Redevelopment of Housing Societys’ Buildings

REDEVELOPMENT OF HOUSING SOCIETIES’ BUILDINGS – (ENTITLEMENT, THOUGHT AND PROCESS)

1.                The redevelopment process of Societies’ old buildings in Mumbai is a must for the development of the City as also for the better and improved living of people of Mumbai. It is and it will be an ongoing process.

2.                Many Societies desire to go for redevelopment of their property but they are not aware about the correct method and the procedure to be followed.

3.                There are three major aspects of the same which are:-

 

(a)      Whether the Society is the Owner of the Land and Building in the Government’s records? If not, what is to be done.

(b)      To know and consider the advantages and disadvantages of the redevelopment of Society’s building; and

(c)      The  procedure to be followed right from conceiving an idea of redevelopment of Society’s building till its effective implementation.

4.       (i)       Coming to the first point, it is must that Society’s name

should appear in the property card maintained by the City Survey Office as the Owner or the subsisting Lessee, otherwise it will be not possible for society to go for redevelopment of it’s property as the Municipal Corporation will not sanction plans, give permissions to demolish the existing building and reconstruct the new building. If  the Society’s name is already appearing in the property card as the Owner or the subsisting Lessee, the society need not worry on this count.

(ii)      Under the provisions of The Maharashtra Ownership Flats (Regulation of the Promotion, Construction, Sale, Management and Transfer) Act, 1963 (“MOFA”) and rules made thereunder, the Developer is required to form a Society within 4 months from the date on which minimum number of persons required to form such organization have taken flats. Further, the Developer is required to convey or cause to convey the land (or leasehold right) alongwith the building within 4 months from the date of incorporation of the Society in favour of the Society.

(iii)     If the Developer fails to convey the land (and/or transfer the leasehold rights) and building by executing the Deed of Conveyance and/or  Deed of Assignment as the case may be in that event, the Society and/or any other body of the Purchasers have got the following remedies:-

(a)      to approach theCivil Courtfor obtaining Conveyance;

(b)      to approach the “Consumer Forum” for obtaining Conveyance;

(c)      To adopt appropriate Criminal Legal proceedings under the provisions of MOFA to punish the Developer (if found guilty) in accordance with the law and which proceedings can put pressure on the Developer to execute Conveyance in favour of the Society;

(d)      to follow the procedure for obtaining “Deemed Conveyance” as provided in Section 11 (3) to 11 (5) of MOFA.

(iv)     The Deed of Conveyance or the Deed of Assignment as the case may be in favour of the Society should be properly stamped and registered for effectively transferring the property in favour of the society in Government’s records.

(v)      The provisions and the procedure for obtaining “Deemed Conveyance” are the fastest and most effective remedies, provided that the Society regularly and strongly follows up the same. These provisions are applicable to free hold lands as also leasehold lands.

(vi)     The Procedure for obtaining “Deemed Conveyance

(a)      The Society should first collect and organize all the relevant documents such as the Society Registration Certificate; Property Card or 7/12 extract; sanctioned plans, IOC, CC and OC (all or any of them); copies of all Agreements for Sale of initial Purchasers, Registration Receipt, Stamp Duty payment proof thereof etc. These documents are required otherwise also for obtaining the conveyance directly from the Developer.

(b)      To make an Application in writing to the Competent Authority alongwith all the relevant documents for issuing a Certificate/Order that the Society is entitled  to have a unilateral Deemed Conveyance in their favour and to have the same registered. The Competent Authority is the District Deputy Registrar of Co-operative Societies.

(c)      The Competent Authority after giving notice to the Developer, after giving them an opportunity to file reply and a reasonable opportunity of being heard, may certify that it is a fit case for enforcing unilateral execution of Conveyance Deed, conveying the land and the building in favour of the Society.

(d)      After the said order is passed, the Society should submit the draft Deed of Conveyance for obtaining approval from the Competent Authority.

(e)      Once the draft Deed of Conveyance is approved by the Competent Authority, the Society should submit the same to the Collector of Stamps for determining the stamp duty on the same. If all the initial Agreements are duly stamped and registered, the Society will have to pay nominal stamp duty of Rs. 100/- on the said Deed of Conveyance. If any initial Agreements are not duly stamped, the deficit stamp duty together with penalty will have to be paid by the Society and which can be recovered by the Society from the concerned present members. After that, to obtain the duly stamped Deed from the office of Collector of Stamps .

(f)       Thereafter, the Society should lodge the said duly stamped Deed of Conveyance alongwith the Certification Order for registration with the concerned Sub-Registrar’s office.

(g)      The Registering Authority (Registrar/Sub-Registrar) shall issue summons to the Developer to show cause why such unilateral Deed of Conveyance should not be registered as “Deemed Conveyance” and after giving a reasonable opportunity of being heard to all concerned, the Registering Authority will register the document of “Deemed Conveyance”.

(h)     Thereafter on the basis of the registered document of “Deemed Conveyance”, the Society can apply to the concerned City Survey Office for entering their name in the property card as Owner of the property and for issuance of Property Card in the name of the Society.

5.                Coming to the Second Point, before going for redevelopment of its properties, the society must consider the advantages and disadvantages of the redevelopment of its property. The general features of the same are:-

ADVANTAGES:-

 

  • New flat with an additional area;

 

  • New building will be earthquake resistant with IS quality standards with modern design, good look, lift facilities and amenities like garden, swimming pool, Club House etc.
  • Monetary benefits in terms of corpus fund etc. to cover up future increase in taxes and maintenance charges.

 

DISADVANTAGES:-

 

  • Shifting to temporary transit accommodation with the belongings and furniture. This is of a serious concern for Senior Citizens living alone.
  • Possible delay on the part of Developer in handing over the new flat.
  • Increase in number of members in the Society. To get adjusted with them.

6.       (i)       Coming to the third and last point, if the Society is the

Owner or the subsisting Lessee as per the property card maintained by City Survey Office and the Society intends to re-develop its’ property, it can start the process of re-development.

 

(ii)      Earlier and prior to 3rd January2009, the Members of the Society have been contending that for re-development process the members were not taken in confidence; transparency is not observed in tender process and in appointing Architects, Consultants and Developers; Committee Members are acting for their personal gain etc. To avoid all this, the Government of Maharashtra has u/s 79 A of Maharashtra Co-operative Societies Act, 1960 issued certain directions to be treated as “Co-operative Housing Societies Buildings  Redevelopment Directives” with effect from 3rd January 2009. Now it is must for all the Housing Societies to follow the same.

 

The brief gist of the directives are, step by step, are set out

herein:-

 

A.      The idea of redevelopment can be conceived in two ways:-

(1)      at the recommendation of the Managing Committee.

(2)      by 1/4th of total number of members of the society requesting for SGM for the purpose.

B.      Within eight days of the receipt of the requisition from the members, the Secretary of the Society shall convene a meeting of the Managing Committee to take note of the said notice and shall also convene within one month a Special General Body Meeting (“SGM”).

C.      First the Society should arrange for a structural survey of the building through the Structural Engineer. On receiving the report of the Structural Engineer, the report should be studied and discussed in the meeting of the Managing Committee in the presence of the Structural Engineer. Before the SGM a list of the Panel Architects and Project Managing Consultants (“PMC”) should be prepared. At least 5 Architects and PMCs should be requested to prepare a redevelopment project report and submit their quotations to the Society. The members also may recommend the names of Architects and PMC atleast 8 days before the date of SGM.

D.      The SGM should be called. Notice alongwith the agenda should be sent to all members with a 14 days clear notice.  The Agenda should cover the following items:-

(i)       to take a  primary decision on redevelopment.

(ii)      to appoint Architect and PMC from the panel of the State Government or the  Local Authority and to finalize their scope of work and terms and conditions.

(iii)     to outline the detailed working procedure for Re-development.

 

E.      Quorum of the SGM shall be 3/4th of total number of members. If there is no quorum, the meeting shall be adjourned for 8 days and if in the adjourned meeting there is still no quorum, the meeting shall stand dissolved assuming that members are not interested in the redevelopment of the Society’s building.

F.       If the meeting proceeds with the requisite quorum,  the meeting shall take cognizance of all suggestions, recommendations and objections of members for the redevelopment of the building, it should be recorded in the minutes of the meeting in detail with their respective names. The Resolution for redevelopment program  and its implementation should be passed by 3/4th majority of the members present at the meeting. After passing the Resolution of the re-development, the General Body shall decide:-

(a)      to finalize terms, conditions and scope of work of Architect and PMC.

(b)      to present the program for redevelopment.

G.      Proceeding of the SGM:-

(i)       video recording of the meeting to make it transparent.

(ii)      to prepare the detailed minutes and to circulate the same within 10 days to all the members.

(iii)     to send the minutes and acknowledgment of receipt of minutes by the all members to the Registrar’s Office of Co-operative Society of the concerned ward.

H.      Appointment letter to be issued to Architect and PMC within 15 days of the SGM. The Society to enter into a contract with them.

I.        (i)       Architect to survey the land, to obtain

information on the Conveyance, to obtain information about availability of FSI/TDR and to prepare realistic feasibility report;

(ii)      PMC and Architect should also prepare the feasibility report containing technical feasibility, financial feasibility, benefits of redevelopment, disadvantages of redevelopment etc;

(iii)     The Architect/PMC to submit the report to the committee of the society within two months from their appointment.

J.       Once the feasibility report is received by the Society, the Society to call the SGM with proper notice and Agenda. The notice of SGM should state that the copy of feasibility report is available for inspection to all the members in the office of the Society and suggestions from the members are invited within eight days of the notice.

  • The suggestions received from members to be circulated to the Architect/PMC and they should be invited to attend SGM.
  • During the SGM there shall be an overall consideration of suggestions and recommendation of members. SGM to approve the feasibility report by majority. Date of next SGM should be fixed to finalize the tentative draft of tender and tender notice.

K.      PMC to prepare draft tender document in consultation with Managing Committee. It should cover all key issues. Some of the key issues are:-

*        Earnest Money Deposit payable by Prospective Developer

*        Security Deposit amount

*        Temporary Accommodation arrangement and payment of cost.

*        Bank Guarantee for performance of the re-development project

*        TDR to be purchased in the name of the Society and at what stage

*        Corpus Fund – Amount; Payable to society or its members.

*        Restriction on use of commercial premises, if any (e.g. to Hoteliers etc.)

*        Liquidated damages for delay clause

*        Termination in case of breach and consequences of breach

*        Defect and Liability period

*        Diary of Progress report

*        Construction features and amenities, Quality Assurance program

*        Details and Technical specification of materials with relevant I. S. Codes.

*        Redevelopment proposal summary

*        Parking facilities (basement, stilt, open and podium) and sharing of the same between the Society and the Developer.

*        Pre Qualification Application

*        Financial Offer Application

L.       Draft tender should be approved in the SGM by majority. Notice of the tender document to be given in newspapers. Tenders shall be called from well known, expert and experienced Developer. Notice to be given to members about floating of tender document and members should be requested to recommend a known Developer. The office bearers, members of the society and relatives of members are prohibited from being the Developer. On the last date of receipt of tenders, the list of all tenders received should be displayed on the notice board.

M.      Opening of tenders – Meeting of Managing Committee and redevelopment committee (if appointed) for opening of the tenders received should be called. Representatives of Developer who have submitted valid offers be allowed to remain present in the meeting.  Members of the Society may attend the meeting as observers. Tenders should be opened in the presence of Architect, PMC and members.

N.      The Architect and PMC shall scrutinize the tenders and prepare comperative table. If bidders are more than five, than at least five bidders should be short listed and they shall be invited in the next SGM for presentation.

O.      Upon short listing the Developer, the Managing Committee to make an application to the Registrar of Co-operative Societies of the concerned Ward to attend SGM in whose presence the Developer shall be selected.

P.       The SGM to be called. Date should be fixed in co-ordination with representative of the Registrar. 14 days prior notice to be given to the members. The SGM to be conducted in the presence of and under supervision of the Registrar. The video recording of the meeting should be done. Only the members, Developer, PMC, Architect and the short listed bidders are allowed to attend the meeting. Members to be issued identity cards. In the meeting the following business to be transacted:-

(1)      to give comparative information of the short listed Developer.

(2)      to permit the Developer to present their work.

(3)      to select one Developer and finalize the tender

(4)      to get approval from the Developer

(5)      to authorize the Managing Committee to complete the formality and prepare the documents.

It is the practice followed that later on the said Registrar will issue a letter to the Society granting permission to the selected Developer to redevelop the Society’s property.

Q.      If quorum is not present in SGM it should be adjourned for 8 days and even if in the adjourned meeting the quorum is not present, it shall be presumed that the society is not interested in the redevelopment and the meeting shall stand dissolved. At this stage the society shall not be allowed to present the proposal of redevelopment again for a period of 12 months from the date of the dissolved meeting.

R.      Development Agreement with the Developer:

 

The managing committee of the society on passing of resolution of appointment of Developer at the SGM shall execute Development Agreement within one month with the selected Developer on the basis of terms and conditions approved under the consultation and guidance of the Architect/Project Management Consultant. Development Agreement shall contain other terms as under in additions to terms and conditions recommended by the Architect and Project Management Consultant and approved by the SGM:-

 

(a)      Redevelopment of the building shall be completed within two years and not more than that and in particular circumstances it shall not exceed more than three years.

(b)      The Developer shall provide a Bank Guarantor of 20% of the total cost of the redevelopment project.

(c)      The Developer shall make provision for temporary alternate accommodation in the same area for the members who will be vacating the premises or shall make provision for monthly rental plus deposit to be paid to all the members of the society if they agree or shall make provision for temporary alternate accommodation in the Transit Camp.

(d)      Development Agreement shall be duly stamped and registered under the Registration Act, 1908.

(e)      New members, on completion of project shall be admitted in SGM as members of the Society.

(f)       Agreement must specify the carpet area to be given.

(g)      Right of the Developer is not transferable.

(h)     Flat Owners shall vacate the premises only after obtaining all legal documents and permission of the Competent Authority for redevelopment of Society’s building.

(i)       In case of one who is in possession of flat/premises and who is Owner of the same, his right of ownership shall not be disturbed.

(j)       If there arises any dispute in the redevelopment of the building agreement executed by the Developer, Architect and Society, it shall be resolved under the provisions of Sec. 91 of MCS Act, 1960 and such provision shall be made in the development agreement.

S.      Allotment of flats shall be given in the new building in the same manner in which the original flats were located and shall be allotted after the receipt of occupation certificate. If it is necessary to allot flats by draw of lot system, it shall be allotted accordingly but only after completion of the building which is ready for occupation and members are ready and willing to occupy their premises. Allotment shall be done in presence of the authorized officer of Registrar. The Developer shall make arrangement for video recording of the same.