You have a residential plot and you don’t want to go through the construction phase and don’t really know what to do with it. One option is to get into a joint development agreement with a developer.
This is an agreement between a developer and a landowner that aims to benefit both. While developers look at saving some money, the landowner may look at other benefits. Usually, under such an agreement, developers construct an apartment complex and hand over a certain number of flats to the owner. The number of flats depends on the prevailing market value of the land at the time of commencement of the project.
There are various types of this agreement. First, where the developer buys the land. Second, it obtains a lease of the land. Third, the developer enters into an agreement as an agent of the landowner only to carry out the development process.
The fourth type is where the builder signs a deal for purchase or lease with the owner and simultaneously commences development on the land. This is also known as “agreement of sale and development” and is the most widely used.
If you are signing an agreement, wherein you will get a certain number of flats, you will also have to sign a power of attorney (PoA) in the builder’s favour. This PoA will be required at the time of getting various government approvals for construction and will also enable the developer to sell his share in the complex. You need not pay for the cost of approvals and the paperwork.
Before the builder or you can sell any flat in the open market, a sale deed would need to be executed in favour of the purchaser.
Before you sign the agreement, you should frame the document with the help of your lawyer in such a way that it favours you.
Usually the document contains details about the portion of the built-up area that will go to the developer for sale, your share in the developed complex and the amount that the developer will pay you. However, signing the deal would not mean that you give up your rights over the land. The land title remains in your name till the time the new buyers form a residents’ welfare association (RWA) and get the society registered with the local authority.
Moreover, if the developer delays the development, you can cancel the agreement and invite another developer. Remember to insert this clause. At this stage, it is assumed that whatever construction he has done till date is your share of the built-up area.
The agreement should also mention the extent of PoA. Include clauses to ensure the PoA doesn’t get misused by the developer in establishing rights over your share.