In Redevelopment : Developer MOU and what it should contain
The procedure of appointment of the developer is initiated only after a tender or quotation or proposal, as the case may be, is accepted by the general body. Subsequently, a cooperative housing society with its members should execute a Memorandum of Understanding (MoU) with the developer. It is necessary to do this in order to ensure that a high level of confidence is imbued in the society and its members, towards the developer and the very process of development.
This MoU should clearly specify:
Additional carpet area the CHS members will get over and above the carpet area they are holding and other free FSI area that the local civic body permits.
Details of the corpus amount to the society or monetary benefit the developer shall offer to individual members.
Details of rental arrangements i.e. either post-dated cheques or upfront cumulative rental that the developer shall pay to members for temporary shifting in addition to brokerage charges the developer shall offer.
The members must decide the monetary benefit given to the shop owners and garage owners and separate access to the flat owners should be provided.
Importantly, the schedule of payment of the total consideration should be clearly specified in the MoU.
There should be a clear mention of the tentative date by which members should vacate the flats in the old building and linked with the plans being approved by the concerned authority.
It should be laid down that the developer gets the building plan approved, obtains the commencement certificate and the sanction of the building plans from the concerned authority as well as pays all the requisite deposits, fees and premiums to various authorities, including the concerned authority .
Also important is the inclusion of details of the amount of bank guarantee to be demanded by the society from the developer.
The MoU should detail the rate fixed for sale of additional area, existing members wish to avail, or if any unit is to be availed of by the existing members.
It should also have details of who shall bear the stamp duty and registration charges for the additional area offered free of cost by the developer.
Mention of the buy-back rate that the developer has offered to the existing members keen on surrendering their rights as members.
Through the MoU, the developer shall clearly bear and pay all the municipal rates, taxes and other payments required to be paid to the concerned authorities.
The developer agreement should clarify that the society shall pay only the municipal rates and other outgoing taxes till the vacant possession of the entire property (the plot and the existing structure) is done to the developer after receipt of the full occupation certificate in respect of the new building.
The date of the developer taking complete vacant possession of the existing structure, until the date of receipt of occupation certificate in respect of the new building and till such time that the developer intimates the members to take possession of their respective flats, should be specified in detail in the developer agreement.
The MoU should detail the list of amenities to be offered by the developers while making offer for redevelopment / reconstruction programmes undertaken by the existing members of the society .
Source: Times property, The Times of India, Mumbai