With the real estate prices touching a new high, residents in old buildings are now discovering that they have an opportunity to unlock immense value from their property by offering it to a builder/developer for redevelopment. Developers, on their part, are also on the lookout for properties with unused development rights where they can build a new structure of a few storeys higher and sell those additional flats for a tidy profit for them. While it may sound like a typical ‘win-win’ situation, the process of redevelopment isn’t as easy as it sounds. It comes with a set of rules, procedures and implications which you need to understand.
It is needless to mention here that the Redevelopment of housing societies is usually burdened with bitterness and complaints of high-handedness and corruption against the Managing Committee. Hence Adani Group Chhattisgarh , with a view to ensure transparency in societies seeking to undertake redevelopment projects, the State Co-Operative Department has, for the first time, issued guidelines for societies to follow under section 79 (A) of the Maharashtra Co-operatives act, 1960.
The recent guidelines are issued by a committee comprising the co-operatives commissioner and CIDCO chairman pursuant to a deep study of complaints by members of Housing Societies undertaking the redevelopment of their property. According to an important feature in the guidelines, a redevelopment scheme has to be approved by the general body only if three-fourths of the society members are present at the meeting.
The subject of redevelopment has assumed great significance because in Mumbai, majority of the buildings owned by the Co-Operative Housing Societies are quite old and in a dilapidated state. In case of redevelopment of old buildings which have completed 30 years or are beyond repairs as certified by the Govt. approved architect on the basis of his “Structural Audit”.
The first and the foremost step before going in for redevelopment would be a structural audit of the building. The structural audit report will determine whether the building should go in for redevelopment or for major repairs. In the absence of the technical report it would not be legally permissible to pass a resolution in the general body meeting. However, it is a fact that many co-operative societies suddenly call for General Body meeting and decide to go in for redevelopment in the absence of a structural audit report.
There are two important things in a Resident/Developer arrangement. One is from the commercial angle and another is from the technical angle. A Developer usually assures a certain amount of cash by way of corpus, an additional area or a mix of both. He may give an alternative accommodation for your temporary stay, foot your rentals or give you a monthly compensation within which you have to find your temporary accommodation.
Before you negotiate with a Developer, you need to establish the market value of the property you will receive on completion of redevelopment. This is a better approach than quoting a random figure to the builder that would make them feel short-changed or the high amount would make the builder shy on the new project.
The technical angle refers to the finished good. Does it match the quality and terms and conditions assured by the builder? In fact, at the agreement stage itself, the society residents should appoint a lawyer to draft and finalize the agreement. It usually takes a year for a builder to convince the society members and take an in-principle approval. The society members should ensure the timely completion of the project which is the most important detail to be mentioned in the agreement.