What society redevelopment committees get wrong

Error one: inviting offers before knowing what the plot can support

The most consequential mistake is procedural and happens at the very start. A committee decides to redevelop, contacts developers, and receives offers — without first establishing independently what the plot's development potential actually is.

From that point the committee is negotiating in the dark. They have no basis for judging whether an offer of a given carpet increase is generous or poor, because they do not know what the site can support. The developers do know, and the offers will be calibrated to what the committee is likely to accept rather than to what the site can bear.

The correct sequence is to establish potential first — through an independent feasibility assessment — and only then to invite offers, against a known benchmark. It costs the society a modest fee and it changes the entire negotiation.

Error two: comparing offers on carpet area alone

Committees compare offers on headline carpet increase because it is the number developers compete on, and because it is the easiest to explain at a general body meeting.

It is one of seven terms that matter, and several of the others are worth more. A large carpet increase from a developer who cannot complete is worth nothing. A corpus promised at possession from a developer who is by then illiquid is worth nothing. Rent that does not escalate while a project overruns by three years costs members real money.

Most damagingly, the carpet definition itself varies. An impressive-sounding percentage calculated on a definition that excludes what members expected to be included can deliver less actual space than a lower percentage on a fuller definition. The measurement basis has to be specified precisely and compared like for like.

Error three: a timeline with no teeth

Almost every development agreement contains a possession date. Far fewer contain a consequence for missing it that the developer would actually feel.

Liquidated damages with no security behind them are an unenforceable promise: if the developer is late because they are short of money, a damages clause does not produce money. The provisions that work are those that make delay expensive in a way the developer cannot avoid — a bank guarantee that can be called, an escrow arrangement, or a mortgage over the developer's saleable share in the new building.

This is the single most important term for a society to secure, and the one most often conceded. It should be settled before the agreement is signed, not raised when the project is already two years late and the society has no leverage.

Error four: selecting the best offer rather than the deliverable one

There is a consistent pattern in failed Mumbai redevelopments: the society selected the highest offer, and the developer who made it was the one least able to deliver it.

This is not a coincidence. A developer with a strong balance sheet, a good record and plenty of other opportunities has no reason to bid aggressively. A developer who needs this project, or who is calculating that terms can be renegotiated once consent is secured and members have vacated, has every reason to.

The remedy is due diligence on capacity before the decision: audited financials, existing debt and its security, projects currently under construction against the capacity to fund them, delivery record against committed dates, litigation position, and — most informatively — how their previous society partnerships actually ended. That last enquiry is the most useful and the least often made. Societies that have worked with a developer will generally speak frankly if asked directly.

Error five: a process that cannot survive challenge

Redevelopment decisions are frequently challenged by dissenting members, sometimes years later. A process that was substantively fair but poorly documented is difficult to defend, and a challenge at an advanced stage can stall a project entirely.

The protections are procedural: proper notice for every meeting, accurate minutes, a documented and uniform offer format so comparisons are on a like basis, a written evaluation matrix, recorded reasons for the recommendation, and disclosure of any committee member's connection to a bidder.

This is tedious and it is the difference between a decision that holds and one that unravels. It also has a secondary benefit: a visibly fair process reduces the number of members who feel excluded enough to litigate in the first place.

• Proper notice and accurate minutes for every meeting
• A uniform offer format so comparison is genuinely like for like
• A written evaluation matrix agreed before offers are opened
• Recorded reasons for the recommendation, including why others were rejected
• Disclosure of any committee member's connection to a bidder
• Independent advice documented, so the committee can show it took it

Error six: treating the solicitor's review as the whole review

A society that has its development agreement reviewed by a solicitor has done something essential and incomplete. A legal review establishes whether the document is enforceable and whether the clauses do what they say. It does not establish whether the commercial terms are good.

Both reviews are necessary. A perfectly drafted agreement on poor commercial terms is still poor terms, and a society that has only had the legal review frequently discovers this after signing.

The commercial review asks different questions: is this corpus in line with what comparable societies in this catchment secured, is this rent adequate for a three-year overrun, is this carpet entitlement reasonable against the plot's potential, and is this security sufficient for the risk.