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15 Important Clauses of Redevelopment Agreement

We have discussed various benefits, Procedure, Guidelines & Key Steps one should take when going for the building redevelopment so as to avoid complaints from the members. Suggested steps will help a smooth process of redevelopment and bring harmony to the members and office bearer.

However, it’s equally important that we also pay our attention towards important clauses of the Redevelopment Agreement to be signed with the developer/builder.

Key Clauses for Redevelopment Agreement;

  1. The completion period of Redevelopment shall be of not more than two years and in special cases not more than 3 years in case of any exigencies.
  1. The Developer should give Bank Guarantee of 20% price of Redevelopment Project.
  1. The Developer should try to give alternate accommodation to the members in the same area till the Redevelopment Project is complete. Otherwise, he will pay monthly rent and Deposit (equivalent to the prevalent rate of rentals in the same vicinity including the yearly rent escalation) agreeable to members or make available Transit Camps.
  1. In case this advance rental is dishonored, the society has the right to prevent the builder from either selling or allowing any new flat purchaser to occupy their respective flats.
  1. The Agreement should be registered under Registration Act 1908.
  1. All the new members shall be admitted in the society after completion of the Redevelopment Project and after approval of General Body Meeting of the society only.
  1. The Agreement should have specific mention of the agreed Carpet Area.
  1. The Development rights given to the Developer will be non-transferable.
  1. The flat owners will vacate their flats only after receipt of all the legal permissions for the Redevelopment work and those in possession of their flats will not lose their rights.
  1. Agreement between contractor, Architect, and society should have a condition that disputes, if any, on the Redevelopment work shall be settled u/s Rule No. 91 of the Rules.
  1. After receipt of the Occupation Certificate for the Redeveloped building, the distribution of the flats should be preferably made in accordance with the prevailing arrangement of present floors. In the case when the Allotment of flats is required to be made by lots, only after completion of the building the Developer should make available the lottery system after completion of the Redevelopment Project.  The developer should arrange for a draw of lots for the distribution of flats in presence of Registrar’s representative and video shooting of the complete process will be made.
  1. No member of the Committee or Office bearer shall be a Developer and or his relative.
  1. The Building Plans which are approved by the Municipal Corporation / Competent Authority shall be again placed before the General Body Meeting for information. A member wishing to have a copy of the approved Documents can get the same on his written application. The Committee is bound to issue the information on charging a reasonable fee.
  1. The housing society member need to calculate and assess the financial implication keeping in mind the interest of all members on account of any increase in the maintenance charges for the additional facilities/amenities builder may provide. Depending upon the average financial capacity member should ask the developer if he is willing to bear the maintenance charges which would otherwise have been borne by the society members. In the case of such an arrangement, the society should ask the developer to deposit the amount into a separate account prior to giving him permission to sell the surplus flats in the newly redevelopment building.
  1. Ensure to add appropriate penalties/damages in case the project is delayed beyond the agreed period including but not limited to payment of rental and other charges to the members.

I am sure our blogs on Redevelopment would help you and the society in creating a harmonious relationship.

13 thoughts on “15 Important Clauses of Redevelopment Agreement

  • Dear sir/madam.. Point no 4, says if payment of rentals not done by Developer then, society has right to prevent developer from allowing any flat purchasers to occupy new flats.
    Why?
    What’s mistake / crime of legal flat purchaser.? Why they should suffer.?
    It should be between developer and Society.
    Also, once the development agreement is terminated prematurely, the Developer looses all rights on the structure developed and all his new buyers loose their flats.
    These points should have alternatives or should be properly ammended and buyers’ rights should be retained.
    Because of these points there are some buyers who lost their Dream homes and Hard earned money both.
    I will go further sah and it’s a legal fraud in redevelopment projects and middle class families loose their lacks of rupees and left helpless by our Law.

    • Dear Santosh,
      While we understand the sentiments of the buyer, but tell me what is the crime / mistake the members have done by giving their property for redevelopment and staying out on rents. So if builder do not pay the rents as agreed, how are they going to survive. So in all fairness they have a right to prevent developer selling the flats. A buyer must check all the documents including the development agreement before buying the property and see as to whether builder if following the terms of the agreement and defaulted before making any payment. By this you can save your hard-earned money.

  • Sir we have an issue of admitting new member in our redeveloped society. Becausr Developer has not yet done stamp duty, registration (which is agreed there in our development agreement) of our original tenant and forcing us to admit the new member first ( buyers of salable flats in our redeveloped building).Our stand is that unless he(developer) not doing of our (original 36 tenants )stamp duty registration we will not accept the new member in our society. Do we are right in our stand? And what further action we should take against developer and new member?

    • You are correct in taking your stand. He is obliged to first full-fill his obligation as per the re-development agreement and then admit the new member.

    • Please let us have the complete perspective of the above reference. We need to understand the entire clause / context in which reference this has been mentioned before we comment.

  • Thanks to this initiative to educate members of society regards re-development. Please send me your contact details because our society is located in one of prime locality in Thane which can be considered as most expensive area in thane. Ours is possibly the only society who has access to two independent roads on two opposite sides which no other society has. Redevelopment discussions are in initial stages but regret to inform you that, neither managing committee are sharing any information like feasibility report etc to members, not members seem to know ANYTHING about redevelopment procedure, laws, pros and cons. I am worried that, such condition can be misused by anybody. Please send me your contact details, so that, I can explore taking your consultancy on turnkey basis.

  • Our building is going for redevelopment under sec 33 (7). Initially the developer has taken IOD and approved plans based on the proposed 23 floor structure. However, due to changes in the current norms the builder can construct upto 120 mts. He has applied for changes in the layout and the approved plans are going to change. Can we enter into Alternate accommodation agreement without receiving the revised IOD and Approved Plans. What are the effect if we sign the agreement without Approved Plans and revised IOD. Kindly advise.
    Thanks,
    Yusuf

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