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MYRA - NRI Property & Investment Consultants

501 Raaga Residency

Kalyan Nagar Phase 3

Moti Nagar, Hyderabad - 500018

Phone - +91-9885160797

Email: info@myraproperties.in 

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  • MYRA Properties NRI - Buy or Sell
  • MYRA Properties NRI - Buy or Sell
  • MYRA Properties NRI - Buy or Sell
  • MYRA Properties NRI - Buy or Sell

What Is Joint Development?

Joint Development is a process/procedure where a landowner contributes his land for the construction of a real estate project and the developer undertakes the responsibility for the development of property, obtaining approvals, launching, and marketing the project.

Who Benefits better from Joint Development, Owners or Developer?

 

Joint Development is a win-win situation for both owners and developer because

Owner Side Perspective: Entering into a Joint Development not only saves the owner from the hassles, time & spending of constructing a property. These days time is money and lot of landowners cannot offered to be there at the site for the time entire of construction. As an Owner,

  • You don’t have to be there every day for all the time from starting to completion of the project.

  • You don’t have to wander around government offices to get necessary clearance and permissions to start the project.

  • You don’t have to deal with labor on their payments and issues every day during the project development stage.

  • You don’t have to deal with material procurement.

Developer Side Perspective: Developers don’t have to spend a lot of working capital needed to complete the project on land. So project completion time can be very fast.

  • The initial investment on land/site is not required for developer.

  • Stamp duty could be avoided partly.

  • Fast mode of development of the property, working capital requirement restricted towards approval and construction.

Here are some of the essentials of a Joint Development.

JD is one of the most common aspects in the real estate sector which bounds the landowner and the developer in an agreement which is terms as Joint Development Agreement (JDA) for the construction of new projects. In return for the land provided by the former, the latter agrees to provide either of the following:

  • Lump sum consideration

  • Percentage of sales revenue or

  • A certain percentage of the newly constructed project on the said piece of land

This depends on the terms and conditions, mutually agreed upon by the parties. In this manner, a JDA helps to pool the resources of both the developer as well as the landowner together. After earmarking a certain portion to the landowner, the remaining area is sold off by the developer directly.

Benefits:

Some of the significant benefits of entering into a JDA are:

  • No initial investment is required for land procurement

  • Partial avoidance of stamp duty

  • Fast-paced development of the property as working capital is majorly required for meeting the construction needs

  • Competent consideration for the landlord

According to MYRA Properties, A Joint Development Agreement (JDA) is beneficial for both the owner of the property as well as the developer of the property. It has become a very common procedure these days and a win win situation for both the parties. Herein, the resources of the landowner and the efforts and capital of the developer are combined together so as to bring out the maximum productive result during and after project completion.

Difference between  Joint Development and  Joint Venture

Though the two terminologies are often misinterpreted to be the same, there is a difference between the duos. Joint Venture (JV) is a much broader concept than a Joint Development (JD). While the JV is a deal between multiple parties to work together for accomplishing a specific task which may or may not include a real estate project, the latter is restricted only to the development of a property and that too where owners risk is minimal.

What all should be kept in mind during JDA?

In the present real estate situation old buildings / Independent houses built years ago, agricultural lands and empty plots, are giving way for high rise apartments or independent villas, the developers and landowners are frequently joining hands for the construction of realty projects. However, while entering into a Joint Development Agreement, you should take note of the following considerations:

  • Get the documents registered: The validity and authenticity of a document can only be proved if it is registered in the office of the sub-registrar. Not just for the parties, registration of the agreement is also essential for a potential buyer. Getting the JDA documents merely notarised will not save you from the possible consequences in future. Besides the main document, you should also get the supplementary agreement properly registered.

  • JDA is not a transfer of title: Everyone should be noted that registration of JDA does not imply that title is transferred it just a bidding document which gives confidence and legal backing to the developer who spends substantial amount of money in developing the property.

  • No home loan until registration for buyers: The banks do not sanction home loan on a property if JDA is not appropriately registered. In that case, you might have to opt for other sources of finance for buying the property, which is not the correct way out.