Irrevocable power of attorney for redevelopment

Querist : Anonymous (Querist) 14 July 2023 This query is : Resolved
does builders ask for irrevocable power of attorney of redevelopment of housing society ?
if yes is it safe to give power of attorney to the builder ?
what if he do not redevelop, after demolition of the buildings ?
as per maharashtra govt. redevelopment document it says, builder should give bank guarantee equivalant to 20% of the construction cost, which is only fraction of the total peroperty cost but they are forcing to accept the builder.
what to do now ? becasue i read that in 10000s of cases builder have not completed redvelopment for upto 20 yrs or more . also not giving the rent .

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Quick Summary

This discussion addresses concerns about housing societies granting irrevocable Power of Attorney (POA) to builders for redevelopment projects. It highlights potential risks, such as project delays, non-payment of rent, and builders absconding after demolition. The conversation also touches upon the Maharashtra government's guidelines regarding bank guarantees and the importance of a clear redevelopment agreement with defined timelines. Several crucial points are raised for societies to consider, including ensuring the builder handles income tax liabilities, obtaining necessary permissions, insisting on feasibility reports, and clearly defining construction limits and FSI benefits.

kavksatyanarayana (Expert) 14 July 2023
The society shall execute POA in favour of the Builder/Developer. The time to complete the redevelopment is within 2 years and in extraordinary circumstances, within 3 years.

Dr. J C Vashista (Expert) 15 July 2023
Managing Committee / RWA (as the case may be) of the Housing Society shall have to grant PoA to builder.
Terms and conditions of agreement shall prevail.

Advocate Bhartesh goyal (Expert) 15 July 2023
Yes,builder can't proceed for development unless he is duly authorized by society and both society and builder shall be abide by the terms and conditions of development agreement and on breach of conditions by anyone of them other party may initiate legal action .

T. Kalaiselvan, Advocate (Expert) 15 July 2023
There are several things to keep in mind while dealing with redevelopment of a building, especially for flat owners in a CHS.

Here’s a checklist while dealing with redevelopment so you do not fall into the trap like home owners in the Campa Cola compound
Here are the important points that may be considered by your society while considering redevelopment

• Income tax liability on the cooperative society; clause should be included in the tender that the same would be the liability of the developer

• Ask for the permission if developer has obtained from the cooperative department in the projects undertaken for redevelopment in Maharashtra

• Insist on a feasibility report; the services of a project management consultant of repute can be of help to the cooperative society in the long run

• Insist on categorical statement from the developer that the developer will not construct more than a specified carpet area (be specific in sq feet terms)

• The rights for additional FSI/TDR benefits should exclusively belong to the cooperative society

• Do not to keep blind faith on cooperative society members negotiating with the builder

• Do not compromise on stuff like height of the flat, three-phase meter, bore well, etc. Insist on individual agreement of members with developer before vacating the premises

There are many more in the list, which can be included in the redevelopment agreement

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