentative timeline for securing these permissions and link the vacating of flats to the receipt of these key documents. This prevents a situation where members have moved out but the project cannot begin due to pending approvals.
5. What is the plan for transparency and post-completion handover?
Open and regular communication is key to a smooth redevelopment process. Ask the developer how they plan to keep society members informed about project progress, milestones, and any potential issues. Will there be regular meetings? Who is the designated point of contact for the society's queries? This builds trust and minimizes disputes. Finally, look beyond the construction phase. The Development Agreement should clarify the process for handing over the new flats and the building to the society. It should specify when the developer will obtain the crucial Occupation Certificate (OC), without which possession is not legally complete. Also, clarify the defect liability period, during which the developer is responsible for fixing any structural or workmanship issues after handover. A professional developer will have a clear plan for a smooth transition and will not disappear once the construction is finished.
