Things To Know About Developers Before Redevelopment

Things You Must Know Before Giving Your Flat to Developers

Have you been thinking about giving your flat to developers for redevelopment purposes? Then let us tell you that it is not an easy task.

With redevelopment, you will receive a new facility, increased space as well as monetary incentives at no cost to yourself. Although redevelopment could be an excellent way to increase the value of a property, still people could sometimes face issues after giving their flat to developers if they are not careful.

To avoid any issues, there are a few things you must know before giving your flat to developers. Let’s look at some of them.

6 Important Things To Consider Before Giving Your Property to Developers

The appropriate developer will undoubtedly provide a hassle-free procedure for redeveloping a flat. This is why we would suggest you be acquainted with these 6 points before handing over your flat to a developer.

Hire a Lawyer Before Signing a Contract With The Developer

The managing committee of a society is often accused of being rude and corrupt during redevelopment. Because of this, members of society must always hire a lawyer before actually signing the contract with the developer.

Then, the contract should explicitly indicate the developer’s responsibilities and the society members. It should also include the consequences of any violation of the agreement by any side.

Moreover, the contract should say when the project will be done, how big the new flats will be, how the money will be paid, and if it will be a one-time payout, rent reimbursement, or perhaps a mix of both. Once the contract is approved in terms of location and corpus money, it cannot be amended.

Choose a Developer Who is on The Bank’s Pre-approved List

Hire a developer who’s already on the pre-approved lists of at minimum 3 or 4 of the country’s most important banks. Before extending credit to a developer, banks perform a significant amount of research and investigation, known as “due diligence.”

If several large banks recommend the same developer, you will have less reason to be concerned.

Monthly Compensation Should Be Agreed Upon in Advance

The developer must also pay the tenant’s brokerage and transportation fees in advance along with the monthly compensation.

Monthly compensation must be similar to local rental rates. The developer writes postdated checks. If this advance rental is not paid, the society may prohibit the developer from reselling or permitting new buyers to inhabit their units.

Housing members should also insist on even a bank guarantee so that the project is not delayed or halted.

Check the Developer’s Portfolio

Talk to owners of the developer’s past ventures. They can inform you about construction quality and if the developer delivered on promised amenities and specs. Once a developer cuts corners, he will do that again.

For instance, he might well have added 10 stories to a 6-storied building. Previous projects may notify you about such violations.

Ask whether the constructor met the deadline. Did the developer pay a late penalty? The developer-buyer agreement states that the developer would reimburse purchasers in case of a six-month delay.

Many developers use “reasons beyond control’ to get out of paying any penalty. Since this provision is open-ended, your developer may refuse to pay the late penalty on spurious grounds like material price increases, labor shortages, bad weather, etc.

Do a Financial Status Check On Your Developer’s Finances

As a result of the downturn in the real estate market, developers are finding themselves in a precarious financial position. In the case of publicly traded firms, the work is simplified since their financial statements are available to the general public.

You may need to do a little more digging to find their unlisted equivalents. Talk to those who interact with said developer regularly. Such as brokers, distributors, contractors, and so on.

If the developer’s finances are challenged, it will show in his interactions with these individuals.

A Developer Might Manipulate the FSI Standards and Conditions of The Contract

Developers could distort and excessively breach the agreement’s regulations by illegal planning and creating extra areas that are not in their rights. Moreover, the purchasers of such illegitimate properties get themselves in transactions that could lead to lawsuits at a later period.

All of the prerequisite authorizations must be in order. Keep an eye out for things like building permits, environmental clearance, and other such requirements.

Are You Thinking Of Giving Your Flat to Developers?

Redevelopment is likely among the most important choices you will make in your life. That is why you must consider all factors before making a choice.

To make it easier for you, we have compiled all the important things you must know before giving your flat to developers. Because we, Assure Group, believe the right decision could save you from any possible unnecessary hassle.