Specific issues in redevelopment
Significance of MoUs, individual property rights and decisions by the majority
MOU can also create rights and tax implications
In the initial stage of redevelopment, many times a society contemplates entering into memorandum of understanding (MoU) at an initial stage.
Care should be taken to ensure that the same is drafted in a manner that there are no tax implications. On substance even MoU can create rights in favour of the developer and can attract income tax implications.
It is often observed that the MOU is not that seriously drafted with a view that the elaborate terms would get drafted in the development agreement. However, this approach may create problems later on when the detailed terms between the developer and the society are not agreeable. Termination of MOU creating substantive rights may not be an easy process without entailing litigation.
Individual property rights are proportionate to sizes of flats
In the run up to the redevelopment, often an issue arises with respect to entitlement of individual members to additional carpet areas in respect of their new flats.
In this context, property rights of the members in a co-operative housing or premises society are to be measured with reference to the sizes of the existing flats owned by them. Therefore, the additional carpet area offered by the developer should be distributed amongst the members in proportion of the sizes of their respective existing flats.
Decision by majority needs to be within framework of law
As far as the process of decision making is concerned, although a society takes decisions by majority, at the same time decision of majority cannot be oppression on minority.
Further, the decision by the majority cannot override the basic tenets of the law. Therefore, it would not be that a majority decision would always prevail.
If there are violations of law or if the method of selection of the developer is not in accordance with the law or is not transparent or objective or the method of distribution of redevelopment benefits is not rational or in some other manner an individual flat owner's rights are adversely affected, even objection by one member or minority would sustain on merits.
Significance of MoUs, individual property rights and decisions by the majority
MOU can also create rights and tax implications
In the initial stage of redevelopment, many times a society contemplates entering into memorandum of understanding (MoU) at an initial stage.
Care should be taken to ensure that the same is drafted in a manner that there are no tax implications. On substance even MoU can create rights in favour of the developer and can attract income tax implications.
It is often observed that the MOU is not that seriously drafted with a view that the elaborate terms would get drafted in the development agreement. However, this approach may create problems later on when the detailed terms between the developer and the society are not agreeable. Termination of MOU creating substantive rights may not be an easy process without entailing litigation.
Individual property rights are proportionate to sizes of flats
In the run up to the redevelopment, often an issue arises with respect to entitlement of individual members to additional carpet areas in respect of their new flats.
In this context, property rights of the members in a co-operative housing or premises society are to be measured with reference to the sizes of the existing flats owned by them. Therefore, the additional carpet area offered by the developer should be distributed amongst the members in proportion of the sizes of their respective existing flats.
Decision by majority needs to be within framework of law
As far as the process of decision making is concerned, although a society takes decisions by majority, at the same time decision of majority cannot be oppression on minority.
Further, the decision by the majority cannot override the basic tenets of the law. Therefore, it would not be that a majority decision would always prevail.
If there are violations of law or if the method of selection of the developer is not in accordance with the law or is not transparent or objective or the method of distribution of redevelopment benefits is not rational or in some other manner an individual flat owner's rights are adversely affected, even objection by one member or minority would sustain on merits.
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