A housing society is not legally required to disclose a proposed redevelopment project in a No Objection Certificate (NOC) issued to a flat purchaser if the redevelopment process is still at a preliminary stage, according to a legal expert responding to a query related to society redevelopment procedures.
The clarification came in response to a query from a resident of a Chembur housing society where members had already passed a redevelopment resolution in a Special General Body Meeting (SGM) and shortlisted a Project Management Consultant (PMC). A society member selling their flat had sought an NOC for the buyer’s home loan process, while the purchaser requested that the proposed redevelopment not be mentioned in the document.
Responding to the query, the expert explained that merely passing a redevelopment resolution and appointing a PMC only marks the beginning of the redevelopment process. The next stages involve issuing tenders, inviting proposals from developers, shortlisting bidders and selecting a developer through another SGM conducted in accordance with Section 79A guidelines under the Maharashtra Co-operative Societies Act.
The expert further noted that the process remains incomplete until a developer is formally appointed and a Development Agreement (DA) is executed. At that stage, statutory and contractual obligations become legally binding on both the society and the developer.
According to the clarification, disclosure regarding redevelopment becomes necessary only after signing of the DA because future purchasers would then inherit rights and obligations attached to the redevelopment project. In such situations, the society should specifically mention in the NOC that the purchaser would be required to comply with terms of the redevelopment agreement despite not being part of the original decision-making process.
However, in cases where redevelopment is still at an initial stage, the society is not obligated to include such information in the NOC.
The expert also stated that financing banks generally conduct independent due diligence before sanctioning loans and may verify redevelopment status separately if required.
The society was advised to cooperate with the flat sale process by issuing the required NOC. It was further noted that most banks provide their own prescribed NOC format, which is typically submitted to the society by the purchaser during the loan approval process.
Source: The Free Press Journal
