REDEVELOPMENT PHASES

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Sr. No.QuestionAnswer
1We had recently floated Tender and have received proposals from 8 builders. What are the steps to be followed now up to selection of Developer?For a detailed process of Selection of Developer, you should visit www.redevelopment.info

and check out Phase 2, Stage 2.

However, here is a concise list of steps:

A: To Make First Shortlist
1. Comparative Statement of Bids
2. Joint Meetings, Negotiations with Bidders (Adherence to Tender)
3. First Shortlist

B: To Make Final Shortlist
4. Due Diligence: Experience (Projects, Clients' References)
5. Due Diligence: Financial Adequacy
6. Due Diligence: Legal
7. Final Shortlist

C: To Consolidate Final Offers
8. Visits to Bidders’ Offices
9. Visits to Bidders’ Project Sites
10. Final Joint Meetings, Negotiations with Bidders
11. Final Techno-Commercial Offers from Bidders


D: To Select A Developer
12. Presentations by Bidders: Plans & Techno-commercial Offers
13. Selection of Preferred Developer
14. Selection of Developer in SGBM (79A)
2We are in the process of selecting a Builder. He will be making a presentation in a few days. Please guide as to what questions we should ask to builder. Your Questions to the Developer should depend on what you expect from him and what you have observed thus far during the Selection Process. Generally, they may be based on the following:

1. Adherence to your Tender Conditions, especially Special Conditions, if any
2. Experience in Projects of Similar Size, Nature, DC Regulation
3. Process of Approval, TDR Loading, Clubbing with another plot, if any
4. Securities: Bank Guarantee, Area Security etc
5. Issues noticed during Technical, Financial & Legal Due Diligence, if any
6. Quality/ Delay issues observed/ reported during Site Visits, if any
7. Plans & Presentation made by Developer
8. Commercial Offer and Terms
3We have received proposals from different Developers under different Regulations (Schemes). How to select the right Developer and Regulation? Redevelopment may be undertaken under different DCPR Regulations (Schemes), the applicability of which depends on various factors such as the location, size, access and ownership of plot, age of existing building etc.

While selecting a Developer and Regulation, following crucial aspects must be considered:

1. Whether the Regulation or combination of Regulations proposed by the Developer are applicable for your type of project, whether they are currently in force and whether the Developer has any prior experience in them?

2. What is the total "FSI Potential" for that Regulation on which the Developer has based his Commercial Offer?

3. What are the Stages in which the total FSI will be loaded for approval? More importantly, how much will be loaded at IOD and whether it will "physically" secure existing members' Flats and car parks?

4. Whether your project will be "clubbed" with any other project? If yes, what is the legality and current stage of that other project? And, if your Developer defaults or does not perform, how you can salvage your project to protect the interests of your members? This is important because the progress, completion and legality of your project will depend on the other project as well.


You should carefully weigh the Risks and Benefits of such regulations before selecting your Developer and Regulation!
4What is the normal scope of services of Society's Legal Advisor for Redevelopment?"Scope of Services of Society's Legal Advisor for a Redevelopment Project"

1. Studying title documents of the Society's Land and Building, Issuing Title Certificate, if required

2. Drafting & finalizing Letter of Intent

3. Drafting/ vetting & finalizing the following documents through joint meetings with Society and Developer
- Development Agreement
- Power of Attorney
- Individual Member Agreements (PAAA)

4. Vetting draft of Bank Guarantee/ Other Security documents

5. Attending Meetings with Society's MC/ General Body

6. Advising the Society during the normal course of Redevelopment

7. Normal Legal Correspondence


Depending on additional requirements (such as obtaining Conveyance or advising on an earlier litigation etc), the Scope may be enhanced.
5Our Developer has offered a discount of 10% to existing members of our Society over his Project Launch Rate for purchase of additional carpet area, but has limited it to up to 100 SqFt per member. Is this a normal practice? It is a common practice to offer a discounted rate to existing members for purchase of additional carpet area and to limit it to a certain area (per member or aggregate for all members). But you should be careful about the following points before agreeing:

1. It should be clear whether rate is on MOFA area or RERA area.

2. Offer of discount over Developer's "Project Launch Rate" is vague
because such a discount is offered at the time of selection of a Developer or when plans are being finalized, whereas Project will be launched several months later. Therefore, you should ask for a very specific rate in Rs per SqFt.

3. You should also ask for terms of payment and whether they can be linked with terms of disbursement of Corpus by the Developer.
6After we selected a Developer as per 79A, much time has lapsed and some new facts about the Developer have also come to light. Therefore, our Society wants to go for another Developer. How should we do it? Before selecting a Developer, it is very important to do thorough technical, financial and legal due diligence and verify all his credentials.

If your Developer has not made much progress in a long period or you have recently got (and verified) some information about him which can be detrimental for your project, you may decide to withdraw/ terminate the Letter of Intent which you had issued to him. However, such a decision should be taken very carefully and only after a great deal of follow up, discussions and correspondence with the existing Developer. You should also refer to the criteria and terms of selection and expected performance of Developer which you may have mentioned in your Tender Documents and LOI.

And it is equally important that you also do thorough due diligence of the new prospective Developer and specify clear terms of his expected performance so you do not run into similar situation once again.