Redevelopment projects demand clarity, commitment, and strict adherence to timelines. But what happens when a developer, selected after a detailed tender process, fails to sign the Development Agreement (DA) within the agreed timeframe? If a year has passed since issuing the Letter of Intent (LOI), does the housing society have the right to terminate? Let’s break it down clearly.
📜 LOI Is Not Just a Formality — It’s Binding
The Letter of Intent (LOI) is a crucial document. It records the developer’s selection and outlines the agreed terms, including timelines. If the tender document clearly stated that the DA must be signed within six months, that condition becomes binding on both parties.
👉 Failure to comply with this timeline amounts to a breach of agreed terms.
⏳ One Year Delay = Clear Violation
When six months were granted but one full year has elapsed, the developer has failed to honour the commitment. Such delay raises serious concerns about capability, preparedness, and reliability.
This non-compliance gives the society valid legal grounds to reconsider the appointment.
❌ Can the Society Cancel the LOI? Yes.
Since the Development Agreement has not been executed, the LOI remains an initial step and does not carry the final legal weight of a registered DA.
✔️ The DA would have superseded all prior communications — but it was never signed.
✔️ Therefore, the society can move towards termination of the LOI.
However, the process must be handled carefully and legally.
🏢 Call a General Body Meeting (GBM)
Before terminating the developer, the society must:
- Convene a General Body Meeting (GBM)
- Pass a resolution with at least a 2/3 majority
While legally sufficient, a unanimous decision is always preferable to avoid future disputes from dissenting members. Proper minutes of the meeting must be recorded.
🗣️ Give the Developer a Fair Opportunity
Even in case of delay, principles of fairness apply. The society should:
- Send a written notice
- Seek an explanation for the delay
- Record the response in writing
This ensures transparency and strengthens the society’s position if legal questions arise later.
📝 Obtain an NOC to Avoid Future Disputes
To protect against litigation, the society should request a No Objection Certificate (NOC) from the developer at the time of termination.
🔒 This confirms that the developer has no further claims against the society.
💰 What About Expenses & Deposits?
If the developer has incurred genuine expenses — such as:
- Planning authority applications
- Architectural drawings
- Approval-related costs
The society may consider reimbursement as per LOI terms.
Additionally:
- Interest-free security deposits must be handled as agreed.
- They may be forfeited or refunded, depending on the contract conditions.
Proper documentation of all financial discussions is essential.
🏗️ Developer Misses DA Deadline: Can Society Terminate the LOI After One Year? ⚖️