Of the many trends of the Indian realty market, one is the partnership between developers and landowners who come together in a joint-development agreement (JDA). In a JDA, the landowner contributes land while the developer is responsible for constructing the realty project.

The developer does not have to pay for the land. Instead, the entire cost of development and construction is borne by him. Since the cost of land may surpass the cost of construction, the landowner often gets some monetary monetarily, a share in the sales revenue or a percentage of the constructed area.

Home-buyers must be well aware of the concept of a JDA. If they are investing in a project involving such an agreement, they must pay attention to the following:

Registration of the JDA

As a home-buyer, they must inquire with the developer if the JDA has been registered. It is not enough for the agreement to be notarized or signed on a stamp paper. For the JDA to be valid, it has to be registered in the sub-registrar's office.

Most banks refuse to sanction a loan in case the JDA of the said project is not registered.

Supplementary Development Agreement

An investment of any kind must be preceded by clarification of its related legal clauses. Buyers must not hesitate in asking the developer about a supplementary development agreement. If such an agreement exists, even that should be registered to be considered legal.

Transfer of rights

It is possible that the landowner may want to transfer the ownership rights to his family members. This is done through a General Power of Attorney (GPA). If the landowner wants to transfer ownership rights, they may ask the home-buyer to transfer money to the said family member. In case the land was passed before the buyer made the purchase, they must still inquire about the GPA and the inheritance.

JDA vs Sales Deed

Most importantly, buyers must not consider a registered JDA as a conveyance deed or a sale deed. They must demand separate copies of each. If the buyer is purchasing a housing unit from the owner's share, they must involve the builder also. The ideal way would be to ask the builder for a No-Objection Certificate (NOC) or request for a tri-party agreement between the landowner, builder and buyer.