Every society general body discusses the additional carpet area offered. Far fewer discuss what the agreement says will happen in year four, when the building is half-built and the rent cheques have stopped. These are the clauses we ask committees to read twice.
1. Rent and its escalation
How much rent each member receives for temporary accommodation, from when, for how long, and how it escalates. Is it paid in advance? What if the project overruns the agreed period — does rent continue automatically?
2. Security for performance
A bank guarantee is only as good as the conditions for invoking it. Check who holds it, what amount, until when, and exactly what default allows the society to encash it.
3. Timelines that mean something
“Possession within 36 months” means little if the clock starts from a date that depends on the developer. Look for a fixed start — usually the date of vacating or of commencement certificate — and a consequence for delay.
4. Termination and replacement
Can the society terminate if the developer defaults? What happens to the approvals, the plans and the power of attorney? An agreement that makes replacement practically impossible leaves the society with no leverage.
5. The power of attorney
The development agreement is usually accompanied by a power of attorney in the developer’s favour, to obtain approvals and sell the free-sale flats. Its scope should be no wider than the agreement requires, and it should fall away if the agreement is terminated.
6. Each member’s PAAC
The permanent alternate accommodation agreement for every member should mirror the society’s agreement — same carpet area basis, same timelines, same remedies. Members sign these individually; a weaker PAAC undercuts everything the society negotiated.
And the process
None of this helps if the decision to redevelop can be unwound. Follow the procedure set out in the directions under Section 79A of the Maharashtra Co-operative Societies Act, and minute every step.
This note is general information, not legal advice. Every project is different; speak to an advocate before your society signs.
