We list some legal tips that buyers should keep in mind when executing a real estate transaction for properties in redevelopment projects.
‘Redevelopment’ is rather unexplored by most homeowners, because of the legal ambiguities around the concept. Redevelopment refers to the refurbishment of an existing property. It can be an exhaustive process, due to the various stages and compliances involved. In this modern age, one must be cautious while buying a flat under a redevelopment scheme.
Before transacting in properties under redevelopment, one should understand what redevelopment is.
Redevelopment is the process of rebuilding or reconstructing a residential premise, by bringing down the existing building or old construction. When a society needs extensive repairs or has dilapidated structures and buildings on the verge of collapse but is unable to take necessary measures or does not have the required funds for maintenance, developers undertake the responsibility of building a new structure to rehouse the existing owners of the flats. In return, developers utilize the unused development potential to build additional floors and other amenities to recover their investments and earn profits. The new structure is constructed as per the sanctions of the municipal authorities and housing departments.
Since the redevelopment process requires the demolition of the old structure, it causes inconvenience to the existing owners of the flats, as they have to move to alternate places while the redevelopment takes place. The completion time depends on the proposed new building. However, most projects take about 36 months to complete, with an extended grace period of six months.
The developer’s role
In many redevelopment projects, the developer takes the responsibility of arranging alternate accommodation for the existing residents (transit accommodation) or providing rental compensation (transit rent). These facilities are provided by the developer for the redevelopment period. All the terms and conditions are recorded in the redevelopment agreement, which is entered into by the developer and the society’s existing members.
When executing a real estate transaction for properties in a redevelopment project, keep these legal tips in mind.
Due diligence
Due diligence must and should be carried out to verify the ownership of the land and the development rights. Any and all claims over the land and associated development rights can affect the process of redevelopment. The nature of restrictions can be anticipated with thorough due diligence.
Appointment of the developer
The developer must be partnered with only after the due process has been completed. One should look into the resolutions of the meetings passed by the society management and ensure that Section 79A process, as enumerated under the Maharashtra Co-operative Societies Act 1960 (or the equivalent in your state), has been complied with.
Litigation search
This broadly involves the disputes that may be pending between the society members and other concerned parties (authorities/buyers). Sometimes, the disputes between the developers and society members may result in time wasted on litigation and affect the completion of the projects.
RERA compliances
The project must be covered under the RERA Act, 2016. Buyers should confirm that the project timelines and details are updated on the RERA website promptly and accurately.
Developer’s background
The developer should be researched and his/her background understood fully before engagement. The financial capacity must be inferred, as this plays an essential role in the efficacy of completion.
Documentation of intended purchases
Documents such as allotment letters, sale deeds, and letters of possession are executed duly with the developer. All clarifications and clauses must be recorded with precision. The agreement for sale must be registered with the sub registrar’s office and the requisite stamp duty should be paid thereon.
Buying a home is not an easy decision. Therefore, buyers must be efficient and aware whilst purchasing from developers. Instances have been recorded where buyers have been made to wait for enormous periods or have been deceived. To inform and protect people from such instances, we strongly recommend that the legal tips highlighted above to be given importance while buying a home.
Source:-https://housing.com/news/tips-for-home-buyers-considering-properties-under-redevelopment-projects/
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