Author: CA. S. H.

Teckchandani
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Draft Print Date: 13-Oct-24
Hand Notes:
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From the Author’s desk
Redevelopment of Societies Procedures and Checklist based
on Laws Applicable in Maharashtra – 1st Edition 2024

Redevelopment of societies is a process that involves the

demolition of old and dilapidated buildings and the
construction of new and modern ones, with the aim of providing
better living conditions and amenities to the members of the
society. Redevelopment of societies is a common phenomenon
in Maharashtra, especially in Mumbai and Navi Mumbai, where
the land prices are high, buildings are ageing with high repair
cost, risk to persons living in old buildings and the increasing
demand for housing with increasing family size.

Redevelopment of societies is not an easy task, as it involves

various legal, technical, financial, and social aspects.
Moreover, there are many challenges and risks involved in the
redevelopment process, such as selection of developers,
delays in approvals, violations of regulations, defects in
construction, disputes amongst the members etc.

Therefore, it is important for the members of the society to be

aware of the procedures and checklist involved in the
redevelopment of societies, based on the laws applicable in
Maharashtra. This book aims to provide in a simple non-
technical manner a comprehensive and practical guide to the
members of the society who are planning to undertake or are
already involved in the redevelopment of their society. The book
covers the following topics:

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 Chapter 1: Introduction to Redevelopment of
Societies: This chapter provides an overview of the
concept of redevelopment of societies. It briefly explains
the types of redevelopments such as the Self-
Redevelopment, Developer Redevelopment with Pros
and Cons of each type. The Author’s suggestion of
adopting a mid-way approach.
 Chapter 2: Initiation of Redevelopment Process: This
chapter describes the steps and procedures involved in
initiating the redevelopment process, such as obtaining
the consent of the members, conducting a structural
audit, appointment of project management consultants,
preparing a feasibility report, calling for tenders, selecting
a developer, etc.
 Chapter 3: Documentation and Technical Terms this
chapter gives a brief description of documentation with
key points to be incorporated in each document.
 Chapter 4: Important Checklist / Quires the Society
Committee and the Members should seek answers from
the developers. The Author recommends the checklist
detailed in this chapter should be carefully considered
when proceeding with redevelopment.
 Chapter 5: Various Schemes of Redevelopment: This
chapter highlights key points of alternative schemes
available under the Development Control regulations,
understanding which of these schemes could be
beneficial for redevelopment.
 Chapter 6: Execution of Redevelopment Project: This
chapter explains the steps and procedures involved in
executing the redevelopment project, such as obtaining

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 the necessary approvals and permissions, signing the
development agreement and the power of attorney,
vacating the premises, monitoring the progress, handing
over the possession, etc.
 Chapter 7: Rights and Duties of the Members and the
Developer: This chapter discusses the rights and duties
of the members and the developer in the redevelopment
process, such as the right to accommodation, corpus
fund, additional area, conveyance, etc. and the duty to
pay maintenance, stamp duty, registration fees, taxes,
etc.
 Chapter 8: Legal framework this chapter briefly explains
the legal framework and the various laws and authorities
involved in the redevelopment process.
 Chapter 9: Disputes and Remedies in Redevelopment
Process: This chapter deals with the common disputes
and remedies in the redevelopment process, such as
breach of contract, delay in completion, deviation from
plan, inferior quality of construction, non-compliance
with norms, etc. It also suggests the ways and means to
resolve the disputes amicably or through legal recourse.

The book is based on the relevant laws, rules, regulations,

circulars, notifications, judgments, and orders applicable in
Maharashtra, such as the Maharashtra Co-operative Societies
Act, 1960, the Maharashtra Ownership Flats Act, 1963, the
Maharashtra Regional and Town Planning Act, 1966, the
Development Control Regulations, 1991, the Maharashtra
Apartment Ownership Act, 1970, the Real Estate (Regulation
and Development) Act, 2016, etc. The book also provides
various formats, samples, checklists, and tips to help the
members of the society in the redevelopment process.
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The book is intended to serve as a handy reference and a guide
for the members of the society who are interested in or are
undergoing the redevelopment of their society. However, the
book is not a substitute for professional advice or legal opinion,
and the readers are advised to consult their Chartered
Accountants, lawyer, architect, engineer or any other expert
before taking any decision or action in the matter of
redevelopment of their society.
The author extends heartfelt gratitude to those who provided
invaluable insights during the finalization of this book,
particularly to CA Meher Masand, CA _______ and Architect
________________ for their noteworthy contributions.

CA. S. H. Teckchandani

PS: Kindly let us have your views on the book by email to

[email protected]
.

Disclaimer: The author has used software copilot to assist in writing/revising the language proficiency of this book;
therefore, some contents herein may be similar or identical to those freely available on the internet, which the author
has been advised is not an is infringement of copyright or intellectual property rights, as it is purely unintentional. The
author does not accept any liability or responsibility for any loss or damage arising from the use of or reliance on this
book. The book is for general information and guidance only, and does not substitute any legal, technical, financial,
or professional advice. The readers are advised to consult professionals before undertaking any redevelopment
project or entering into any contract or agreement with any developer or society.

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Chapter 1: Introduction to Redevelopment of Societies
Need for Redevelopment
Redevelopment is the process of demolishing an existing
building and constructing a new one in its place, with the aim of
providing better amenities, facilities, and living standards to the
members of the society. Redevelopment is often necessary
when the building is in a state of disrepair, and the cost of
repairs and maintenance is higher than the cost of
redevelopment. Redevelopment also enables the members of
the society to avail the benefits of additional Floor Space Index
(FSI), Transferable Development Rights (TDR), and incentive FSI,
which can increase the carpet area of their flats and the value
of their property. Redevelopment also ensures compliance with
the latest building norms, fire safety regulations, earthquake
resistance standards, and environmental guidelines.

Self-Development vs Developer Redevelopment

There are two commonly known modes of redevelopment: Self-
development and Developer/Builder Redevelopment. In self-
development, the society itself undertakes the redevelopment
project, by appointing its own architect, contractor, legal
advisor, financial consultant, etc. The society bears the entire
cost and risk of the project and retains the ownership and
control of the property. The society can also avail the benefits of
various government schemes and subsidies for self-
development, such as the Pradhan Mantri Awas Yojana (PMAY),
the Maharashtra Housing and Area Development Authority
(MHADA) scheme, the Slum Rehabilitation Authority (SRA)

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scheme, etc. Self-development requires a high degree of
involvement, coordination, and consensus among the
members of the society, as well as adequate financial and
technical resources and expertise.

In Developer/Builder redevelopment, the society entrusts the

redevelopment project to a third-party developer or builder,
who is responsible for obtaining the necessary approvals,
permissions, and clearances, as well as financing, constructing
and completing the project. The developer/builder also pays the
rent or transit accommodation charges to the members of the
society during the construction period, and provides them with
a corpus fund, a bank guarantee, and an indemnity bond for
their security and welfare. The developer/builder also shares a
portion of the additional FSI, TDR, and incentive FSI with the
society, which can be used for generating income or enhancing
the common amenities and facilities of the society.
Developer/builder redevelopment requires a careful selection
and verification of the developer/builder, as well as a clear and
transparent development agreement and power of attorney
between the society and the developer/builder.

Means of financing Self Redevelopment

The Society could adopt one or more of the following options
available to it for funding the redevelopment

1. Sale of additional areas or additional flats to existing

members at cost to Society or agreed discount or at
ready reckoner rates. This should be preferred at very
initial stage of commencement of redevelopment.

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 2. Investors (from within the society or outsiders)
interested in acquiring flats during construction stage at
some discounted rate.
3. Bank Loans.
4. Allotment of flats to Contractor appointed to construct
the new building at an agreed rate.

Pros and Cons of Self Redevelopment

Self-redevelopment is a mode of redevelopment in which the
society itself undertakes the redevelopment project, by
appointing its own architect, contractor, legal advisor, financial
consultant, etc. The society bears the entire cost and risk of the
project and retains the ownership and control of the property.
Self-redevelopment has some advantages and disadvantages,
which are as follows:

Pros of Self Redevelopment:

- The society can design and construct the building as per its
own preferences and requirements, without compromising on
the quality, aesthetics, or functionality of the required amenities
in the building and within the flat.

- The society can avail the benefits of various government

schemes and subsidies for self-redevelopment, such as the
Pradhan Mantri Awas Yojana (PMAY), the Maharashtra Housing
and Area Development Authority (MHADA) scheme, the Slum
Rehabilitation Authority (SRA) scheme, etc. These schemes can
reduce the cost and enhance the feasibility of the project.

- The society can also benefit from the additional floor space
index (FSI), transferable development rights (TDR), and

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incentive FSI, which can increase the carpet area of their flats
and the value of their property. The society can also use these
benefits for generating income or enhancing the common
amenities and facilities of the society.

- The society can avoid the hassles and risks of dealing with an
external developer or builder, who may have vested interests,
hidden charges, or fraudulent practices. The society can also
save the profit margin that the developer or builder would
charge for the project. The Society can also ensure better
quality construction as the member's control construction
phase thru the construction contractors appointed by the
Society.

- The society can ensure the timely completion and delivery of

the project, as it can monitor and supervise the progress and
quality of the work at every stage. The society can also avoid any
disputes or litigation with the developer or builder, which may
delay or hamper the project.

Cons of Self Redevelopment:

- The society needs a high degree of involvement, coordination,

and consensus among the members of the society, as they
must collectively take decisions and bear responsibilities for
the project. The society may face di iculties in managing the
diverse opinions, expectations, and demands of the members,
especially in large or complex societies.

- The society requires adequate financial and technical

resources and expertise to execute the project. The society
must arrange the funds for the project, either through loans,
grants, or contributions from the members. The society also
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must appoint and manage the various professionals and
agencies involved in the project, such as the architect,
contractor, legal advisor, financial consultant, etc. The society
may lack the experience or competence to manage the
financial, legal, technical, or administrative aspects of the
project.

- The society bears the entire risk and liability of the project, in
case of any delays, defaults, accidents, damages, or losses. The
society must comply with all the statutory norms and
regulations related to the project, such as the building
permissions, environmental clearances, fire safety measures,
earthquake resistance standards, etc. The society also must
ensure the safety and welfare of the members and the workers
during the construction period.

- The society may face challenges in finding suitable alternative

accommodation for the members during the construction
period, as the existing building must be vacated and
demolished. The society may also have to pay the rent or transit
charges to the members, which can increase the cost and
burden of the project.

- The society may encounter unforeseen issues or

complications during the project, such as land disputes, title
defects, structural problems, cost escalations, market
fluctuations, etc. The society may not have the capacity or
flexibility to cope with these challenges, which may a ect the
viability or success of the project.

- The Society may not be well equipped to ensure timely Sales

of Units to fund the project, more particularly in light of the

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recent trends where home buyers are choosing to buy ready
possession flats over under-construction flats. Whereas the if
developer of repute is chosen for redevelopment, the society
can encash on the developer’s goodwill and market reputation
to sell the flats/shops, this could incidentally ensure timely
redevelopment.

Self-redevelopment

Housing societies of old and dilapidated buildings usually

appoints a developer for the redevelopment of the society
under the rules and regulations implied by the local
government/authority. In such cases except the members of the
society only the developer gets benefit of additional FSI and
other incentives. The participation in such projects is limited
from the members of the society which results into dominance
of the developer and stalled projects, irregular payment, or no
payment for transit rent. Delayed projects add financial burden
on the buyers from free sale component of the project who took
loan from banks to buy home. To curb this issue, it is ideal that
housing society can opt for self-redevelopment where the
members can get the benefit of FSI and other incentives. State
government introduced concessions to ensure fast tracking of
such self-redevelopment projects through government
resolution dated – March 8, 2019.

The Maharashtra State Government issued a Government

Resolution (GR) on September 13, 2019, to promote self-
redevelopment of housing societies. This initiative aims to
empower residents to undertake redevelopment projects
independently, ensuring better control, transparency, and
benefits for society members.
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Eligibility Criteria:

• Age of Building: Buildings that are over 30 years old are eligible
for self-redevelopment.

• Society Resolution: A resolution passed by the housing

society’s general body is required to initiate the process.

To encourage self-redevelopment, the government has

provided several incentives and concessions:

• Additional Floor Space Index (FSI): Eligible projects receive an

extra 10% FSI.

• Free FSI: 0.4 FSI is provided at no cost for plots abutting roads
less than 9 meters wide.

• TDR Concession: A 50% concession on the purchase of

Transfer of Development Rights (TDR).

• Premium Concessions: Reduced premiums payable to

Municipal Corporations.

• Loan Rebates: A 4% rebate on loans taken for self-

redevelopment projects.

• GST Reduction: Concessions on Goods & Service Tax (GST)

applicable to the project.

• Stamp Duty Reduction: A nominal stamp duty of Rs. 1,000 for

the Permanent Alternate Accommodation Agreement (PAAA)

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Pros and Cons of Developer/Builder Redevelopment
Pros of Developer/Builder Redevelopment:

- The society can transfer the responsibility and risk of the

project to the developer or builder, who has the expertise and
experience to execute the project. The society does not have to
arrange the funds, appoint the professionals, or manage the
work for the project. The society can also avoid the legal and
technical hassles and compliance issues related to the project.

- The society can negotiate and secure the best possible terms
and conditions from the developer or builder, such as the
corpus fund, rent compensation, additional area, amenities,
quality, timeline, etc. The society can also ensure that the
interests and rights of the members are protected by
incorporating the clauses and safeguards in the development
agreement and the power of attorney.

- The society can benefit from the market reputation and

network of the developer or builder, who may have tie-ups with
the banks, financial institutions, government authorities,
contractors, suppliers, etc. The developer or builder may also
have access to the latest technologies, designs, and trends in
the construction industry, which can enhance the value and
appeal of the project.

- The developer or builder will provide the alternative

accommodation to the members during the construction
period. The society does not have to incur the cost of shifting to
another place or paying the rent or transit charges.

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Cons of Developer/Builder Redevelopment:

- The society may lose the control and ownership of the project,
as the developer or builder will have the sole authority and
discretion to execute the project. The society may not have any
say or involvement in the decisions or changes related to the
project, such as the layout, design, specifications, materials,
etc. The society may also face di iculties in monitoring or
supervising the progress and quality of the work by the
developer or builder.

- The society may face the risk of delay, default, or

abandonment by the developer or builder, who may not fulfill
the promises or obligations made to the society. The developer
or builder may also violate the terms and conditions of the
development agreement or the power of attorney, such as
diverting the funds, encroaching the land, etc. The society may
also encounter disputes or litigation with the developer or
builder, which may a ect the completion or delivery of the
project.

- The society may not get the fair or optimal value for their
property, as the developer or builder will charge a high profit
margin for the project. The developer or builder may also exploit
the ignorance or vulnerability of the society and o er them low
or unfavourable terms and conditions, such as the corpus fund,
rent compensation, additional area, amenities, quality,
timeline, etc. The society may also have to pay the taxes, fees,
or charges related to the project, such as the GST, stamp duty,
registration fee, etc.

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 Looking forward to your
suggestions. Suggestions
incorporated in the final book
shall be acknowledged in the final
published edition.

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