Joint Development Agreements: Real Estate in a Fix

Joint Development Agreements: Real Estate in a Fix

Joint Development Agreements or JDAs are a common feature in the real estate sector wherein the landowner transfers the land to the real estate developer and gets flats, a certain amount of revenue or a combination of both in return. In JDA, the Developer enters into a Development Agreement with Landowner, whereby

• The Developer Acquires the Development Rights from Land Owner with respect to the Land.

• The development right entitles the developer to Obtain various types of licenses and approvals from the government authorities and Construct the Complex, Building or Civil Structure on the Land.
•  In return for the transfer of development rights by the landowner, the Developer hands over the Ownership Rights of the certain percentage of the developed area ie Super Structures and may also certain Amount.
• The Remaining Flats Retained by Developer and Sold to various Buyers

Example :

For Example, Developer ABC Ltd enters into a agreement with landowner Mr. XYZ whereas in lieu of this agreement a total of 100 residential units will be constructed by ABC ltd on the land provided by Mr. XYZ whereas 40% of the units i.e. 40 units shall be given to Mr. XYZ and rest 60 units shall be taken by ABC Ltd.

Both can commercially sell the units in the open market. The landowner gets 40 units of flats in lieu of the land given and Developer gets 60 units of flats in lieu of the construction work done.