Monday, 20 April 2015

Why Redevelopment is a disaster in many housing societies

Cooperative housing societies are really “Uncooperative” housing societies. Argumentative flat-owners, habitually opposing one another, usually accept whatever clauses the developer and his lawyers include – and therein lies the tragedy. The builder usually gives Financial Bank Guarantees, which are more generalized and less safe than Performance Guarantees, and succeeds in safeguarding his own commercial interests, while making a fool of the society and its members.

Housing societies, their office-bearers and their members generally have no idea of the financial risks that are being loaded on them. Chronically unwilling to spend money on and accept advice from serious legal professionals (as against aloo-chaaloo advocates), they accept unnecessary risks with a fatalistic statement: jo sabka hoga, woh hamara hoga. (Only those who have been living away from their houses for many years – usually without rent-allowance from builders – have any idea of the seriousness of these dealings; only they understand the mistake of entering into such dealings casually, as if they are playing cards!)

In every society, there are usually one or two individuals who understand the risks, and oppose the faulty paperwork tooth-and-nail. But the office-bearers usually paint such persons as troublemakers, and the silent sheepish majority keeps quiet while they are harassed, isolated and crucified.

The lack of legal thinking and financial rigour in housing redevelopment projects strikes me like a stone in the eye. When I see the amount of planning, paperwork and mandatory reporting that a government company includes in its project parameters, the paperwork done by housing societies (even where government entities like MHADA are involved) appears like rubbish! In fact, the strangest thing is that many office-bearers go out of their way to include clauses in the Development Agreement, Bank Guarantee etc. for penalizing society members, and safeguarding the interests of the builders! Anxious to release the builder from their commitments under the bank guarantees at the earliest possible time, they downplay the need for enforcing performance of the builder’s contractual obligations.

Project Management Consultants (PMCs) and society office-bearers take advantage of our habitual errors and mistaken beliefs, to push forward a deal where the redeveloper’s duties and actions are not clearly defined. Questions raised in the general body meetings are brushed aside. Paperwork is vague, and often, forged. Many illegalities are committed by the office bearers themselves, paving the way for the builder to take them for a ride.

Ironically, such illegalities and forgeries committed by the office-bearers and the PMC to help the builder themselves become the weak-point, which can be targeted by those who are opposing the redevelopment project. The trick is in knowing what to oppose, and when to oppose it. Opposing the entire development blindly can reduce the likelihood of success, but strategically targeting the illegalities and infirmities in the paperwork makes it possible for putting the builder and office bearers on the backfoot, even before the matter lands in court.


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