A very interesting detailed analysis for Builders and Real Estate Developers including aspects of Taxation for members such as
Liability of Income/Capital Gain Tax, if any, on:-
- Additional area in the hands of individual members.
- Cash compensation received upon surrender of entitled additional area, in part or in full, by an individual member.
- Corpus Money received by the individual members from the Developer in lieu of surrender of part entitlement of FSI/Development rights.
- Corpus Money received by the Society from the Developer and subsequently distributed to its members.
- Rent for Temporary Alternative Accommodation including Deposits, if any.
all this, along with important decided case laws
Click Here for the detailed analysis -
In land-starved Mumbai, managing committees of cooperative housing societies tango with builders to beat the law and browbeat flat owners by opting to redevelop buildings
According to legal and realty experts, while the laws are generally good, society MCs take advantage of sundry shortcomings to connive with builders at the time of executing redevelopment contracts. As a result, tens of redevelopment cases end up in courts. While cases between housing societies and their members land in cooperative courts, a feud among a society, its members and a third party goes to the high court.
At the ward/department level, there are lakhs of cases of such disputes.
The government’s taciturn approach does not help either – legal experts say the departments concerned turn a blind eye to the “dictatorial manner” in which MCs function by flouting laws and disregarding rules.
Many experts are of the view that the Redevelopment Directives of January 2009 U/S 79 are broad guidelines, and are one-sided – they are meant only for members to follow and lack any provision for penalty or punishment for the errant builders. Despite many projects being delayed, no builder has so far been put behind bars, prompting Dilip Shah, senior counsel, redevelopment, to quip, “This is a major lacuna. And builders know that a common man cannot afford to get into a long-drawn legal battle.”
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By Accommodation Times News Services
All the redevelopment plans put up by either builder or society itself for redevelopment must accompany a certificate from the Registrar of Co-operative Housing Society who have observed section 79A procedures laid down by Maharashtra Co-operative Society Act 1960.
The Brihan Mumbai Mahanagar Pallika will not entertain any proposal for redevelopment. Section 79A is guide lines set up by State Government of Maharashtra for smooth procedure and unbiased process for redevelopment for societies.
Legal intricacies are the most common reasons for any redevelopment project’s trailing completion. Very few lawyers are aware about drafting an immaculate development agreement which provides basis for successful completion of a project. As Andheri, Chandivali, Sakinaka and nearby regions take up redevelopment projects of co-operative housing societies (CHS) aggressively, Dilip Shah, Andheri-based senior counselor tells ET about the guiding regulations and prevalent policy paralysis.
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There are many covenants and indemnity bonds the developer has to agree to, with the members in order to have a smooth redevelopment process. The following are some of them :
- The developer should agree to carry out the redevelopment work in accordance with the DC regulations, BMC, MHADA Act and all the other concerned authorities. The society will not be responsible for any breach, if any, committed by the developer.
- The developer must give a Bank Guarantee before commencing redevelopment
- There must be a tri-partite agreement between the developer, the Society and the Member, which should protect the Society and Member interests totally.
- The developer should also indemnify the society/the members against objection, if any, raised by any of the concerned authorities.
- The developer should carry out demolition of the existing structure and construction work at his own cost. If there is no demolition, and the construction is to be carried out in a space adjoining or between the existing buildings, the developer must indemnify the Society and its members in case of any damage to the existing structures.
- Even if the demolition is to be carried out, the developer must keep the Society indemnified in case of any damage to the adjoining or nearby buildings, even if they do not belong to the Society.
- The developer should bear all the expenses for submission of the plans, amended building plans, getting the approval, architects and consultants fees and other costs, charges and expenses related thereto
- The developer should obtain insurance of the labour, workers and all others and indemnify and keep indemnifying the society from or against loss, damages due to inaction or otherwise, on part of the developer, from starting the demolition of the existing building and till the members re-occupy their new flats in the newly constructed building.
- The complete installation which the developer is to undertake for his on-site power supply, shall conform to the Indian Electricity Rules 1966 and Indian Electricity Act 1910, with latest amendments and specifications. The developer shall provide, at his own cost, portable generators to maintain regular power supply for his operations, in case of disruption of power supply. The developer should indemnify the society from any liability, either legal or financial, for damages or delay caused to the developer on account of failure of power supply.
- The developer should provide indemnity bonds for the project. The developer should, throughout the period of development, keep indemnifying the society against all actions, suits, costs, charges, expenses, damages, etc., resulting on account of any act of omission or any breach, delay or default on his part in developing the said property or any rules and regulations, terms and conditions or otherwise.
- Lastly, the developer should not make any claims on the basis of the present Development Agreement after the expiry of the 24 months, till the separate agreement is signed with the society.