Redevelopment At Glance

Introduction

We understand the redevelopment is most critical, risk oriented process in lifespan of society. Society members have to go through huge problems & worries during the decision making process. But with help of good project management consultant this process will reduce worries of all members. The process must have following factors.

  1. a. Maximum benefit to all society members.
  2. b. Impartial service to all members.
  3. c. Consultation for smooth process & easy decision making.
  4. d. Safeguarding society rights.
Let’s understand whole process of redevelopment at a glance

For a successful redevelopment society must go through following process.

Here is each point explained in detail.

A. Smooth Redevelopment

1. Difference Between Restoration And Redevelopment?

In restoration, the existing building is extensively repaired and restored to its original condition. In redevelopment, the existing building is demolished and new structure/building with prevailing bye laws & additional FSI/TDR is constructed.

2. What Are The Advantages Of Redevelopment?

  • a. In case of restoration of a building by major repairs, though the beams and pillars of the building are strengthened externally, the inner core composing of steel rods cannot be restored to its original condition. Hence, even after extensively repairing the building, there are bound to be umpteen complaints about leakages requiring frequent repairs. In the case of redevelopment, the entire structure being brand new, it will be free from complaints.
  • b. New building will be accommodating various modern facilities & amenities with current tread of society.
  • c. Well planned and designed flats with earthquake structure.
  • d. Corpus fund received by each individual member will take care of increase in the maintenance cost of the premises or could be utilized for other purposes.
  • e. Additional carpet area will be received as compensation from the developer.
  • f. Owner can buy additional space (if available) from the developer at best available price.
  • g. Modern facilities / amenities / gadgets like lifts, intercom system, smoke detectors, fire fighting alarm system, concealed plumbing, concealed wiring for electricity, telephone, cable TV etc. Will be available. (depends upon offer from developers)
  • h. Additional parking will be available with new norms of authority.
  • i. Electrical, plumbing, tiles, parking spaces & other specifications will be as per modern trends.

3. Disadvantages Of Redevelopment

  • a. For considerable period of time, members are required to give up possession of their flats which disrupts their age old routine.
  • b. Residential complexes if converted to commercial complexes are seldom preferred for housing purposes or dwellings.
  • c. Additional area received will attract stamp duty and registration charge at current market price.
  • d. Corpus fund received by each individual member will take care of increase in the maintenance cost of the premises or could be utilized for other purposes.
  • e. There is always a fear of half way stalled project resulting in court case. ( but a good project management consultant can reduce this risk by verifying of all steps in redevelopment process)

4. Guidelines For Smooth Redevelopment

  • All members of society should be taken in confidence in process of redevelopment.
  • Tender process should be transparent & as per provision of co-operative society housing bye laws.
  • Appointment of builder/developer /contractor should not be arbitrarily. Agreement with them should be legally sound, technically complete & clearly mentioned all possible specifications of building. It should clarify all things like carpet area, amenities, corpus fund, shifting charges, rent of temporary accommodation, any betterment charges etc.
  • Role & responsibility of project management consultant should be clear & their services should be impartial.
  • Society should not go for redevelopment process without feasibility report from project management consultant

B. Frequently Asked Questions (FAQ's)

1. Whether individual consent of all the members is required for redeveloping the society’s buildings or only a resolution by the general body will be sufficient?

In case of apartment (registered under association of apartments) a written consent is required from each & every member. But in case of housing society a written consent from 51% members is required for redevelopment. (As per govt. GR)

2. What is the consequence if consent is not received from all the members for carrying out redevelopment?

If all the members of the society do not give their consent for redevelopment, then permission for redevelopment will not be granted by the concerned authorities like the dy. Registrar of co-operative societies.

3. Can a member change his decision after giving his consent in writing for redevelopment?

Consent obtained from the members is irrevocable and embossed with rs.100/- stamp. Hence, once consent is given by a member, it cannot be revoked. Only if a member has a strong reason to retract his consent, then he has to follow the legal procedure for proving his point of discontent for retracting his consent.

4. Can a minority of members stall the process of redevelopment?

It depends on what proportion of minority is stalling the development and the reasons behind stalling the project. If the reasons for stalling the project are strong, then redevelopment cannot proceed unless the issues with them are settled.

5. Can one or two members hold the society to ransom on flimsy grounds?

No member of the society can hold the society to ransom on flimsy grounds. The society will have to initiate action against such members.

6. What action can the society initiate against those members who oppose such kind of a move that is supported by a huge majority?

Then society can issue show cause notice to the members and take action even to the extent of expulsion from the society.

7. Does a society require forming a redevelopment committee or can a managing committee carry out the job independently?

The general body has the powers to decide on this issue. Appointing a redevelopment committee is not mandatory but is highly recommended to ensure transparency in the dealings.

8. What are the powers of the redevelopment committee?

The general body has to decide on the powers to be allocated to the redevelopment committee. Generally the following powers are to be given to the redevelopment committee:

To approve or reject the proposal placed before them by the managing committee of the society.

To give suggestions, if any, regarding the proposal placed before them by the managing committee.

9. What is the tenure of the redevelopment committee?

Generally the tenure of the redevelopment committee should be from the start of the project to the completion of the project to ensure the continuity of the control of the project.

10. Whether elections are to be held for selection of members for the redevelopment committee?

The election rules are not binding on the redevelopment committee. They should be selected by the general body from amongst senior members of the society who are educated to read and understand the various documents and have active interest in redeveloping the society.

11. Can a redevelopment committee / member of a redevelopment committee be terminated?

If the general body feels that a member of the redevelopment committee or the entire redevelopment committee acts to the detriment of the interests of the society and obstructs the working of the managing committee in carrying out redevelopment, then on the recommendation of the general body, the tenure of a member a redevelopment committee or the entire redevelopment committee can be terminated.

C. Step by step redevelopment

The office bearers of the society are requested to follow the following steps for redeveloping their premised successfully.

1. Conveyance Deed

The society should reconsider redevelopment only if the society has conveyance deed in their favor. In case conveyance deed is not in favor of society, the process for deemed conveyance should be done by appointing appropriate agency.

2. Structural Audit

When a society should consider redevelopment

  • a. First step for deciding redevelopment is structural audit report by structural consultant or project management consultant. This survey has to be carried out for all building/structures in society plot.
  • b. The structural audit agency shall reveal the condition of buildings & suggest whether society needs the redevelopment.
  • c. Without such report, society can’t go for redevelopment process.
  • d. Even if building is less than 30 years old (building lifespan), but structural report suggest redevelopment than restoration, society can go through redevelopment.
  • e. Circulation of structural audit report- In case of adverse structural audit report, the society shall circulate the said report to all the members of the society within one month of receipt of such report along with their recommendations and call for the consent of all the members of the society in writing within 14 days of circulation of report giving their opinion whether they would like to go for repairs or redevelopment. If 75% or more of the total members of the society give their consent for redevelopment to the managing committee, the managing committee will start the process of redevelopment.

3. Starting Redevelopment

The society in which redevelopment work of the buildings is required to be undertaken, an application of requisition to hold a special general body meeting to consider and discuss the redevelopment project and suggestions on the same, is to be submitted to the hon. Secretary of the managing committee which is properly Elected as per the provisions of the society’s bye–laws and also constituted as per. The provisions of the maces act 1960. The requisition application is to be signed by not less than 1/4th of the total members of the society.

4. SGM For Redevelopment

On receipt of requisition for calling the meeting, the managing committee of the society, within 8 days of the receipt of the application, should consider the same and within a period of 1 month, the hon. Secretary will call the general body meeting of the members of the society giving 14 clear days notice for which acknowledgement will be collected from every member and maintained in the records of the society. The quorum for the SGM shall be 3/4th of the total number of members of the society. If the quorum is not attained, The SGM shall be adjourned for 8 days. If there is no quorum in the adjourned meeting also, then the meeting shall be dissolved considering that the members have no interest in the redevelopment of the society. In such a situation, the redevelopment subject cannot be brought before any SGM for its approval for further one year. In the meeting, 3/4th of the members present in then meeting should agree for redevelopment and then a resolution should be passed for going ahead for redevelopment of the building and authorizing the managing committee to obtain permission from the deputy registrar of co-operative societies of their respective ward office for redevelopment. A resolution should also be passed authorizing the managing committee to obtain quotations from experienced architects / project management who are empanelled by government / local authority, for the work of preparing feasibility report and framing rules / conditions for their work.

5. Permission For Re-Development

The society shall forward a copy of the structural audit report along with an extract of the re-development resolution passed in the SGM to the dy. Registrar of co-operative societies of their respective ward seeking permission for re-development of their building. (As per GOVT. GR Dy. Registrar permission is no longer required)

6. Feasibility Report

Within one month from the date of receipt of permission for re-development from the office of the dy. Registrar of co-operative societies, the society should appoint an architect or a project management consultant to survey the project plot /area / FSI / TDR/ PMC–rules applicable / technical / financial details including viability, comparison of repairs v/s re-development and submit a feasibility report. This feasibility report should be circulated to all the members of the society within one month from the date of receipt of the report along with the managing committee’s views and their opinion / objections on the same should be called for in writing for discussion in the next special general body meeting.

7. SGM For Constitution Of Re-Development Committee

  • a. The society should call for a SGM and since this being an important meeting the quorum for the meeting shall be at least 75% of the members of the society.
  • b. The managing committee should discuss the feasibility report in the meeting and if at least 3/4th of the members present in the meeting agree for re-development
  • c. Then they should pass a resolution to go for re-development of the building and authorize the office bearers to start the procedure to appoint architect / civil engineer / financial consultant or project Management consultant.
  • d. In the same meeting, the society should form a “re-development committee” of at least 5 prominent / senior / original members of the society representing each building of the society, to oversee the working of the managing committee.

8. Appointment Of Consultants

The office bearers shall shortlist architect/civil engineer/ financial consultant / project management consultant for appointment and recommend their names to the re-development committee to confirm their choices and fees chargeable by this professional/s. The managing committee should call for a SGM and introduce these professionals to the members of the society and give their recommendations. A decision should be taken in this meeting to appoint any or all them of them and fix their duties and fees.

9. Pooling Of Documents For Re-Development

The society should ask the appointed consultant/s to proceed and go ahead to get all the clearances required for re-development and submit his report on the availability of following documents with the society:

  • a. Society registration certificate
  • b. 7/12 extract / index ii / form no. 6 from revenue office
  • c. Conveyance deed
  • d. Non Agricultural (NA) order
  • e. Property card
  • f. City survey plan (demarcation)
  • g. Copy of commencement certificates
  • h. Copy of completion certificates
  • i. Proof of payment of stamp duty / registration charges.
  • j. Copy of paid assessment bill ( water bill, electric bill)
  • k. Approved building plan
  • l. Structural Drawings

10. Tender Floating

After the technical problems are sorted out, the society should call for a SGM no. 4 to apprise the members of the society’s standing on the various technical points referred to above and convey their views as well as the views of the re-development committee on the matter and seek the approval of the general body to proceed further. In this meeting all the members of the society should be asked to prepare and submit details of requirements / demands / choices / demands in writing so that the same could be incorporated in the tender document. The general body should pass a resolution and authorize the managing committee to proceed ahead and float tenders by inviting different agencies / builders / developers to give their offers through news paper notice etc.

11. Opening Of Tenders

Within one week from the last date for receipt of tenders, the society should call for a SGM no. 5 and open the tenders in front of the members of the society present in the meeting along with the society’s consultants and parties participating in the Tender. The details of offers received should be read out in the meeting and a provisional merit list should be made in the meeting itself.

12. Comparison Statement

The consultants appointed by the society should study the tender offers in detail and prepare comparative charts and give their recommendations to the managing committee who should satisfy themselves about the recommendations of the consultants and put it up before the re-development committee for their observations. The best offer should be short listed merit-wise and details circulated to all the members of the society calling for their views.

13. Selection Of Developer / Builder

The society should call for a SGM no. 6 and after discussing the merits and demerits of all the offers, should select one developer / builder for carrying out the redevelopment of the society. In this meeting, the members should agree on the following issues

  • a. The additional area that they should get as not only in terms of percentage increase in their existing carpet area but also in actual number of square feet.
  • b. The amount of corpus payable to each member should be clearly expressed in amount of rupees besides linkage to their existing carpet area. The break-up and the due dates for payment of the same should also be clearly specified.
  • c. The amount of rent payable for alternate accommodation should be clearly specified in terms of amount of rupees besides linkage to the existing carpet area. The break-up and due dates for payment of the same should be clearly specified.
  • d. The amount of shifting charges and the re-shifting charges should be specifically stated.
  • e. The members should pass a resolution authorizing the managing committee to issue letter of intent to the developer subject to above terms and conditions.

14. Letter Of Intent

The society should circulate the agreed terms and conditions to all the members of the society and obtain irrevocable letter of consent addressed to the society, the builder, PMC, dy. Registrar of co-operative societies and other concerned parties. When at least 90% of the members give consent letters to the society, the society should give a letter of intent to the selected developer / builder and request him to furnish plans of the new buildings to be constructed, amenities to be provided and allotment of flats to members as per the new plan.

15. Re-Development Agreement

On receipt of the plan for the new buildings, the managing committee and the re-development committee members should first approve the same and satisfy themselves that the same is as per their offer. Then, the society should call for a SGM no. 7 for approving the plan of the flats / building and amenities offered by the builder. When the same are approved in the general body, the society should pass A resolution to sign a redevelopment agreement with the developer also fixes the date for vacating the old flats and receiving the compensations.

16. Handing Over The Property For Re-Development

The developer should then proceed to get the plans approved and obtain i.o.d. From p.m.c. After fulfilling the terms mentioned in the i.o.d., the developer should obtain commencement certificate up to plinth. After these conditions are complied with, the society should call SGM no. 8 and pass a resolution for vacating the flats and fixing a date for handing over the vacant possession to the developer and fixing dates for receiving compensations from the developer. The managing committee should issue instructions to the members to vacate their flats by signing individual agreements with the developer and after receiving his dues from the developer.

17. Occupation Certificates

After construction of the buildings are completed, the society should follow up and ensure that the developer gives, occupation certificate and regular water connection within 4 months from the date of handing over of the new flats to the members of the society.

D. Supervision

Either Project management consultant or separate agency must be appointed for supervision. This supervision includes many things but few of them are mentioned below.

  • 1. Analysis & approval for architecture plan.
  • 2. Obtaining, checking & approval to drawing.
  • 3. Checking parking area, carpet area, society utility & service areas etc.
  • 4. Structural drawing checking.
  • 5. Analysis & approval for submission drawing.
  • 6. Analysis & approvals for site execution drawings
  • 7. Site visits to verify specifications, & material quality committed by developer. (as & when required.)
  • 8. Consultations throughout redevelopment process at every important situation.

E. Redevelopment Documents / Lists

For successful completion of redevelopment, the office bearers of the society should be aware of the documents to be kept ready and the documents to be obtained from the builder

I. Important documents required for redevelopment.

  • 1. Society registration certificate
  • 2. 7/12 extract.
  • 3. Conveyance deed.
  • 4. Structural drawing checking
  • 5. Title search report
  • 6. Index ii
  • 7. N. A. Order
  • 8. City survey plan( demarcation plan)
  • 9. Approved building plan
  • 10. Commencement certificate
  • 11. Appointment letter to PMC

II. Documents to be prepared for redevelopment.

  • 1. Feasibility report
  • 2. Suggestions from members
  • 3. Public notice for inviting the tender
  • 4. Minutes of various meetings
  • 5. Correspondence with different authorities
  • 6. Obtaining permission from deputy registrar
  • 7. Tender form
  • 8. Summary of tenders received
  • 9. Approval of tenders in the general body meetings and preparation of draft and final minutes
  • 10. Appointment letters to advocate, structural engineers, architect, project management consultant etc.

III. Various Agreements & letters required for redevelopment

  • 1. Redevelopment agreement
  • 2. Format of bank guarantee from the builder
  • 3. Power of authority from the society to the developer
  • 4. Agreement for alternate accommodation
  • 5. MOU between the society and builder / developer
  • 6. Appointment letter from the society to the builder / developer
  • 7. Revocation / cancellation of power of attorney
  • 8. Other duties associated with advocate
  • 9. Possession letter from the builder to the members
  • 10. Format of the resolution to admit new members
  • 11. List of documents required being collected from the builder
  • 12. Indemnity bond by the developer
  • 13. Consent letters from the members to the society

IV. What are the requirements from the developer?

  • 1. Project report from the developer as to how they would develop the property at the offers given by them
  • 2. Copy of registration certificate
  • 3. Partnership deed of the developer duly registered or memorandum of association (as the case may be)
  • 4. Name and address of all partners / directors along with their PAN
  • 5. Address & Pan of the firm
  • 6. Copy of balance sheet & P/L A/C to understand the financial strength of the firm
  • 7. Income tax return filed for the last 3 years of the partners / directors of the company

F. Agencies & members involved in redevelopment process

  • 1. Society members
  • 2. Society committee members
  • 3. Structural consultant
  • 4. Project management consultant
  • 5. Advocate
  • 6. Dy. Registrar
  • 7. Developer
  • 8. Chartered accountant
  • 9. Builders architect
  • 10. Building permission authority
  • 11. New members

G. Successful Redevelopment

Must know things for successful redevelopment

  • 1. The offer received from the developer should commensurate with the potential of the plot taken for redevelopment as per architect’s report.
  • 2. The builder should be strictly chosen on the basis of his financial capacity and track record and not on the basis of the highest offer received.
  • 3. The tenders received should be objectively evaluated by an able architect appointed by the society.
  • 4. All the members of the society should give their consents to avoid disputes.
  • 5. Complete details of the offers made by the developer should be clearly understood by all the members of the society and there should be transparency in the dealings.
  • 6. Redevelopment committee should be formed from amongst the other members of the society by including 2/3 members from the managing committee to oversee the entire process to ensure that complete transparency is maintained by the managing committee of the society.
  • 7. All agreements / documents should be got scrutinized by a competent advocate appointed by the society to ensure that there is no lacuna.
  • 8. Bank guarantee for the total cost of the redevelopment project should be obtained from the developer covering the full period of construction.
  • 9. Penalty clause should be inserted in the redevelopment agreement to ensure proper implementation of the project by the developer.
  • 10. The managing committee and the redevelopment committee members should conduct regular inspection when the construction is in process to ensure that there are no deviations from the plans / offers.
  • 11. Existing society members should vacate their respective premises only after all necessary approvals.
  • 12. Any committee member or office bearer of society should not be the relative of builder or developer.

!! Happy Redevelopment !!