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LATEST ARTICLE
Documents Relating To Redevelopment Of Housing Societies
Published By (Dilip Shah), Date (02 Feb 2014)

Documents relating to Redevelopment are the principal documents to be executed between the Office Bearers of Managing Committee and the Developer for the redevelopment of any property. But it’s not as simple as it sounds; the Housing Societies need to exercise necessary caution to ensure that the residents’ corporate interest is safeguarded.

 

The legal documents concerning the redevelopment projects are essentially to be precise and leaving no room for any ambiguity on the agreed terms. Documents drafted meticulously, ensure that the parties truly agree on the contents and prevent future disputes caused by differing interpretations of the document. Drafting/Vetting of legal documents accurately is our privileged skill requiring close attention to terms and conditions to be documented in favour of the Society.

 

While it is easy to draft terms addressing the primary purpose of legal documents, the best documents anticipate all those possible events that might interfere with the Society’s intent. We anticipate these events to help our Client Societies or Landlords to determine and arrest such eventualities in documentation.

 

The number of redevelopment projects are being scaled back or even abandoned on a half way is tremendously on the rise due to wrong selection of Developer and imperfect drafting of redevelopment documents. Inevitably, some projects fall into dispute whenever a Society decides to suspend or terminate the Development Agreement on account of breaches and if the disputes necessitate litigation, the Society will learn lessons (often too late) about the importance of perfect documentation.

We have team of learned Advocates for vetting and drafting of all legal documentations in most effective manner. These drafts after methodically vetted, scanned and scrutinized theoretically by us and the gray areas/pitfalls and shortfalls are exposed and a detailed written report is given to our Client Society apprising them the areas of alerts and awareness and advise them to impress upon the Developer to modify and improve all the legal documents of redevelopment in corporate interest and safety of the Society to achieve the desired results.

 

Please click on the link given below to understand the importance of vetting and scrutinizing of various legal documents related to the redevelopment.

http://redevelopmentofhousingsociety.com/index.php/article-showcase/redevelopment-matters/importance-of-scrutiny-and-vetting-of-redevelopment-documents

 

A brief descripttion of various legal documents involved in redevelopment and its characteristic is given below:

 

FEASIBILITY REPORT: The Society, on appointment of the Project Management Consultant (PMC), directs him to prepare a Feasibility Report and handover the same to the Managing Committee. Feasibility Report is a document that is prepared by PMC after an analysis of the existing plot and structure. The feasibility study is an evaluation and examination of the potentials of a proposed redevelopment project which is based on extensive investigation and research to support the process of decision making whether or not the project will be successful. The Feasibility Report helps the Society to study the financial feasibility of a Developer; financial and technical viability of the project etc.

 

TENDER DOCUMENT: A document is called a Tender Documentvide which various terms and conditions for redevelopment of Housing Society are notified and offers are called from Developers. It is precisely designed to evaluate the capacity, capability and experience of Developers.

 

It is very important that the drafting of the Tender Document is done meticulously. Excellent skills & an exceptionally vast legal and technical knowledge is must to draft such an important document. It is recommended to avail the services of a professional, who is legally as well as technically qualified to carry out comparative evaluation of offers based on a perfect methodical technique. 

 

The PMC will first prepare and submit the Draft Tender Document on which there should be a detailed discussion and the Managing Committee together with Redevelopment Committee. All doubts/points on the Draft Document including the Pre-Qualification Bid, Technical Bid and Financial Bid must be discussed and recommend changes wherever necessary before floating of the same. The Housing Societies are advised to get the Tender Document vetted by experts like us to ensure that no vital terms and conditions are ignored or left behind.  

     

DEVELOPMENT AGREEMENT (DA): After the terms of redevelopment are settled and the Developer is selected, the Society receives a Draft of Development Agreement from the Developer specifying therein, all the agreed terms with the Society.

 

The Development Agreement is executed between the Society and the Developer to construct the new building on the land owned by the Society by using available FSI, Premium FSI, Fungible FSI, TDR etc and provide new flats with additional area to the existing members free of cost and also pay rent, corpus, shifting charges etc. as a consideration for allowing the Developer to carry out the redevelopment on the plot of land owned by the Society.

 

The Development Agreement records all the financial, legal, technical and general terms agreed between the Developer and the Society. Through this Document, the Development Rights are assigned by the Society to the Developer.

 

INDIVIDUAL TRIPARTY PERMANENT ALTERNATE ACCOMMODATION AGREEMENT: When the new flats with an additional area are provided in the new building by the Developer to the existing members of the Society as per the agreed terms of Development Agreement and in order to establish the title of the new flat, a separate Tri-Party Agreement known as Permanent Alternate Accommodation Agreement has to be executed by the Developer with the existing member wherein the Society shall be as confirming party. This Agreement must be executed immediately after the issuance of Intimation of Disapproval (IOD) and before the existing member hands over his flat to the Developer for redevelopment. The Stamp Duty and Registration Charges will have to be solely paid by the Developer.

 

As per the Transfer of Property Act, 1882, any transaction  pertaining to the immovable  property  exceeding Rs.100/- needs to be in documented in writing and has to be registered as required under Registration Act, 1908.

 

The importance of this Document is to have Title Document of the new flat permitting the existing member to sell his flat in future as also to mortgage the new flat and raise the loan from Bank/Financial Institution. As per the amendment done, in the Schedule I to the Bombay Stamp Act, 1958, even if the Society issues a Letter of Allotment of new flat in the new building, the same shall be treated as an Agreement and applicable Stamp Duty will have to be paid. Therefore it is a must that existing member should get the Permanent Alternate Agreement executed for new flat as advised above.

 

POWER OF ATTORNEY (POA): To enable the Developer to develop the property in accordance to the terms and conditions as set out in the Development Agreement and to carry out all the work pertaining to the development of the property, the Society executes a general Power of Attorney in favour of any one of the Directors/Partners or Proprietor of the Company/Firm to act for and on behalf of the Society to do all acts and things relating to the said property, to deal with and correspond with the Municipal Corporation of Greater Mumbai, Mumbai Metropolitan Region and Development Authority, Mumbai Housing and Area Development Authority and all other Offices and Local Authorities and/or the State Government and/or Central Government and its departments in respect of redevelopment of said property, to apply for and obtain sanction of building plans or the revalidation, to apply for and obtain Commencement Certificate, Occupation Certificate, Building Completion Certificate and all other relevant certificates, to deal with and correspond, to demolish, pull down, construct, reconstruct, repair, improve upon the said property or any part or portion thereof, to appoint Architects, RCC Specialists, Engineers and other Professionals to sell and dispose of the remaining premises, area, flats, commercials that have been constructed and generally to do all other acts and matters in connection with or relating to redevelopment, construction, completion and occupation of the new building/s of the Society. The tenure of Power of Attorney is co-terminus with the tenure of Development Agreement.

 

MEMORANDUM OF UNDERSTANDING (MOU):MOU is described as bilateral written understanding known as formal agreement between the Society and the Developer. It expresses a convergence of terms and conditions between the parties, indicating an intended common line of action on redevelopment. It is initially used in cases where parties intend to imply legal commitments pending the execution of final agreement. It is more of a formal alternative to a Gentlemen’s Agreement.  For an MOU to have legal effect, the essential terms must be sufficiently clear and certain.

 

BANK GUARANTEE: The Developer furnishes an irrevocable and unconditional Bank Guarantee in favour of the Society which is equivalent to the cost of construction of new building as Performance Guarantee based on the Feasibility Report prepared by the PMC appointed by the Society. The said Bank Guarantee is furnished before vacating the premises by the existing members and remains in force until the Developer completes the intended new building and notifies the Society to take possession of the members’ flats. The entire Bank Guarantee stands withdrawn after completion of the intended new building in pursuance to the grant of Building Completion Certificate and Occupation Certificate by the MCGM. If the Developer fails to complete the construction of the intended new building within the stipulated period of completion, then the Society is entitled to cash/invoke the said Bank Guarantee and complete such incomplete or pending work by engaging a Developer or Contractors of their own choice. However, the Society shall not be entitled to invoke the Bank Guarantee, if the work is delayed due to the force majeure conditions as documented in the Development Agreement.

 

CHECK LIST OF VARIOUS DOCUMENTS OF REDEVELOPMENT AND FOR REGISTRATION

 

A. SOCIETY DETAILS

Plot no:

Ward:

Plot Area:

Survey No:

Hissa No:

CTS No:

Conveyance: Yes/No

Date of Conveyance:

Indenture of Conveyance:

Lodge for Registration under Serial No:

Useable Area:

Structure: Ground+………..

Flat Category:

 

******************************************************************

 

B. COPIES TO ATTACH WITH DEVELOPMENT AGREEMENT FOR REGISTRATION 

(With adjudication or without adjudication)

 

Property Card:

Total Area Statement: Existing members existing area and free area offered: 

SBGM Resolution

Society Registration Certificate

Details of Share Certificate of all members

List of Amenities

Resolution for Signing Authority

Typical Floor Plan

Conveyance Copy/Index II

Society’s Letter of Intention

2 Witnesses, their Photo ID proof and 2 Passport size Photograph of each of them

2 Passport size Photograph of all signing authority and their Photo ID Proof

Society Rubber Stamp

Developers Rubber Stamp

Pay Order for Stamp Duty (Adjudicate Agreement)

Pay Order for Stamp Duty (Non Adjudicate Agreement)

Pay Order for Registration

 

******************************************************************

 

C. COPIES TO ATTACH WITH POWER OF ATTORNEY

FOR REGISTRATION  

 

Final Draft of Power of Attorney

CTS Plan

Property Card

2 Witness, their Photo ID proof and 2 Passport size Photograph of each of them

2 Passport size Photograph, Photo ID Proof and 2 Passport size of all signing authorities.

Society’s Rubber Stamp

Developers Rubber Stamp

Pay Order for Registration

 

******************************************************************

 

D. COPIES OF DOCUMENTS TO ATTACH WITH PERMENANT ALTERNATE ACCOMODATION FOR REGISTRATION

 

Agreement for Permanent Alternate Accommodation

NOC letter from Society to Member on Society’s letter head

Receipt of Stamp Duty paid on Development Agreement

First and last two pages of Registered Development agreement

Old Share Certificate (Front & Back)

Property Card

City Survey Plan

Occupation Certificate of old Society

Assessment Bill (Old) Of Society

Ration card of member

Electricity bill of member

Society registration certificate

Floor plan of Member

IOD and CC

Copy of Member’s Election Card and Pan Card

2 passport size photographs

 

Articles published in http://www.lawyersclubindia.com/forum/Documents-relating-to-redevelopment-of-housing-societies-94908.asp#.Uu8wxvsxAVd by Dilip Shah


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The Committee shall decide the date, time and place of every general body meeting of the society and the business to be transacted thereat, provided that the business to be transacted at the requisitioned special general body meeting shall be only that mentioned in the requisition. The notice convening the general body meeting shall be issued by the Secretary of the Society accordingly as provided in Bye_Law no 163. On his failure to issue thenotice, the Chairman shall issue it.



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What are the steps involved in the recovery of dues under sec-101?
Ans:

1. Society to issue a Notice to the defaulter and giving him an opportunity to make payment within stipulated time and with a warning therein that on failure of the same, an application would be made to the Registrar under Sec-101 of the MCS Act for the recovery.

2. MC has to pass a resolution for taking such an action.

3. Secretary / Chairman has to make an application to the Registrar of the Co-operative Societies along with necessary documents.

4. Registrar would give hearing to the member and accordingly a certificate will be issued by him to the society.

5. On receipt of the certificate under Sec-101 from Registrar along with other documents, the recovery officer has to prepare demand notice to be sent to sale officer detraining movable property of defaulted member concerned.

6. Sale office on receipt of the recovery papers from the recovery officer has to visit the premises of the member for preparing inventory of the movable property and hand over this list to the member and serve the demand notice on him.

7. If even after serving the demand notice, the amount is not paid by the member, the sale office seizes the movable property of the member as per the inventory and hand over the same to Secretary / Chairman of the society for safe custody.

8. After Sale officer will fix the date, place for such an auction of the movable property seized and auction out the same and pay sale proceeds thereof to the society in satisfaction of the outstanding dues payable by the defaulter member.

9. If the proceeds of the sale of movable property are found to be insufficient to cover the outstanding dues in full, sale officer will proceed by arranging auction of the premises to recover the balance of the dues payable by the member.
What is the basis of the number of Managing Committee members?
Ans: Committee consists of 5 /7 / 9 / 11 members. This includes reservation of seat for women members as per the provision under section 73. Pl see the following table:



No. of members strength

General

Women Total Quorum in MC

Up to 50 4 1 5 3

51 to 100 6 1 7 4

101 to 300 8 1 9 5

301 & above 9 2 11 6
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