The Joint Development Agreement (JDA) is one of the most common forms of agreement used in the real estate sector, which binds the landowner and the developer together in order to construct a new project. As a form of payment for the land provided by the first, the latter agrees to provide some provisions in return for the land he provided.
How does a joint development agreement work?
- An amount that can be considered as a lump sum
- A percentage of the sales revenue, or a percentage of the purchase price
- This means that a certain percentage of the newly constructed project on this piece of land will be donated to the charity
I believe that this is a question that is subject to the terms and conditions that are mutually agreed to by both parties. Thus, a JDA can help to pool the resources of both the developer as well as the landowner in an effort to provide greater efficiency to all parties involved. A certain portion of the landowner’s acreage is allocated to the developer, but the rest of the acreage is sold directly by the developer to the landowner.
Benefits of Joint Development Agreements
As a result of entering into a JDA, it is likely that you will be able to benefit from the following:
- The process of purchasing land does not require any initial investment on the part of the purchaser
- Stamp duty on certain items is partially avoided
- Developing the property at a fast pace is necessary due to the fact that funds are essential for fulfilling the construction needs of the property
- Landlords should be given due consideration when making their decisions
The joint venture in india proved to be effective, both as a benefit to owners and as a benefit to developers, according to Amit Modi, Director, ABA Corp. It is a common practice these days and it leads to a win-win situation for both parties involved in the transaction. Landowners and developers here are combining their resources and efforts so as to come out with a maximum productive result post-construction, with the goal of bringing out the maximum amount of value.
Joint Development Agreement vs Joint Venture
Despite the fact that the two terminologies are often misinterpreted as one and the same, there is a subtle difference between the two. As explained by Avocat V.K. Singh, VK Singh, and Associates, Delhi, “a joint venture or a joint development agreement is a much broader concept than a joint development agreement.” As opposed to the former, which is achieved through the collaboration of several parties to carry out a specific task, which may or may not include the development of a real estate project, the latter focuses solely on the development of a property.”
How should a Joint Development Agreement be structured?
There is no doubt that real estate development is a very lucrative business these days, considering that independent homes and villas are slowly being replaced by high rises, and most of the time, landowners and developers will join hands to develop real estate projects. When entering into a Joint Development Agreement, however, it is important that you consider the following points before entering into a contract:
Register the documents
An authentic and valid document can only be proved to be authentic and valid if it is formally registered with the sub registrar’s office. There is another reason why parties should register their agreement, and it is not just for the parties, but also for a potential buyer. Just because you get the document notarized, you will not be protected from the possible consequences that could occur in the future. There is also a supplementary agreement that must be registered after the main agreement, in addition to the main document itself.
No title transfer with JDA
Having a JDA registered does not mean that the landowner will be able to sell the property after it has been constructed without the developer providing him with a No-objection Certificate proving his rights to do so. If you are looking to buy a property, you need to remember that although the land upon which the property is constructed is the property of the landowner, the developer has full authority to market the project and sell it to buyers.