Yours is a fit case for joint development agreement.
A joint development agreement is an agreement between a land owner or owners and the builder/promoter regarding any real estate joint venture project. A joint venture is one where a land owner with a vacant land or land with building enters an agreement with the builder to construct new projects. This way, the capital, construction and legal work will be carried out by the builder whereas the land will be provided by the builder. Usually the land owner and the builder shares the profit in the ratio of 60:40 which may differ based on location, construction cost, development cost etc.
The joint development agreement should include the names of all the owners of the particular land and the builder’s or the company’s name. The JDA should possess the complete detail of the land such as the size, floor area, materials used, property price, construction and completion schedule, payment plan and the profit ratio shared by the owner and builder. The agreement should include the creation milestone, expenses paid by each party such as the capital invested, man power expense, miscellaneous cost like travel, supplies etc.
Along with the above details, the agreement should also contain the expenses shared, effect of termination, alternative exit strategies and other legal provisions. This will help the purchasers have security even if there are issues in the construction or if either of the party wants to exit the agreement. By knowing the schedule for project completion, the home buyer will have an idea about the construction and the possession date of the project.
According to the legal process, the owner/owners of the land should grant a general power of attorney to the builder by signing the rights to his name. This way, the builder receives the exclusive right to construct and develop the project in the owners land. It also grants right to get the No objection certificate, occupancy certificate, sanction certificate, electricity and sewage connection on behalf of the land owner.
The General power of attorney (GPA) should be prepared legally by attorneys or with legal assistance and registered by the binding parties to avoid any legal loopholes in the agreement. Once the GPA is approved, the joint development agreement can be processed. A JDA will protect both the land owner and the builder from fraudulent scams.