The Top 7 Considerations When Purchasing A Landowner’s Share

A landowner’s share or a developer’s shares of the properties produced by a joint venture between a landowner as well as a developer are available for sale. If you are uncertain which share you bought, it can result in a disagreement. When purchasing a landowner’s part vs. a developer’s stake, specifics vary frequently. When purchasing, keep the following things in mind. One of the most important contracts a landowner and developer can sign is a Joint Development Agreement (JDA).

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In such a development, the landowner provides the land. And the builder handles the building and legal work after reaching an understanding regarding the distribution of the units. Buyers must carefully note which component they are buying when independent portions of such properties are offer for sale in the market. To determine whether the property in question belongs to the builder’s share or the landowner’s share. Buyers must carefully study the agreement. Although experts advise against purchasing a landowner’s share, they do think that the builder’s share is a safer choice.


JDA must include the flat count and the relevant landowner’s name.

One of the most frequent issues that homeowners encounter is this one. As an illustration, a developer is building 100 units, 50 of which are owned by landowners. It has been noted that in the majority of JDAs, the developer only lists 50 units. Making it hard for a buyer of real estate to determine which flats belong to the landowner and which ones to the builder. Homebuyers should check the registered JDA to make sure it contains the precise number of flats and their matching flat numbers. Additionally, the JDA should expressly state the flat number and the associated name of the landowner if there are numerous landowners.


Insist on the signing of a tri-party agreement.

The fact that it is nearly hard to tell if a property is mortgage is one of the biggest drawbacks of buying an under-construction property from a landowner’s share. It has frequently been noted that landowners want the execution of a bilateral agreement. To protect their interests, homebuyers should stay away from it and sign a tri-party agreement with the builder, the landowner, and themselves. This will lessen, if not completely eliminate, the risk.



A homebuyer must add the following two terms in the tri-party agreement they sign with the builder and the landowner to avoid disagreement:

  • Without any outside pressure or compulsion, the proprietor is free to sell the property.
  • The landowner gets paid at market value, which is confirm by him or her before to the transaction.

Any chance of a disagreement in the future will be eliminate.


Make the landowner at the very least the JDA’s “Confirming Party”

It has been noted that the landowner will occasionally grant the builder marketing rights, or the authority to sell their apartment. A landowner loses the ability to sell their portion directly as a result of this. Although the landowner is typically not require to be involve in real estate transactions. It is advise that the homebuyer include the landowner as a party to their contract with the builder. The builder may disagree, but it is the buyer’s duty to request that the landowner be include in the agreement at least as a confirming party.


Price heads

Homebuyers must carefully read through the JDA to determine who will bear the cost under each heading. For example, if a landowner only obtained an Undivided Share of Land (UDS) in the project. They would have to pay the builder an additional fee for building, which could result in a future disagreement.


Never give the landowner the whole amount due.

The homebuyer should state the payment they are making as a total consideration value to the landowner when signing a tri-party agreement. Additionally, any payments owe to the builder should be sent directly to him. For instance, if the homebuyer is paying Rs 10 lakh for a house. They should specify in the contract that they are paying the landowner Rs 8 lakh. The remainder of the money, or Rs. 2 lakh, would be given straight to the builder.

A home buyer should also adhere to a strategy like the Construction Linked Plan (CLP) of the builder and never make an upfront payment to the landowner. For instance, the purchaser of a home should pay 80% of the total amount at the time the contract is sign. And the final 20% should be paid when the property is register.


Get the JDA signed by all of the landowner’s legitimate heirs.

It has been discover that, in a JDA, between 30 and 35 individuals, including children, sign as the “Second Party.” The builder includes all of the legitimate heirs and stakeholders of the landowners in the JDA to safeguard their financial interests. To get everyone who is a legal heir or stakeholder in the landowners to sign the JDA. The homebuyer must first identify them all. This will shield him or her from any pending legal heir disputes or claims.

It is significant to highlight that when there are numerous legal heirs and shareholders. Such as children and grandchildren, the builder’s share may have the same problems. Therefore, buyers should carefully read the Joint Development Agreement before signing on the signed line.




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