Redevelopment Rules for Residential / Commercial Societies

Old societies are looking at the option of redevelopment and developers are keen to take up redevelopment based on availability of Land and FSI.

Gujarat government came up with draft norm for redevelopment by amending Gujarat Ownership Flats Rules 1974  in July 2019 and final norms in Dec 2019.

This article covers redevelopment where land is owned jointly by members. There are different schemes for redevelopment of Public Housing (Gujarat Housing Board / Urban Local Bodies / Urban Authorities etc of Gujarat) and Slum redevelopment which will be covered in next article.

Benefits of Redevelopment

• Larger apartments
• Better amenities
• Higher resale value of property
• More parking space
• Better fire safety system

Conditions for Re-Development

1. (a) The period of twenty-five years of a building shall have  completed from the date of issuance of the permission for development by the concerned authority, or
   (b) The building is declared dilapidated, ruinous or dangerous in any way to any person occupying, resorting to or passing by such structure or any other structure or place in the neighborhood thereof by the concerned authority, and
2. Consent of not less than seventy-five per cent of the members of the building for re-development of the building shall be necessary.

Who can call for Re-Development

• Managing Committee suo-moto
• An application is received from 1/4 of members of the flats

Process

1. Managing committee to call for Special General Meeting within a period of 1 month on receipt of application.
2. The rules and the byelaws of the society or apartments made under the relevant law with respect to convening meetings of the General Body or the Managing Committee,
   • Notice,
   • Circulation of agenda items,
   • Quorum at the meetings,
   • Taking policy decisions,
   • Entering into agreement,
   • Supplying minutes of the meeting to the members, etc. shall apply to the matters relating to re-development project.
3. The Managing Committee shall place before the General Body
   the agenda item for taking policy decision relating to
   • Re-development of building; and
   • For appointment of the Architect / Project Management Consultant to prepare the re-development project.
   • Consent of not less than seventy-five per cent of the total members of the body for re-development of the building and
   • Authorize the Managing Committee to take all further necessary action/steps for re-development project.
   • All members of building shall be informed with reference to the policy decision of re-development of the building taken in the meeting.

Project Report

1. The Architect / Project Management Consultant appointed by the Managing Committee as per the special general meeting decision, shall prepare the project report within two months and submit the same to the Managing Committee. Report will contain details like:
   • Carpet area to be provided to the members
   • Providing alternative accommodation and payment of rent
   • Vacant area
   • Garden area
   • Parking space
   • Building specifications
   • Common areas
   • Recreation facilities and amenities
   • Provisions of corpus fund and bank guarantee
   • Time-limit for completion of the re- development project, obtaining the approvals/permissions from all statutory bodies required under the applicable laws
   • Any other matters as may be necessary for re-development project.
2. Invite the offers from the eligible contractors, builders, company or developer.

Preparing list of offers received

Immediately after receiving the offers from the contractors, builders, company or developer within the stipulated time limit, the Secretary of the Managing Committee shall prepare a list of offers received and display the same on the notice board of the office of the building for knowledge and information of the members.

Selection of Developer

The Managing Committee shall after considering the offers received and presentation made by each contractor, builder or developer, as the case may be, select one as the developer for the re-development project.

Agreement with the Developer

Subject to the terms and conditions as approved by the special general body meeting of the building, a development agreement shall be entered into with the Developer in consultation of the Architect / Project Management Consultant. The development agreement shall contain following details :

• The period of completing re-development project of the building;
• A bank guarantee, if any, for amount equal to such sum as may be agreed to by the parties;
• Free alternative accommodation to the members till the re-developed flat is handed over to the member, or cash in lieu of existing premises or any combination;
• Registration of development agreement under the Registration Act, 1908;
• Conditions for admission of new members in the building;
• Right of the Developer to sell and/or transfer and dispose of the remaining flats forming part of the re-development project
• Carpet area to be allotted to each member;
• The procedure for allotment of flats to the existing and new members;
• The procedure of termination of development agreement for default or breach of any of the conditions of agreement;
• Other terms and conditions such as amenities to be provided by the Developer, corpus fund, if any, shifting charges, common infrastructure development work, penalty clause for delay in completion of the project, obtaining required approvals for re-development project, re-development work as per the Development Control Regulations of the concerned authorities; and other matters as per the agreement by the parties.

Prohibition on certain acts

The Developer shall not make any changes in the building plan except with the written permission of the Managing Committee.

Allotment of New Flats

1. After the re-development work is completed and the completion certificate as well as the Building Use Permission (certificate) is obtained, the Managing Committee shall allot the flats to the existing members as per the list annexed to the development agreement.
2. The Managing Committee may pass a resolution to authorize the Developer to sell, transfer, lease, mortgage, convey or deal with any manner in respect of the balance of the units apart from the new units re-allotted to the existing members.”.

Reference

1. Gujarat Ownership Flats Rules 1974: Amendment : 26 Dec 2019
2. Sec 41A: Gujarat Ownership Flats Act, 1973: Amendment 
3. The Gujarat Ownership Flats Act, 1973
4. The Gujarat Ownership Flats Rules, 1974
5. Comprehensive General Development Control Regulations – 2017
6. Whether a co-operative housing society is eligible for redevelopment.
7. Redevelopment of Cooperative Housing Society
8. Redevelopment now easier for co-op societies in Ahmedabad