Sunday, 29 March 2015

Afraid of Redevelopment? Bring Builder to Negotiating Table

7th December 2013, Mumbai: Nowadays, Mumbai looks like one massive construction site. With thousands of buildings at various stages of redevelopment, the gigantic bulldozer of commercial redevelopment is leaving a trail of financial casualties and collateral damage to thousands of citizens. The common man, government and judiciary are all turning a deaf ear to the suffering of thousands of families affected by redevelopment, because they are all in favour of “the majority”. With clever financial engineering, nice brochures and websites, and a pre-planned package of half-truths, builder firms convince thousands of financial illiterates about the attractiveness of their proposals. Flat owners and office bearers generally don’t know how to read a balance sheet, have no understanding of law, and cannot understand the various risks that they will be made to carry for several years. The beautiful dream of being rewarded with a new and larger house and lakhs of rupees as corpus fund makes them blind to all the risks and realities. those who oppose redevelopment finds out the hard way that even the judiciary is evidently blind to the risks that the common man is being exposed to in the name of redevelopment. 
In every housing society that is over 25 years old, builders and estate agents are recruiting an ignorant but vocal minority to spearhead the redevelopment procedure. The redevelopment procedure is a tried-and-tested mix of legal and commercial terms and conditions, bullying, manipulation, dream-selling, event-management and crowd management. Since many society members are living abroad or in other buildings, or are too old to apply their mind and oppose the proceedings, the general body meetings are attended by small numbers of insecure people, who readily give their signatures. So, it is quite easy for the vocal minority to create an illusion that “the majority” wants redevelopment, and then push the society to a point-of-no-return in the redevelopment procedure. Very few societies verify the credential of the project management consultant (PMC) and the builder before giving them all kinds of blanket consents and powers with agreements, MOUs and power-of-attorney. Dilution of fiscal responsibility and mutual mistrust among cooperative society members and office-bearers, benefits many PMCs and builders who lack financial strength, experience and integrity. Society office-bearers are under the mistaken belief that a redevelopment agreement is for controlling society members, as against the builder and PMC. They also have a naïve belief that they can successfully approach the judiciary to enforce the terms of the agreement against the builder if necessary. With their penny-pinching insistence that the builder should pay the PMC, they end up making the PMC one with the builder, and tie their own hands. With such a defective mindset, housing societies fail to carry out due diligence and to exercise control over PMCs and builders. Their claims are usually taken at face value. By the time some unpleasant truths come to the surface, the society finds itself legally and financially joined to the builder; now there is no easy way out of this messy relationship!
Every week, my activist colleagues and I receive many calls from flat owners searching for an exit-route from redevelopment, to save their own family members from heavy financial losses and fear of homelessness. The callers have become anti-redevelopment due to numerous bad experiences. Against the wishes of the majority, they are exploring ways of stalling the redevelopment project, changing the builder or getting the office bearers dismissed. The advice that I give such people is: Save yourself, forget the society. You have no obligation to neighbours who will not even stand up and support you in a general body meeting, even when they know you are right. Don’t hesitate to use every legal means to get what is best for you and your family.
Most builders, with the office-bearers’ support, impose conditions making it impossible to sell your flat for at least 4-5 years. Sometimes, you can sell but at a loss; if you sell, you will be forced to settle your family in a poorer neighbourhood or a smaller flat. To defend yourself against this injustice, you need to counter-attack by targeting their illegalities and mistakes before various administrative, quasi-judicial and judicial forums. You may not necessarily win all the proceedings, but you can create sufficient threat of delays and obstacles. Your intention should be to attract the builder to buy peace with you at a heavy price. He should buy your flat at, say, double the current market rate, so that you can afford a good house in the same locality and still have extra money for interiors and furnishing.

(CAUTION: This may not always be possible. Every society’s situation is different and unique. So, you need to sit down with a cool head and look at all your options. Commence such actions only if your hand of cards looks sufficiently promising, otherwise you will fall flat on your face!)
Be diplomatic and tactful, even if the other side is provocative. Don’t start a lifelong enmity with the builder or any office-bearer. Try not to provoke people’s ego; remember that you want them to sit across the negotiation table and have a cup of tea with you at the earliest.
Your deepest intention should be to let the building redevelopment – despite all shortcomings — continue peacefully without you. Just stop the bus long enough for you and your family to get off at the bus stop of your choice! Let other passengers look after themselves.

1.    THIS IS NOT BLACKMAILING, IT IS BUSINESS. Redevelopment is a dirty business. The builder does everything in his power to maximize his profits, including manipulation and pressure tactics. There is nothing wrong in playing his own game with him.
2.    BREAK THE MONOPOLY. The redeveloper is always in a monopolistic position vis-à-vis your housing society and your flat. He single-handedly determines the market value of your property and he controls it completely. So, you don’t have to feel guilty for taking actions to break his monopolistic stranglehold over your family’s precious asset! In many societies, office-bearers get a lot of extra benefits for being the builder’s henchmen. So, there is no reason for you to be left behind in the race. In case you have any second thoughts, remember Campa Cola Compound, where three builders made their profits and disappeared, and today, even the court and the municipal corporation are interested in punishing only the helpless buyers, but not the builders!
3.    BECOME SELF-RELIANT. Although your office-bearers are duty-bound to safeguard your best interests, they actually act on the builder’s behalf, and against your interests. Having already subjected you to all kinds of pressures, they will not hesitate to use your weaknesses against you and your family in future also. So, you have no reason to trust your managing committee members to speak on your behalf for safeguarding your long-term interests. You can only rely on yourself and your efforts to protect your family’s interests.
4.    BE DIPLOMATIC, AVOID ENMITY. Control your anger at all times. Be very careful with what you say or write. Avoid or minimize personal attacks on individuals; otherwise your judgment will be clouded. You want to win an economic negotiation, and not an ego-battle. Actually, this is only a tough business negotiation, and it is in your best interest to avoid personal bitterness. So, ignore provocation by others, and don’t say or do anything that may cause anger and vengefulness. Also, don’t be vengeful towards others who say or do anything against you. Remember, achieving your economic objectives is much more important than getting stuck with taking revenge.
5.    AVOID FILING CRIMINAL COMPLAINTS. Going to the police and starting criminal litigation will surely start personal enmities. Maintain an objective distance from all the proceedings that you initiate, and avoid getting sucked into side-issues (e.g. RTI second appeal against a PIO who overcharges you.) Also be careful not to give anybody a chance to make a police complaint against you or your family members. Remember, your game-plan is to reach the negotiation table, and not to get lost on the way.
6.    CHOOSE YOUR BATTLES WISELY. You don’t have to rush into every battle that appears in front of you. Conserve money and energy by focusing on one or two crucial forums, and putting others on the back burner. Don’t be ashamed to back down on any forum.
7.    STAY COOL, BE PREPARED TO WITHDRAW. Your ability to withdraw proceedings is your biggest bargaining chip. Don’t devalue your bargaining counters by getting emotionally attached to the proceedings you initiate. The builder should know that you are always willing to withdraw your proceedings and complaints on any or all forums, provided that he gives you what you want. (But don’t be tricked by promises; wait until you get the benefits in your hand!)
8.    TAKE PROFESSIONAL HELP. By yourself, you may not be able to identify all the opportunities and challenges of your situation. The most important part is to read and understand the documents like redevelopment agreement etc. So, it is important for you to sit with an activist, consultant, expert, advocate etc. and discuss the particulars of your situation. Show him all your documents and listen patiently. Try to understand whatever he has to say. If in doubt, seek clarifications and if necessary, get a second opinion also. If called for negotiations or personal meetings with the builder, office-bearers etc, it may be better to let a professional go on your behalf so that there will be no quarrels and enmities. Finally, don’t forget that the builder will definitely engage professionals and experts.
9.    ALLOCATE MONEY FOR EXPERTS & PROFESSIONALS. Remember, you are doing all this in order to defend your property, whose value is in lakhs and crores, and to maximize its value by getting, say, 150 or 200 per cent of current market value. It is a business venture, and not a social service or charity. So, you should be mentally prepared to spend at least 1.5 to 2 percent of the value of your property – similar to an amount that you would pay an estate agent. If you expect free help, you will only get sympathy and general guidance. If you want serious help to defend your property and maximize your profits, then be prepared to pay the experts and advocates a few lakhs. Spread out the payments throughout the tenure of your dealings with the expert and the advocates.
This is all about your exit-strategy from your society; so don’t get stuck in the door, and don’t slam the door on the way out. Be sensible and businesslike in your approach, leave as pleasantly as possible, and try not to leave with any feelings of anger and bitterness. Before you go, distribute a kilo of sweets to every household, and make your exit with a smile, feeling like a winner.
CONCLUSION: You are now in the role of a businessman. You have a property that the builder wants for his own business venture (i.e. the redevelopment project), and you have every right to individually negotiate for its full value. So, use pressure tactics to bring the builder and the office-bearers to the table, bargain hard to get the best possible deal – much better than the usual market rate. Afterwards, forgive and forget, wipe the slate clean, and move on in life. Do all this without guilt, because this is business, not blackmail!
Best of luck,
Krishnaraj Rao
98215 88114
OTHER ARTICLES for people who question and oppose faulty redevelopment:

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