Joint Development Agreements ( JDAs) of properties

by Admin on March 10, 2011 · 2 comments · Property


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joint agreement in propertyThe buzzword in residential real estate sector is joint development agreements ( JDAs) of properties. A JDA enables an individual land-owner to cash in on the skyrocketing real estate prices, but at the same time, it also helps him/her to retain a portion of the land/property for his/her own use and living. The builders are also greatly attracted to this arrangement as it eliminates the risk attached with blocking huge funds towards purchase of land. Thus, a JDA has evolved as the most preferred and widely adopted property development model in urban cities.

An individual landowner and a builder may enter into a JDA. The key feature of a JDA is that the landowner will contribute land and the builder will undertake development activity on it. Depending upon the land price, the joint development ratio is decided among the parties. In most situations, the builder will agree to allot a few flats to the landowner and will pay a token advance. In consideration for this, the landowner will part with a portion of undivided share (UDS) of land in favour of the builder or his nominee and will also allow the builder to construct and sell the agreed number of flats.

The form of arrangement of the JDA will decide the statutory treatment /levies.

weight: bold;”>Stamp Duty:

Stamp duty is another significant statutory levy attached with conveyance of immovable property. At times, the builders will sell a portion of UDS to the buyer and then construct the flat/building on behalf of the buyer. In such situations, the conveyance of UDS in land will warrant payment of stamp duty.

In some states, the Stamp Act may provide for payment of stamp duty even on the construction agreement, when the seller of the land and the builder of the property are the same.

Service Tax:

Service tax would apply when the development is in excess of 12 residential units in a project, except where the builder sells the flats and receives the entire consideration after obtaining the completion certificate.

This could give rise to a tricky situation when the competed flat, for which the completion certificate is yet to be issued, is being sold by the builder. The question that would arise is whether this will be treated as the sale of the flat or as a transaction that should be subject to service tax.

So, if you are looking at entering into a JDA, you must pay due attention to the above aspects, otherwise you may land yourself in trouble while parting with your land.

(Authors of this article are Rajesh Srinivasan, Senior Director and SP Chidambaram , Manager, Deloitte Touche Tohmatsu India Pvt. Ltd (DTTIPL). The views expressed herein are personal views and not that of DTTIPL

Source: Economic Times

 





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Admin March 10, 2011

{ 2 comments… read them below or add one }

Kolakaluri SriKiran March 10, 2011 at 9:47 am

Dear Sir, Any article how one can take up Agiruculture as profession ? How to buy land from government , Loans given by banks , What are government initiatives in support of dryland farming . In believe investing in Agriculture reaps good returns in future . Agri Business comes later . A good article from you will help peple like me to take up Agriculture as a Profession .
Any reference book advised by you will be highly appreciated .

Regards

K. SriKiran

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admin March 10, 2011 at 3:39 pm

I’m sorry but this topic is little different from our track. We generally tracks mutual funds, insurance, credit card. etc. I’ve just googled and find this website http://www.agricultureinformation.com/. I think you may get some help from there. Also, you need to contact some NGO who are dealing with agriculture business and farmers.

Hope it will help you.
Admin

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