The Maharashtra Real Estate Regulatory Authority (RERA) plans to ask the state government for more powers to be able to adjudicate over certain redevelopment projects that currently don't fall under its purview. While changing the laws to give the necessary powers to RERA
will take time, residents need to exercise due diligence before entering into a redevelopment agreement with a developer.
In some redevelopment projects, the resale component (which the developer sells to new customers) may be less than eight apartments. Such projects fall outside RERA's purview. Second, the original residents do not pay any money to the developer. The latter takes their existing space, constructs more, and returns a bigger flat to the customer. Since no monetary transaction happens, they fall outside the purview of RERA.
On these two grounds, RERA
is not able to adjudicate in many cases where there is a dispute between builders and customers of redevelopment projects. To bring them under the purview of RERA, the powers of the authority need to be expanded.
Next, let us turn to some of the typical problems that arise between developers and customers in redevelopment projects. There could be potential problems even before the project is sanctioned. There could be a case where the society negotiates with the developer and an agreement is signed between them. After the signing, the regulations may change. The developer may not find the project as desirable as it was earlier. For instance, there could be a change of regulations regarding FSI. If it was free earlier, the developer may have to pay a premium to purchase it. In such a case, the developer may want to revise the terms and conditions, and the society may not agree to this.
The second typical problem is that work gets delayed. Three, sometimes the developer stops paying the transit accommodation rent after some time.
Customers need to do thorough due diligence before entering into a redevelopment agreement with a developer. "The developer should be financially strong. Do a search on the internet for his background and read reviews about him," says Arun Saxena, founder and president of the International Consumer Rights Protection Council. Check his track record - whether in the past he delivered the quality he promised, and whether he delivered on time or with minimal delay.
Customers also need to compare the proposal of one developer against those submitted by others.
The society is required to ask for at least three bidders. If all the three bidders offer the same terms, quality and specifications, it is fine. But if one developer promises exceptional terms, that calls for caution. "The society should also ask for sufficient bank guarantee so that if the developer fails to fulfil any of the terms of the contract, the society can forfeit the amount. It should also ask for sufficient upfront payment for transit accommodation," says Ashutosh Limaye, head-research services & REIS, JLL India.
What agreement with builder must contain
·Get surety of transit accommodation or full advance rent by post-dated cheques
· Agreement should clearly show the details of the new building, the new flat number allotted to each owner and parking details
· All members should have maps, area plan, floor plan, carpet area, plumbing, electrical fitting, accessories, and other details
· Agreement should have clear date of possession
· It shouldn't have an arbitration clause
· It should have a penalty clause for delay