FAQ

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Frequently Asked Question

1. What is Redevelopment?

Redevelopment means demolishing the old building structure and constructing a new building structure in its place as per the new DC guidelines taking into consideration additional FSI & TDR available with new layout plans for the building and individual members flat with modern amenities.

2. When should a Society consider Redevelopment?

Some of old buildings both in the city and the suburbs are very well maintained and have excellently planned spaces hence a Society should consider Redevelopment of the building only if an adverse Structural Audit Report is received from an approved Structural Auditor. The report should clearly mention details of defects / remedies / cost of repairs etc. Redevelopment should be considered considering the cost of repairs, if it minor repairs or major structural repairs and the General Body can decide if they want to go for repairs or redevelopment. Once Redevelopment is decided procedures as stipulated u/s 79(A) of of MCS Act 1960 as per the Government order dated 3^rd January 2009.

3. What are the precautionary measures to be taken by the Managing Committee and the Redevelopment Committee to ensure smooth beginning and completion of the project under re-development?

100% support of members is the key to success of any redevelopment process first precautionary measure is to take stock of disputes and oppositions within and devise and consider means to find ways and means for resolving the disputes and converting opposition to support gradually with the redevelopment process. Secondly the Managing Committee should seek advice of professionals of ethical conduct.

4. What is the percentage of consent of members required for re-development?

As per the Government notification of 3^rd January 2009, 75% members of the total members should be present at the Special General Body Meeting in which decision for redevelopment is taken and the developer is appointed. In the said meeting if a majority of 75% of the total members present approve the re-development (effectively this means 57% of the total members of the society) decision can be taken and is binding on all the members of the society.

The Managing Committee should try for 100% support because if any disputing members fail to vacate the flats voluntary and while legally minority cannot stall the re-development process this may lead to few months of anxiety to other members until court orders are obtained and implemented.  

5. Can a Society go for redevelopment without taking conveyance & agreement?

As per the Government Notification dated 3^rd January, 2009, the appointment of Developer or builder can be done only after obtaining  Conveyance of land and building in favour of  the society. If conveyance has not been done the society can appoint a consultant to obtain the conveyance in favour of the Society. Many a times societies without conveyance want to avoid the time and expense for conveyance and become vulnerable to developers who are looking for such societies/opportunities where they can execute agreements at their own terms and conditions such societies are at the mercy of these developers and the society cannot dictate their terms and condition. So get the conveyance done and be the boss.

6.    What would be the benefits to the Members in terms of additional area, corpus fund, rent, etc. from redevelopment or to be negotiated with the developers?

This varies as per the location and potential of the plot, for e.g. a developer may offer more benefits in a prime location offering better return on investments than a not so prime area. Further as per the new DC rules there is no space free of FSI like balconies, niches, voids, etc all this now come under ‘fungible area’ and Managing Committee should ensure that the same is negotiated in the total area offered by the developers. Members should expect and negotiate the following benefits –

(i)            Depending upon location additional Area of 15 % to 30 % of existing usable carpet area + additional 10% to 20%  towards ‘fungible area’ i.e. a total benefit of 25% to 50% additional carpet area.

(ii)          Corpus Fund in the range of Rs.1000/- per s.ft to Rs.2500 per s.ft of existing usable carpet area of members.

(iii)         Prevalent Rent for obtaining on LL space equivalent to existing usable carpet area for relocation in the vicinity of existing building.

(iv)         Prevalent one/two month’s brokerage for two year term.

(v)          One Way/Two Way expenses for transportation of household goods.

(vi)         Cost of Stamp Duty and Registration of proposed new flats to be allocated.

(vii)       Amenities required by the members should be decided initially and incorporated in the bid documents to receive best offers from the developers. 

7.    How long will it take to complete the total redevelopment of the Society’s building proposal?

From the first SGM wherein the members agree to resume redevelopment process to finally deciding the developer and signing of MOU/DA/Approving of new layout plans with the developer may take 12 to 18 months. From vacating the old flats to getting occupation of newly constructed flats may take 14 to 30 months. Hence the complete process is expected to take 4 to 5 years.

8.    Can there be a penalty clause included against the builder for Delay or denial of possession, or O.C or any other statutory requirements?

Yes. The Penalty Clause in the agreement should be drafted appropriately and should be possibly linked with Bank Guarantee/Security Deposit by retaining a higher amount of bank guarantee. Once members are out no developers have ever adhered to the penalty clause and litigation on part of members will stall the project so ensure that you have suitable clause and cash in hand to impose the penalty clause.

  

9. Why there is lottery system when members get a new flat & why there is no choice?

Lottery method is one of the simplest and easy way to allocate flats and avoid disputes among members for choices, other alternative solutions can be negotiated with the developers or cooperation of the developers sought, e.g.

(i)            Allocation of flats as per the old chronological order, say owner of Flat No.1 in the old building will get the first available flat on the first available floor say Flat No.101, Flat No. 2 will get Flat No. 102 and so on.

(ii)          Another option can be on the basis of facing of flat say front and rear

(iii)         Another option can be one floor higher like old ground floor flats will move to the first floor of the new building, old first floor to the second floor and so on. 

10.   What is the tenure of the Redevelopment Committee?

As such there is nothing sort of tenure of Redevelopment committee, it is preferable that one set of committee oversee the complete project from beginning of the process to completion of project.

11.   Can a minority of members stall the process of Redevelopment?

There are many High Court rulings against minority members trying to stall projects. Even after various verdicts we know the process of law which takes it own times and obtaining a favourable order in view of the various verdicts may take 6 months. All possible efforts should be made to avoid such confrontation for speedy p the process.

12. Do the members enjoy rights or privileges for purchase of additional area to be built by the developer for sale?

Generally developers offer 5 to 10% of the total area occupied by the members at a pre-negotiated rate. Suitable clause can be incorporated in the bid documents itself to ascertain such area available. The managing committee should also devise means for distribution of such spaces if the demand is more than that offered by the developer.

  

13.  What is the permissible height of the new building?

In case of buildings in the vicinity of airport and high rise buildings Civil Aviation Department is the final Authority. Members should also ensure individual flats floor height during the bidding process itself. Minimum floor height of individual flat is 9½ feet as per BMC guidelines.

14. Can a member sell his/her flat to the developer, if yes what should be the rate?

While some members redevelopment as an opportunity there are a few who perceive it as a risk and would rather prefer to sell the flat and buy a flat somewhere else. The managing committee should take due consideration of such members  and can also consider inviting rates for purchase of flats by the developers during bidding process itself and try to negotiate the best rates for such members.

 

15. Can the associate members vote in such meetings, will their opinion be considered?

Yes, Associate Members are authorised to vote at such meetings, as per the authorisation form submitted by the original member. Managing Committee should ensure that such form have been duly obtained and is on record before the voting process.

16. On vacating of flats by the members where will the existing members stay?

Members can choose flat of their choice in the vicinity as per the rent negotiated with the developer. Depending on corpus fund and rent receivable and overall financial position of members, they can opt for investing/buying their own flats in the distant suburbs and temporarily relocate to such flats and create a permanent asset for themselves.

  

17. Is the rent for alternate accommodation right of the members?

Yes, Rent for alternate accommodation is the right of the members and should be negotiated taking into consideration future inflations in rates for first year, second year and consecutive year if further delay is anticipated.

18. How to ensure that rent for alternative accommodation will be paid by the developer till occupation is given to the members in newly constructed building?

Members should preferably negotiate rent for the full tenure of completion of the project proposed by the developer in advance say if the developer has quoted 24 months completion period, negotiate 24 months rent in advance.  

19. What happens in case one of the members brings in a Court stay order

Courts generally don’t issue stay orders on flimsy grounds. If there has been any technical lapse in following the bye laws or the guidelines under 79(A) of the MCS Act. on the part of the managing committee a stay may be possible. It will be appropriate if SGM approval is sought on all major issues so that such members are part of the process and they cannot back out at the last moment.

20. What will be the maintenance cost per member after redevelopment?

It may be always 2 to 3 times more than that being paid presently. But MCGM is already working on increasing the levies on old buildings at par with the new buildings in the next few years there will be a marginal difference between the old and the new buildings.

21. To sum up what are the Advantages & the Disadvantages?

The Advantages

- Most of the buildings considering redevelopment are 30 to 40 years old,              

   families have expanded during the years who do not wish to leave the   

   neighborhood, redevelopment gives an opportunity for additional space plus

   an opportunity to purchase additional space if possible.

- Redevelopment gives bigger better planned internal and outer space

- Modern facilities and amenities like lifts, intercoms, hi-tech security systems,

  concealed wiring, stilt/podium parking, etc

- Recreation facilities like community hall, gymnasium and club house/

   swimming pool subject to availability of space.

-  Stilt/Podium Car Parking space.

-  Finally available corpus fund and rent from redevelopment if planned and   

   invested judiciously will means life time free maintenance and may be even

   additional revenue.

The Disadvantages

-  There is a tense phase between vacating the flats by members in the old building and getting  occupation of the flats in the new building.

-  Unethical conduct on the part of any one or all the parties involved in the project may    
   jeoparadise the whole project.

-  Loop holes in the Redevelopment Agreement may leave scope for misinterpretation and give  undue advantage to the developer.

-  Initially there is a psychological divide between the old and new members post 
   redevelopment.

-  High maintenance cost post re-development

-  Pressure on amenities like water supply, sewage, etc.

-  Forceful occupation without OC may lead to high taxes.

-  Additional area will invite additional stamp duty and new individual agreement will require 
   fresh registration
  
Mohan Chandra, Project Management Consultants, Andheri, Mumbai
Mobile : 9819011191, 8433225151
Email : aek.omcar@gmail.com