Is your housing complex going in for redevelopment? Then it’s time to think kind, not cash upfront. You could end up with more in the bargain.
MUMBAI: Is your housing complex going in for redevelopment? Then it’s time to think kind, not cash upfront. You could end up with more in the bargain.
The concept of ‘Unpaid Vendor’s Lien’ is fast becoming a trend, especially in south Mumbai. Here is how it works:
Say ABC Builders wants to buy your housing complex for redevelopment. At the time of agreement, insist that you and your housing society members don’t want to be paid in cash. Instead, demand that ABC Builders share the redevelopment profits, or, better still, give some square footage in the redeveloped property.
Your housing complex and ABC Builders will sign the agreement on unpaid vendor’s lien. Now, the builder could take a year or more to redevelop the property and pay you your share of profits. Till then – here is the clincher – you continue to hold a lien on the property. This means ABC Builders will not be able to market the redeveloped complex/building until it discharges its obligations towards you – in this case, until it pays you part of the redevelopment profits in the form of square footage or cash.
The cash, in this case, will be the market rate of the redeveloped property once it is ready for sale. This unpaid vendor’s lien gets extinguished when ABC Builders fulfils all obligations as laid out in your agreement.
Pujit Agarwal, general secretary and spokesperson of the Property Redevelopers’ Association of India, says the popularity of the unpaid vendor’s lien’s is giving rise to hopes of solving the city’s housing problem.
Though lien is not a new concept, the practice is gaining currency because of rising real estate values and to guard against unscrupulous builders.
Sunil Mantri, CEO of the Mantri Group, said: “With property prices on a high, it is natural for property owners to demand the fruits of their investments.”
So, what are key benefits?
One, it ensures that you as the property owner enjoy complete rights over the property till the redeveloper discharges his obligations fully. Two, if the redeveloper fails to perform as per the agreement, the strictures can be enforced faster – because you still have a lien on the property.
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