Verify the Developer’s Credentials
Before anything else, conduct thorough due diligence on the developer. Choosing the wrong builder is one of the biggest risks in redevelopment, often leading to stalled projects. Look into their track record, financial stability, and past projects. Check
for any history of litigation or delays. Ensure the builder's entity signing the agreement is the same one selected by the society, not a shell company or a special purpose vehicle with no assets. A developer's reputation for quality and timely delivery is paramount.
Scrutinise the Development Agreement
The Development Agreement is a critical legal document that governs the entire project. It must be comprehensive and transparent. Ensure it clearly defines the scope of redevelopment, including the total built-up area and the Floor Space Index (FSI) being used. The agreement must be registered to be legally enforceable. Vague clauses can lead to disputes, so every term should be examined closely, from the rights and obligations of both parties to the specifications of the new building.
Confirm Your New Carpet Area
One of the most common points of dispute is the final carpet area of the new flat. The agreement must state the exact carpet area you will receive in square feet, as defined under RERA. Do not accept vague terms like "built-up" or "super built-up" area. For existing tenants, the new accommodation must typically be of the same carpet area or the minimum prescribed, whichever is higher. This clause should be non-negotiable and clearly written to avoid any ambiguity after possession.
Clarify Rent, Corpus Fund, and Other Financials
During construction, the developer must provide either transit accommodation or pay a monthly transit rent. The agreement should specify the rent amount, an annual escalation clause (often 10-15%), and the payment schedule. Additionally, a corpus fund—a one-time, tax-free payment to residents—is often provided to cover the higher maintenance costs of the new building. Ensure the amount, calculation method (e.g., per square foot), and payment timeline for both rent and corpus fund are clearly defined. The developer should also furnish a Bank Guarantee, typically 20% of the project cost, as security.
Check for MahaRERA Registration
Any redevelopment project that involves the sale of new flats must be registered with the Maharashtra Real Estate Regulatory Authority (MahaRERA). Before signing any document, verify the project's registration number on the official MahaRERA portal. RERA registration ensures a degree of accountability, mandating that the developer adheres to project timelines and deposits 70% of funds from buyers into a separate escrow account. This prevents the diversion of funds and protects residents.
Review Timelines and Penalty Clauses
Project delays are a major concern, sometimes stretching for years and leaving residents in a lurch. The agreement must specify a realistic timeline for completion, with clear deadlines for key milestones like obtaining approvals, demolition, and handing over possession. Crucially, insist on a penalty clause that holds the developer financially accountable for any delays beyond the committed completion date. Without this, you may have little recourse if the project overshoots its schedule.
Ensure Clear Title and Approvals
The redevelopment cannot proceed smoothly without a clear and marketable title to the property. The housing society must have a Conveyance Deed in its name, proving legal ownership of the land. The developer is responsible for obtaining all necessary approvals from municipal authorities, such as the Intimation of Disapproval (IOD) and Commencement Certificate (CC). Residents should only be asked to vacate after all critical legal permissions are in place.
