At the time of property purchase, many people are not aware that flat they are buying is from landowners share. Recently one of my client came to know only on the day of property registration that his flat was landowners share. Builder kept him in the dark. He was shocked but didn’t have any choice but to go ahead with the registration. Though its a complex topic and each case is different from another. I thought of writing a separate post on same. Majority of the under construction property disputes are between Builder and the landowners. One of the most common reason for dispute is landowners feel cheated and duped when they find out that builder is selling flats at huge profits and they received very little share. Normally landowners get upto 40% share in property which is developed jointly. The biggest advantage of a flat from landowner is that you can get discount of upto 20% compared to rates quoted by the builder.
A Joint Development Agreement signed between builder and the landowners is most crucial document. It is also known as JDA. Joint Development Agreement should be registered and buyer should thoroughly check JDA before signing below the dotted line. Also buyer should be aware whether he is buying a flat from builders share or landowners Share. In my personal opinion, it is advisable to buy flat from builders share to be on safer side. I am not discouraging my readers to buy Landowners Share but they have to be extra cautious. I am highlighting some of the common points which should be checked by buyer before buying a property under landowners share.
Landowner’s Share – 7 Points to consider
1. Flat no. not mentioned in JDA: This is one of the most common problem. For example if builder is constructing 100 flats and out of 100, 40 are of landowners. In most of the cases, only a count of 40 is mentioned in the registered joint development agreement. If someone point out then builder share non-registered supplementary agreement or it might not be available. This is just one of the possibility and there can be N no. permutations and combinations. In this case, it is next to impossible for buyer to find out which flat is under builders share and which one is landowners share. In worst case scenario, i observed that there was no mention of even flat count. Only % share in UDS (Undivided share of land) was mentioned in JDA. Now no one is aware how many flats will be claimed by the landowners and how many by the builder. The explanation given by builder was that it will be in proportion of UDS. Its must to mention the count of flats and corresponding flat nos in registered Joint Development Agreement. In case landowners flats are divided among multiple landowners then JDA should clearly mention flat no and corresponding name of landowner.
2. Mortgage: The biggest drawback of under construction property is that it is very difficult rather impossible to find out whether property is mortgaged or not. Builders are still transparent in this regard but if you are buying landowners share then it very difficult to find out. In many cases, landowners insist on executing bi-lateral agreement but it not advisable to sign any bi-lateral agreement. To safeguard your interest, you should sign tri-party agreement between builder, landowner and yourself. It will help to mitigate your risk in entire process. Though associated risk is not completely ruled out but can be minimized.
3. Under paid: As i mentioned that this is one of the most common reason for legal dispute. As a buyer if you are making payment to landowner then it is advisable to insist on following 2 clause in your tri-party agreement with builder and the landowner
(a) Landowner is selling his property without any coercion or pressure from anyone.
(b) Landowner has received consideration at market value, which is independently verified by him before sale.
These are not legal clauses but summary of the same. These 2 clauses will ensure that possibility of any dispute in future on this front is ruled out.
4. Marketing Rights to builder: Another imp point to check. In some cases, Landowner give marketing rights to builder i.e. right to sell his flat. In this case, Landowner cannot sell his share directly. Though involvement of Landowner is not required for purchase in most of the cases but still it is advisable to include landowner as a party to your agreement with the builder. If builder don’t agree then you may insist to make landowner atleast confirming party in the agreement. In my opinion, it is must.
5. Cost Heads: There are multiple ways to buy a property and infinite cost heads are attached to it. For example, if landowner only received UDS in the project and he has to pay separately to builder for construction. It is advisable to go through all the agreements carefully and specify in your agreement, who will bear the cost under each head.
6. Balance Payment to the Builder: For some cases, i observed that my client paid total consideration value to landowner and landowner was suppose to pay X amount or balance payment to builder under his agreement with the builder i.e. JDA. In his case, landowner was not paying to the builder. Because of this reason, builder refused to register property in my clients name. It is advisable that buyer should take over balance payment from landowner to builder & adjust in his payment. For example, if buyer is paying Rs 100 to landowner and landowner has to pay Rs 20 to the builder. In this case, buyer should mention in tri-party agreement that he is buying a property for Rs 100. In payment terms, he should mention that out of Rs 100, he is paying Rs 80 to landowner. Balance i.e. Rs 20, he will directly pay to the builder which is due from landowner’s end to the builder.
7. Legal Heirs: In many Joint Development Agreements, you might have observed that 30-40 people sign as Second Party. It include also kids. The reason being, to safeguard the financial interest, builder include all the legal heirs / stake holders of landowners in the Joint Development Agreement. While signing your agreement, you should also identify which all signatories of Joint Development Agreement are associated with the landowner from whom you are buying the property. All the legal heirs and stakeholders should sign in your agreement. It is to avoid any future dispute or claims from legal heirs.
I tried to cover all the common scenarios but as i mentioned, it is not feasible to cover 100% in one post as each case is different. Any generic queries in this regard can be posted in comments section.
Word of Caution: If you are buying a flat from landowner then do take care of following points
(a) Sign only tri-party agreement
(b) Payment terms & cost heads should be clearly mentioned
(c) As a buyer, you should take over balance payment from landowner to builder
(d) Last but not least, never pay upfront money to landowner e.g. 80% paid at the time of signing agreement and 20% will be paid at the time of registration. Payment terms should be similar to CLP (Construction Linked Plan) of builder.
Hope you liked the post !!!
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Sir, if I add my brother as co applicant in home loan so can I register my property on my name only or it will register on both name ? Is there any procedure for it ? and which name will shown on electricity bill,property Tax bill etc.
You can register it only in your name. All documentation will be in your name only. Your brother will be only a guarantor of Home Loan.
is it applicable if my income is lower than him
It is feasible
I had purchased under construction 1 BHK Flat from the landlord shares by landlord , now this flat service tax /vat not paid by builder & landlord , and now this moment at the time of possession builder hold our possession letter . and demanding us service tax /vat paid challan ,so pls confirm in that case the service tax/vat applicable ?
It is subjective. Normally service tax is not applicable on landowner share. You may check the JDA between builder and landowner for more details.
Sir, i am in discussion to purchase a flat from the landowner and he quoted same price as builder. But you mentioned that we can get 20% discount, if we purchase from landowner instead of builder. How is it possible to get the discount ?
The statement from my end is based on my experience with my clients. Discount can be upto 20% depending on your negotiation power. Reason being buying from a landowner is slightly risky compared to buying from a builder. If you are getting same price from landowner as builder is quoting then in my opinion you should buy from builder.
Sir,
Thanks for your effort.
As builder has 1 or 2 available flats on top-most floor, land owner is demanding the same price for his flats and i have decided to go with landowner flat itself. Flat’s total cost is 50L(1020sft) and UDS cost comes around 10L based on Government guideline value. As per the ‘Joint Development’ agreement with builder, land owner receives 35% of the built-up area in the constructed flats. So he is asking me to put ‘sale deed’ for the entire flat intead of UDS + construction agreement registrations and also asking me to register for 25.5L cost, considering ‘construction cost’ as Rs. 1500/sft(it has amenities like swimming pool, play area, garden, community hall, etc). I am planning to go Bank loan for 20L only. Now please clarify my following doubts:
1. Can i go with full flat ‘sale deed’ instead of UDS + construction agreement registration ?
2. If i go with full flat ‘sale deed’ registration, is it necessary to go for tri-party agreement ?
3. What are the risk factors that involve in registering with lower cost(25.5L) compared to market value(50L) ?
I have checked around 20 community flats so far and finally found this one as the best fit for me. That’s the reason for putting this much effort!
To answer this query, i need to go through your agreements i.e. how the money is accounted and who will get what. It is not clear if full value is 25.5 lakh then how the balance 24.5 lakh will be accounted. Prima facie based on information shared
1. You can register at full value
2. Tri-Party agreement is must as i mentioned in my post also
3. I can comment after going through documents
Sir,
Again thanks for your clarifications. I have not put any agreement, just given booking advance amount. Land owner is asking me to give 24.5L in ‘cash’, 5.5L in cheque and 20L from bank loan.
Regarding tri-party agreement, do we need to register it ?
Tri-Party agreement can be executed on stamp paper.
Sir, After some discussion with owner, he agreed to give supplementary agreement for this flat mentioning the flat number clearly, which will be executed between builder and land owner. Builder is NOT ready to go for tri-party agreement. In this case, is it mandatory to have tri-party agreement ?
Apart from this, builder mortgaged the flats to avail bank loan, but still not yet closed. Do we need to follow any procedure for this ?
Thanks in advance.
Tri-Party agreement is must as the builder is constructing the apartment therefore builder is party to property transaction.
If builder has mortgaged the flat then you need bank NOC i.e. bank should allow builder to sell the mortgaged flat.
Sir,
Builder said, ‘i finished the construction and handed over the key to owner. Also ready to give supplementary agreement which will convey that mentioned flat is landowner’s share. So tri-party agreement is not necessary and i won’t sign on this’.
Is it correct or do i need to force him for tri-party agreement ?
If property is registered in current owner’s name by the builder then tri-party agreement is not required. If property is yet to be registered from builders end then you need to sign tri-party agreement / assignment agreement.
Sir,
After so-many discussion, still builder is not accepting. Either i need to come out of this deal or take risk! Let me know the risks involved in going this deal without tri-party agreement.
I need to go through the documents to answer this query. General risk is related to payment. As you will signing agreement with seller therefore how builder will know you have bought from seller. Tomorrow any dispute between seller and builder will jeopardize your deal. Who will clear the payment due to builder. In whose name builder will register the property etc.
I have the copies of ‘Joint Development’ agreement, supplimental agreement with me. Let me know the procedure to send the documents. Builder informed that he wouldn’t come for the registration. As it is landowner share, landowner will come and register the property in my name.
Simply landowner gave land for development to the builder and received 30% share of land with 30% of super built-up area and car parking area. Now landowner is selling the flat to my name, which is equal to resale of the flat. So i need to go for complete flat cost registration.
My apologies but could not understand where you would like to send documents. You may consult a local lawyer.
Ok Sir. I will consult local lawyer for this. Apart from this, who is the signing authority for this flat ? Either builder or land-owner.
Builder will register in your name
Hello Sir,
I am interested in buying a landowner share flat which is ready to move, as you mentioned there is only mention of % share of UDS (44:56). I asked the builder to give me the supplementary agreement and he has agreed to give it. In the JDA there are no legal heirs except for the witnesses. The tri-party sale agreement has Owner, builder and Purchaser as the signatories. I want to know should I be worried about the heirs. As per my understanding a tri-party agreement in case of Land owner share is combined agreement of sale and construction. Please let me know if I am correct. Should I include the flat belongs to Land Owner in the sale agreement.
FYI: I am paying more than the builder marketed price and going for SBI home loan. SBI has already issued loan to about 15 flats in the same apartment.
Your query is very specific. Without going through documents i cannot comment. Ideally legal heirs should be part of agreement. Secondly, supplementary agreement should be registered.
Sir, Thank you for the reply. The supplementary agreement is done on stamp paper, how can I know if it is registered. Should I ask for the receipt given by the sub registrar office? After learning a lot of things I am feeling the deal is leading me to a trap laid by the builder marketing person and the land owner. The JDA has owner name say A.B.C, the owner is demanding the sale agreement cheque in the name of C and the PAN is in the name of C.D. Do you think a bank like SBI will process my loan, I don’t think so. The marketing guy says that he will manage the SBI officer to issue the cheque in the name of C and tells me not to worry. He is suggesting me to prepare an affidavit which clearly says that A.B.C is indeed C.
Now what I infer from this is the owner/builder wants me to sign the sale agreement by paying 20% and later once SBI rejects my loan application, I am forced to go for a loan in some banks like LIC so that they get the final DD in the name of C.
I have told the builder marketing guy that unless all these details are sorted out I cannot proceed with the sale agreement.
Please let me know with your opinion.
Thanks
As i mentioned in my previous comment, I can only comment after going through documents.
Hi
I have booked a 2 BHK flat in OCT-14 at Royal Castle with address: Behind Rosewood Hotel, Nr. Dange Chowk, Wakad ‘Nx’,Thergaon,Pune-411033(its a project by Shree Anand venkateshwara construction) .
Booking amt paid was 5,00,000/-.
My requirement was immediate possession, as the project is almost ready the builder promised me the possession by Jan-15 During booking.
In Dec-14, i was informed to wait for another 2-3 months so that they can get the completion certificate, i was also promised that after receiving the completion certificate the VAT & service tax will not be charged from me.
I was asked to pay another 3,69,000/- in dec-14 (the total payment made by me is 500000+369000=869000, this was 20% of the total agreement value).
When i started following up with the builder in March-15 to get the agreement done & hand over the flat, i was then told that the flat booked my me belongs to the LAND OWNER, and was also told that my agreement can be done only after the agreement between builder & Land owner is done after receiving the completion certificate. Time given to me was 31st march-15.
When i again followed up with builder in 1st week of April-15, i was abused & rudely told that it might take next 1 week or 6 months also to get the completion certificate, hence i was told not to follow up with him any more, they would be giving the call to me when & then they receive the completion certificate. and also now they are telling me that i will have to pay the VAT & service tax also later.
after paying the agreement amount, Neither my agreement is done nor the builder is confirming the time of possession.
I request your advice or further course of action in this matter
Kiran Upadhye
You may submit written application with builder to execute the agreement as you already the requisite amount.
I am pushing the builder to get my agreement done but he is saying my agreement can be done only after the agreement between builder & Land owner is done after receiving the completion certificate,
am unable to understand why completion certificatie is reqired for making the agreement between builder & Land owner or my agreement with the builder
It seems to be the case of fraud and cheating. Builder has sold flat without JDA in place i.e. Joint Development Agreement between builder and the land owner. In short, builder has NO rights to develop or sell the property. Without JDA, builder cannot sign your agreement. Completion Certificate is just an excuse, It is issued once project is complete.
Hi Sir,
I recently purchased a flat from landowners share in Hyderabad. I made the total payment and got the flat registration done. Yet the builder doesn’t handover me Occupancy certificate. Although OC has been issued to other flats which are not under landowners share. When asked about OC builder delayed its issuance for 3 months without any luck. Can I occupy my flat without OC ? (builder gave me a key to my flat, the other is with him). Given there is no way for me to contact landowner is there anything I could do legally to speed up the process ?
OC is not issued flat wise. It is issued for a block, up to certain floors or entire project. You may check the OC handed over to other flat owners. If your block and floor is included then you can take a copy of same and that’s it.
Hi Nitin,
I am planning to buy landowners share apartment in SJR Parkway homes, Bangalore. Here they have created an LLP called Parkway Homes LLP which is a JV between SJR Homes (Developer/Builder) and Reliaable Homes (Landowner). I ll be having the agreement with Parkway Homes LLP and not a tri party agreement. Is there any issue here provided all other points raised by you is considered.
Thanks in Advance
As i have not checked documents therefore cannot comment but prima facie it seems to be OK subject to terms and conditions agreed between builder and landowners under LLP.
Hi Saneesh,
I am also planning to buy an apartment in SJR Parkway homes. My agent mentioned that there will be a tri party agreement! Did you go through the purchase? Is it possible to connect offline over phone maybe?
You may check the “Services” section on this website.
Hi Selvam,
I too is planning to buy an apartment in SJR parkway under landowner share. Can you please share ur mail id on rachit2802@hotmail so that we can speak offline.
Thanks
Sir, I have decided to buy a Flat from Landowner Share. The construction of Property is complete and in ready to occupy stage. I have taken 80% Loan from DHFL Finance.
Property is in Coimbatore, Tamil Nadu.
First DHFL Finance told that Registration can be done for UDS + Construction Agreement. The same was executed also between me and Landowner.
But now DHFL have revised their stand and claim that the Registration has to be a Sale Deed for full value since the property construction is over and Landowner cannot undertake a construction agreement with buyer. Same point is raised by The Registrar also.
So now I need to shell out additional Rs. 2,76,000 for Registration. Instead of 8% on UDS of 5,10,000/- and 2% on construction cost of 46,40,000/-, now I need to pay 8% on full purchase cost of 51,50,000/- as Sale Deed is to be registered. DHFL says that this is treated as an Outright Sale or Resale.
Is this Stand by DHFL right? Kindly seek your advice to proceed further and request clarification on
1). Will this problem be solved if I take Loan from SBI, HDFC or any other bank.
2). Or can I drop this and go for a Builder share or an Under construction Property, as I am not ready to pay additional cost for Registration. My budgets are also strained. or will the same apply for any ready to occupy property.
3). Is there any benefit on registration as Sale Deed instead of UDS + Construction Agreement?
I can answer this query only after going through property documents.
how to create a mortgage over a property under construction? A lot of blogs state the possibility of this there is no backing authority. Is there any court judgement or provision of law where a mortgage can be created over an under construction property?
Mortgage can be created on UDS (Undivided Share) of the property. If there is payment default to the Bank before completing the construction, Bank will request builder to terminate the Agreement and refund the loan amount disbursed to builder by bank. The builder will terminate the agreement with buyer.
Does builder need to sign in sale deed If I am buying land owner’s share flat?
Yes
After the flat is completed & land owners share is transferred to land owner, is the signature of builder on sale deed still required?
I am assuming that by transfer you mean that flat is registered by builder in the name of land owner. In this case, your sale deed with land owner will not require builders signature.
Hey
A friend of mine has bought a flat (under a JD). Now he wants to mortgage that individual flat. However, a money lender refused to lend money on the grounds that the whole property is already mortgaged with a bank.
So the flat he bought cannot be mortgaged at all? Could you please tell me if that flat can be mortgaged?
It can be mortgaged provided existing lender i.e. bank with which entire property is mortgaged is willing to issue NOC.
Thank you. Really helpful
Hi, I am looking to buy a flat which was originally land owner’s, but in a supplement agreement, that flat (along with a few others) was transferred to the builder. Now my question is, Should I pay the amenities charges, club charges, car parking, and other charges? Am I supposed to pay service tax and VAT, given that the property has received completion certificate (OC is not yet issued). Thanks
Is the supplement agreement registered or executed only on stamp paper.
It is executed on a stamp paper of value Rs 200 with the seal of Dept of Stamp and registration (Karnataka). I am not sure if its registered or not. I have the copy of the document with me, how do I find?
Title in the property cannot be transferred just through stamp paper. Any supplement agreement to JDA should be registered. A non-registered agreement can be disputed in future.
I confirmed it, it’s not registered. Its just on a stamp paper. What is your advice now?
Sir,
I am buying a flat from the land owner. The joint development agreement between the builder and land owners is registered but the sharing agreement between the parties is not registered. It is just done on a Rs. 200 stamp paper before notary. Because of this, my lawyere insists that the directors of builder company or a registered GPA be brought in as consulting witness for both agreement and sale deed. The land owner says the directors have authorized an official from their side to be part of all sale deeds as one of the parties, in a board resolution and the directors need not sign any agreement as this is a private limited company. My lawyer suggests me to drop the deal in that case. What do I do now? Your advice will be of great help. Thanks in advance.
Regards,
Bharathiraja R
I concur with your lawyer.
I went ahead with an under-construction project and based on discussion with one of the advocate who is part of SBI panel, went ahead and also paid few instalment through cheque. I now propose to go for loans with Axis bank when I discovered the following
1. The sharing agreement with respect to the percentage of share between owner, developer and third party has been divided as 79%, 11% and 10% respectively, and the same is registered. But the sharing of flats along with flat number is just documented on a stamp paper and notarized. Is it necessary to even get this document registered as well?
2. The owner and the developer had nominated a single person as their GPA. The sale agreement was executed (registered) to purchase apartment from the developer’s share, and the GPA of the developer signed the same. Is it necessary for the third party mentioned above to also sign the sale agreement? and if yes, is the current sale agreement invalid?
3. The developer provided an EC for a particular flat which I intend to buy. But the bank says that the developer should provided EC for the entire apartment consisting of all flats which would show their respective ownership.
Please clarify on the above mentioned queries.
1. Yes
2. As i have not seen document therefore cannot comment. It depend on the content of the GPA. Preferably, other parties should be confirming witness either directly or through GPA holder.
3. Banks concern is that project should not be mortgaged i.e. land. Therefore i agree with bank.
Sir,
Firstly, thanks to you for such a good informative article.
I recently visited an ongoing project in Hyderabad which I liked.
However, according to the sales team all the corner flats are sold out and only a few inner side flats are available. I am interested only in the corner flats.
They did not bother to mention anything about landowners’ share. I too did not ask as at that point of time, I did not know about this concept of landowners’ share of flats.
Is it possible that there are still some corner flats actually available for sale from the landowners’ share? If yes, then what could be the reason for sales team not to disclose it? Would they be planning to sell it later at a higher price? What if I tell the sales team that I am willing to pay higher price now for a corner flat? Is it possible that they then suddenly produce a list of available corner flats from nowhere?
I am sorry if all these questions sound dumb. I just wanted to know if these sorts of things usually happen with builders fooling around with people like me.
Regards,
Ram
All the possible reasons mentioned by you are valid. Normally non premium property is SOLD first compared to premium ones.
Hello sir,
i have a questions. We have booked an apartment where 80 flats are there. out of them 25 belongs land owner and rest 55 belongs to builder. i bought from builder.we have 2 blocks and those are different projects and so OC is also different. now builder has created 88 parkings by saying 8 will be provided to land owner for other blocks. it is legally right or wrong . please let me know.
As OC is different which means approved layout plan is also separate therefore builder cannot allot car parking of block A to owners of Block B.
Hello Sir,
This is somewhat a complex scenario. I bought a new flat from the landowner with a loan from a finance company. loan has been disbursed and The sale deed has been registered. When I went to the builder’s office to collect the key to the flat. He is asking me to shell out the service tax. Who is truly liable in this case to pay the service tax? I am pretty sure it should be between either the builder or the landowner. Could you please confirm?
thanks in advance.
Service tax is builder’s responsibility. If it is mentioned in your agreement then it is your liability.
Thank you sir….however in this case. The flat has been registered on my name two days ago and legally i am the owner of the flat now…so it would imply that service tax has already been paid for isnt it even if the landowner was not aware of service tax implications when he was selling the property to me.
Service tax is already paid. You can ignore the service tax demand.
hello sir, I have some questions , buy resale flat, society already register but not done try party agreement, convence deed, still not payment property tax also do not issue share certificate, pls tell me we have buy this property or not ?
thanks in advance
You have to check why the society has not fulfilled necessary compliance process then you can decide. I suggest you to hire a local property lawyer for title certificate.
Good Afternoon Sir,
I have quarry for Property document.
Pls tell me purchaser document list from Seller. .
Please check following link
https://www.nitinbhatia.in/real-estate/property-document/
It is just 100/Rs Stamp Paper Tenement. It is in my budget so i want bye. But I don’t know which document need from seller. Pls tell me doc. List.
For general list of documents, please check following link
https://www.nitinbhatia.in/real-estate/property-document/
Hello Sir,
I have booked a Flat in JDA project from builders share and Sharing agreement reflects the Block and Flat number along with UDS area.
Now Land Owner has sold all the rights to XYZ builder. And after reading the content of sale deed between land owner and XYZ builder. I understand that land owner has transferred all the rights on land , % share of UDS, % share on Flats to XYZ builder.
I am in stage of sale agreement, and in Sale agreement, builder has put earlier land owners name as VENDOR and representing him by GPA. there is no mention of XYZ builder.
Can you please suggest me, who all should be mentioned as VENDOR or 1st Party in sale agreement and Sale deed.
There are contradictions in 2 points. If you are buying a builder’s share then land owners cannot be vendor in your agreement. They can be confirming witness. It seems either you received wrong agreement copy or your flat is from land owners share. Please clarify from builder. Another possibility is that flat is landowner’s share and builder has only marketing rights. Such flats are also called builders flat and land owner is vendor in such agreements. You have to carefully go through all the documents.
Hello,
We have bought a landowner share flat in Bangalore. We booked it in 2013 n all payments are done flat is ready now.. Now when we called up to ask when will the registration start we got to know that the builder has cancelled our flat n they did not give a reason for cancellation .they told that legal notice is sent…
Please advise
You need to check the reason for same. It seems some payment is delayed by more than 90 days. Normally cancellation is due to delayed payment. After receiving legal notice you can take next steps.
Dear Sir, I am purchasing flat from landowner who is my close relative. The project is under construction.
1. Landowner had done MOU on 100 Rs stamp paper , where it is clearly mentioned that 04 flats of 1000 sq ft along with car parking will be given free of cost to landowner.
2. Landowner had done development agreement which is registered. There also it is clearly mentioned that developer have agreed to give kind consideration of 04 flats of 1000 sq ft. on 5th floor. flat numbers are not mentioned.
4. Development agreement , developer has clearly mentioned that , landowner to pay stamp duty, registration charges of these flats for sale deed.
3. then recently Landowner had given affirmation/confirmation/consent on plane paper, where flat numbers are mentioned. There is change in floor number for 2 flats due to non availability. So now 2 flats on 4t floor and 2 flats on 5th Floors will be given. In this consent signed by Landowner on plan paper, he gives permission to developer to attach this to sale deed.
My questions are..
1. If i want to purchase one of these flat from landowner, what agreement should i do?
2. Whether, flat has to be registered on the name of landowner first, before selling to me?
3. Can I borrow Home loan from any reputed bank for this flat?
4. What documents bank will demand before loan sanction?
5. if home loan is done, bank will give money step-by-step (CLP) to whom ? Developer or Landowner ?
6. Do I need to pay stamp duty , registration charges?
7. is there any other way to getting ownership of this flat, like gift agreement etc ? will it save stamp duty ?
karthik
1. It depends on which floor you are buying
2. No. Not necessary
3. Yes, provided all the permissions are in plan
4. For general list, please check following link
https://www.nitinbhatia.in/real-estate/property-document/
5. It depends on agreement. Prima facie it seems that payment will be to landowner
6. It depends on your agreement
7. No
Dear Sir,
Thank you very much for your reply. I will be buying flat on 5th floor. The agreement between developer and landowner , doesn’t talk about sale of flats owned by landowner. Since landowner needs money urgently , so he wants to sale one of the flat out of what he has received from developer. In Development agreement , developer has clearly mentioned that , landowner to pay stamp duty, registration charges of these flats for sale deed. In that case if flat is to be registered on my name, then who has to pay stamp duty, Developer, Landowner, or me?
karthik
It can be either you or land owner. Property in your name will be registered by the builder.
Dear Nitin
I am interested in buying a flat from landowner share. When i asked about cost breakup, the landowner told he cannot provide cost of service tax, parking charges, municipality fee etc. as separate items. He is only telling me consolidated price per square feet. Whether these items are applicable to builders share only or they are applicable to landowner as well.
It is subjective. Landowner can charge consolidated amount. You just check for any liability of landowner towards the builder and also JDA between builder and landowner. If everything is clear you should not concerned about breakup.
1. You can decide % share even if the no of flats are still not confirmed/unknown i.e. 25% of no of flats will be landowner’s share.
2. The agreement between landowner and builder should be registered. After that builder can be confirming witness as suggested by him. I suggest you to avail Home Loan from SBI and check if the loan is approved or not. If it is approved you may go ahead.
Thanks for your reply Nitin
…yes we have % of the total built-up area to be shared with developer clearly mentioned in the registered JDA.
Yes the project in Bangalore is preapproved by SBI and I am planning to take loan from them only.
good to go..all the best..
Hello Nitin, Recently i approached a nationalised bank for home loan and got approval. Now we are going to register the flat and the bank is asking for a document called “Supplementary agreement for undivided land share”. The flat is from land owners side. Can you please help me with the format and the content to be included in the document. The bank is expecting to have UDS and cost or something which i am not clear.
This agreement must be already there. You may check with builder or landowner.
Hi Nitin,
Many Thanks for writing such a detailed and helpful article. I have a query specific to my case.
I’m planning to buy a flat which is from the land owners share. The project is that of a reputed builder. In the set of documents, there also is a power or attorney which allows the builder to sell Land owner’s share, and the specific flat number is also mentioned in this document.
The property is a ready to move in one with OC already received. Now, my question is:
The builder is asking for 2 cheques – one for the cost of the flat and the other for renovation.
Now, when I approached certain nationalized banks, they are not comfortable with it, and the builder is recommending a certain private bank, with which I’m not very comfortable.
Please advice if it is safe to go forward with such a model, and if there are any specific things I should keep in mind apart from your very well explained warnings in the above article.
Many thanks again for the detailed article.
Regards,
Pratik
To be upfront with you, the cheque for renovation is builder’s bribe to sell flat on behalf of landowner. I am also not comfortable with this arrangement.
Thank you for your reply. The builder is asking for 60 % of the amount in one cheque and 40% in the other. However, both the cheques are to be on the landowner’s name only.
I am not sure about this logic. You can clarify from builder the reason for same.
Dear Nitin,
I have seen you giving valuable suggestion in multiple public forum.Appreciate your noble deed.
I need some suggestion too this time. Could you please help in answering “Regarding buying of new un-registered FLAT in under construction venture from Landowner share”
1>Currently Landowner shows interest in doing bi-party agreement without mentioning about actual date of possession in Agreement of sale since Project is already delayed by a year.
Q->so should i ask strictly to go only for Tri-party Sale Agreement here also mentioning about tentative date of possession? Is there any other way to sort this out if the Landowner doesn’t agree or its a catch from them?
2> Landonwer has quoted base price charge of RsX per sqft- but he will only show Rs X/3 per sqft (as per govt rate) in papers. Remaining money has to be arranged as work order loan or in cash to the landowner. However for remaining money excluding registration amount- he agreed to pay only Cash receipt on their company pad and no where else it will be captured?
Q-> Will I get tax benefits on the work order loan as well which i need to apply in separate to Home loan? Is this a normal trend followed is correct? and is for saving TAX only by landowner? or something else?
3> Landowner will carry out the agreement in name of Company registered ,which has three registered Directors but in Agreement only one of the director name is mentioned.
Going through MCA website , I see his name comes under “List of Singatory” but he is not DSC registered . Is this fine or not?
4> Current Landowner has agreed to share only JDA which is a thick booklet.
Should i ask for more documents to verify or will it suffice?
I am looking forward for your response. Thanks in advance!
1. Any bi-party agreement is a big NO. You should enter into tri-party agreement along with land owner and the builder.
2. He is saving capital gain and in future you might need to bear the same if you sell on full value. Any cash payment is illegal beyond Rs 20,000. A work order can be executed if payment is through cheque.
3. You need to check article of association of company and it depends in whose name the payment will be made.
4. You need master file of the project
2. He is saving capital gain and in future you might need to bear the same if you sell on full value.
I did not under stand it. Could you please elaborate with this example:
Alex buys house worth 100, and registers at property value of 70. In future, if Alex wants to sell it for 150 in all white transaction, what would happen?
The answer is based on query that bal 30 Rs is paid towards work order. With this assumption, if property is sold for 150 then capital gain will be on 150-70 i.e. 80 Rs. On the other hand if property is registered at Rs 100 then capital gain will be 150-100 i.e. 50 Rs. Therefore the seller saved capital gain on 30 Rs that will be borne by the current buyer when he will sell the same.
Dear Nitin,
We recently brought a flat in Hyderabad. We were planning to register the same last month. But the builder informed us that we cannot register full value of the flat as it belongs to land owner share and they will not agree (though there is no such rule). The problem is that we do not have any advantage n registering it at reduced amount as then we will have to pay VAT and ST at higher rates (5% & 5.8%) on the remaining amount. My query is legally can the builder pressurize us to register the flat at reduced amount or can we go ahead and register full value as moneywise its the same for us.
I could not understand VAT and ST part. As i understand, you need to sign work order in case of low registration value therefore VAT and ST will be applicable.
If you willing to bear stamp duty and registration charges on full value then builder cannot force you to register at low value.
They had made two agreements. Saled deed(30 Lacs) and construction agreement (27 Lacs). ST and VAT for sales deed is 4.35% and 1.25%. But for construction agreement it is 5% and 5.8%. So for us costwise registering it at sales deed value or full value is almost the same. What do you suggest.
In this case, i will prefer full value.
Thanks Nitin
Hello Nitin,
Your entire blog is full of amazing information – an eye opener for the first time buyer. I am glad that i visited your blog.
I am planning to purchase a property from land-owner’s share in Bangalore. It is a flat in 500 odd apartments project. They say that there is 40% land owner’s quota. Land owner is selling at same rate at which builder sold 2 years ago. Rental value for the same is 25K pm. They are quoting 75L for the property of 1100 sqft. Could there be any caveat in this deal considering:
1. Price tag for this flat seems to be a little lower than potential at which it could be sold. It could be due to poor market conditions as well, but can there be something to ware about here?
2. Though entire project is be reputed builder of Bangalore and it is in a big shot society where there are premium villas or luxury houses are also built. Since compound wall on one side is adjacent to lack, lack and this project is sharing same compounding wall for a part of lack compound wall. Lack is well developed by Lack authority, and it has solid jogging track within its premises. How to be sure that there is no land encroachment by builder or land owner? If SBI gives loan, is it safe to assume that all is good in this regard?
Thanks for liking the blog !!!
1. Land owner’s share is normally sold at little discount but you need to check the resale price in same project then we can decide. Also please check my following post on discounted flats
https://www.nitinbhatia.in/real-estate/discounted-property-beware-trap/
2. You may check approved layout plan issued by BBMP for any encroachment. Approval from SBI normally means All is Well.
Dear Nitin, I am planning to purchase a property from land-owner’s share in vizag, and i have approached DHFL and shown documents provided by the land owner, the loan agent asked two more documents mentioned in landowner- builder agreement, then i approached the land owner and asked him about the documents then he says that he will arrange Loan from Canara Bank and can not provide those documents.
My doubt is whether i can proceed to purchase the flat, if Canara Bank provides loan means that the property is legally clear or not.
Please share the name of missing documents.
I have a plot , which is asked by the developer for development . the scheme is of row house. he agreed to give one row house. but i am not understanding whether this deal is feasible or not. and i am worried about I should not be cheated by builder.
pls let me know what are the loop holes in such situation.
so that i can think on it
You may ask for copy of Joint Development Agreement to be signed. Secondly, check the value of your land. Lastly, check what will be proportion of your land in a project and no of row houses to be built. Basically, you should get same proportion of row houses i.e. in proportion of land.
I have a query where builder is claiming that in total land area, terrace floor belongs to builder, hence he will have some part of UDS in their name, is that true, please answer this on urgent basis Sir..
It depends on agreement between buyer and the builder. Normally a builder retain terrace rights.
Thanks for the beautiful article and the information.
Need your help on a question.
I have bought a flat in an Apartment (Its a JDA) from the Builder. Out of 1220 Sq Yards he left 20 Sqyards left and constructed on the 1200 Sq Yards for Vasthu. But in the HMDA Layout the plan was done for 1220 Sqyards. Now on the 20 SQyards do the Flat owners have the rights and second one Builder has not given equal Undivided share but in the Sale Deed the left out share was not given to anyone. Do the Flat owners association has the rights on the whole 1220 Sq Yards.
It is not feasible that 20 Sq yards is left out. The total UDS is distributed in proportion of ownership. You have to check how this left out space is accounted in whole project. Though a builder can deviate up to 5% in the project. If this is the only deviation in whole project then it is acceptable as it is 1.63%.
Thanks for the update.
The builder did not give equal share now in this case on the left out UDS share who will have the rights. will the owners( Association ) or the Builder or the Land Owners will have the rights on the left out undivided share.
As i shared, UDS cannot be left out. It is in proportion of ownership. You may clarify from builder in this regard.
I recently purchase a flat from the land owner. The value of the flat mentioned in the sale deed document during registration is less than the actual value of the flat and the money we paid him. We have all the cheque or draft details of the actual amount paid to the land owner. But we don’t have a legal document mentioning the actual amount we paid for this flat. What should we do now to procure this document?
I doubt that anything can be done after the deal is over. You should have clarified this before making the payment.
Hi Nitin, I am planning to a buy an apartment in Bangalore. The one which I am currently interested has only apartments of Land owner. After reading your article, I sense a bit of risk or difficulties when buying land owners share apartment. In my case, the apartment will be ready to occupy by Sep 2016. All the payments are to be on the name of Builder. I dont know why like that when the properly is owned by land owner. Could this be due to rights given to builder for selling the flat? Even in that case, I believe we need to stick to tri-party agreement. Right?
Next one doubt: Is it possible for the builder to buy the apartment owned by land owners and make a sale to me, if I am showing reluctance to buy it from the landlord?
1. Normally the builder and the land owner sign a agreement wherein the land owner transfer or assign the “right to sell” to builder. Even in such cases, the land owner should be confirming party in the agreement with the buyer. Also you need to check the agreement between land owner and builder.
2. Sorry i could not understand. Once the JDA is signed and share is fixed the change in ownership between land owner and builder is rare. Till now i have not came across a case in which builder bought land owner’s apartment and sell. Normally they have marketing rights as i shared in point no 1.
Hi Nitin, I am buying an apartment from land owners share. After jd between builder and land owner (some share of total flats belong to all his family members as per jd) and construction of apartments, the land owner from whom i am purchasing a flat from his “share of flats” entered into a PARTITION of flats between him and his family members and there is a partition document on same. So in this case, if i purchase flat from land owners share, am i a second owner of flat? Does he needs to own both katha and EC for the flat under him as partition? I am purchasing through loan only. The query comes as bank is insisting for khata on flat which is under him as partition, from me. Is it mandatory for me to give both khata and ec on flat as registered under the land owner as owner, to bank? pls help with a feedback and any other precautions i have to take in this case. Thank you
You have not mentioned
1. Whether partition deed is registered or not.
2. Whether builder registered flat in the name of landowner or not.
3. It seems partition deed was signed after the property is registered in landowners name. Please confirm.
Dear Nitin
I am buying flat from land owner share. In the JDA between builder and landowner, the flat nos that belong to land owner are clearly mentioned. The builder is reluctant to enter into tri-party agreement. Instead we are signing a bi-party agreement between the land owner and me.
If the flat no is clearly mentioned in JDA, is it ok to sign bi-party agreement?
The flat no mentioned in JDA as 402, 1256 sft, but the agreement says 402, 1200 sft. Builder saying during agreement that was the proposed sft, but based on the actual construction plan the sft changed. Is it ok ?
1. Builder should be confirming party even if the flat no is mentioned in JDA. You know never know if land owner signed separate marketing agreement with the builder to sell flats.
2. Slight change in area is possible. You may check approved layout plan and corresponding area mentioned in the same.
I am purchasing a flat from Mr. X. But the land in which the building is constructed is not partioned among their family members. Mr. X is one of the family member having 1 flat which he is intending to sell. Mr. X is having Allotment letter from Developer & Power of Attorney . However one of the Authorised person of the Power of Attorney expired . So as a buyer whether I should buy the property or Not ?? . Please Suggest
Mr X is also providing me the Mutation Certificate which is in the name of Mr. X.
You need to check without partition deed, how the mutation certificate was issued in the name of Mr. X. If it is only based on the Power of Attorney then you need to check date of POA and it’s legal status. It seems the POA was executed before supreme court ruling in Oct 2011 on property transfer through Power of Attorney.
Thanku Sir.
Hi Nitin,
I have similar question on different article of yours. But just checking for more clarity.
In cases where both land owner and developer are selling their flats, is it that the land owner doesnt come under VAT or ST because he is not just adding any value nor providing any service. He is just selling his share from the value and service being provided by the Developer. So arent there any tax implications on Land Owner selling his flat? If there are is it different from the way being charged by Developer? Can you let me know on the taxation(both VAT & ST) in this scenario?
The scenario shared by me are generic. You check the joint development agreement between the builder and the land owner for clarity on taxation part.
Hi Nitin,
I am trying to buy a flat which the builder has mentioned as landowner’s share. In this case, the land owner is none other than the chairman of the builder’s company. So all my cheques will be in favour of the land owner.
Do I still need to ask for a tri-party agreement of sale?
Any other risks or specific document I need to ask for?
You should sign tri-party agreement as chairman might be landowner in individual capacity but builder is company. Please go through my post on this page for risks and other imp points.
The landowner and the builder have a JDA, in which they have mentioned flat no and the boundaries clearly. The builder is reluctant to get into a tri-party agreement of sale as most of the landowner’s share have already been sold out and registered with bi-party agreement between buyer and landowner.
So can I go ahead and sign the agreement or is there any other way to include the builder name in the agreement?
I will not buy this property till builder is willing to become a party in tri-party agreement or assignment deed. The builder and landowner can resolve their dispute mutually.
Hi,
It is a nice article to read & get knowledge.
I am planing to buy a flat from Land owners share(Fully constructed). in the JDA it was clearly mentioned share count and flat no’s. Landowner telling that all the payments to builder is cleared.
Landowner has original copy of JDA, but all the original link documents are not available with the landowner. As per him all the original link documents are with the Builder and the builder refusing to give the original link documents as some of his flats are not sold and the builder not allowing to sell landowner flats until he (Builder) sell away all his share flats.
In this case, is it advisable to buy a flat directly from landowner without builder involvement.
What are the risks involved in this case.
Pls reply.
regards
Rajanna.A
I will not suggest to buy the flat from landowner. There is a possibility of fraud.
Thanks
Sir, I’m buying Flat from Landowner Share. The construction of Property is complete and in ready to occupy stage. builder also handed over possession certificate to landowner. i checked that corporation also provided CC.
landowner settled his share of property to his son through registration.
Property is in chennai, Tamil Nadu.
Land owner said that the Registration has to be a Sale Deed for full value since the property construction is over and Landowner cannot undertake a construction agreement with buyer. Same point is raised by The Registrar also.They told to pay 8% on full purchase cost as Sale Deed is to be registered.
my question
can i proceed sale deed for full value, without separate construction agreement registration.
kindly help me to
regards
Ramesh
It’s a resale transaction therefore i agree with the seller and the registrar that you have to register the property on full value.
Excellent detailed article that for sure is help to the buyers.
Excellent article. Sir, I bought a flat which got registered on my name through builder, now I came to know that the flat is in Owners share. Is it possible, and if so then what all problems I am going to deal with. Please advise me.
Firstly you need to check how come builder directly registered in your name. Also, i am assuming you made 100% payment to the builder. It seems landowner might have assigned marketing rights to builder to sell his/her quota. You may clarify from the builder.
Sir,
I am negotiating a deal with owner of an apartment in Ranchi. He says it is a builders flat but due to some dispute with the builder he has cancelled the power of attorney . He had financed and floated a dummy buyer by making the sale agreement of Rs 300000 (of the total value of Rs4100000).Now he wants to sell the property . He says it will be a triparty agreement with builder being the confirming party and the proceeds will have to be given to the builder. I have collected the copy of JDA which is made between builder and one another land owners. The JDA is not registered but in a stamp paper so is the sharing agreement. My question is can a land owner be the vendor and builder be the confirming party in such situation and that to the payment is to be made to the builder and according to him registration will be facilitated by builder on payment of full amount. Can I go ahead in this scenario.Kindly advise.
It seems to be disputed case. I will not buy this property.
In a JDA residential project in west bengal, the land owner’s flat is up for sale. The builder has provided the CC, but the flat is not registered. The owner gave the explanation that since the flat number is clearly mentioned in the JDA, the registration is not required. Can one go ahead for purchasing of this particular flat?
Moreover in the JDA, the flat number is clearly mentioned along with a car parking space, but the car parking space id number is is not mentioned. And for this the land owner says – ‘During JDA car parking space was not assigned with any id/number and this will not be an issue, in the sale deed you can mention the flat comes with a car parking space and also mention the number’.
My question is: what if this car parking space has been allotted to a different person??
Please guide.
1. Registration is required in the name of land owner by builder or a tri-party agreement can be signed between you, land owner and the builder & then builder will register property in your name. JDA does not transfer title of the property in the favor of landowner.
2. You need to check whether builder allocated car parking no’s or not. If yes, land owner can get a car parking allotment letter from builder in his name.
Sir, I am the original owner of a piece of land. Through a JDA, the builder has constructed a building and allotted a few flats to me and my brother. Do I need to register the flats allotted to me by the builder? Builder says as we are the original owners, no registration needed.
Registration is required as there is a change in UDS in the property.
Hi Nitin,
Very informative post. I’m planning to buy a flat ( not yet booked, just received the final quote) from owner’s share from a reputed builder in Chennai. The builder says that during registration an authorised person from builders side will sign the documents on behalf of owner. Through an email the builder confirmed – Our officer is an authorized signatory by which the Power of Attorney had given to him by land owner himself and the same paper will be shown to you when you come for booking. Is it ok to proceed with buying this flat? Can the builder’s authorised signatory sign on behalf of owner through Power of attorney? What other documents should I verify or ask for from the builder to avoid future issues?
The answer is subjective. Normally, landowner share is sold by builder through power of attorney. Secondly, you may check whether the builder’s representative is authorized through article of association or board resolution. The document requirement vary from case to case basis.
hello sir if JDA as well as sharing agreement is registered or flat is registered with landowner still would you recommend triparty agreement?
If flat is registered in landowner’s name then it is resale property and tri-party agreement is not required. You can buy directly.
Hi Nitin,
I am interested to buy a Flat in apartment. In this apartment there are total 2 wings (Wing A and Wing B).Wing B is constructed but basic work like lift and amenities work pending. But some people are staying without registration and OC.
I also want to buy a flat in Wing B.This Flat belongs to relative (sister) of land owner.
She and developer has given below documents to me
1)Gift deed between her and her brother.
2)Property papers
3)Sharing Agreement between Land owner and developer
4)Commencement Certificate
5)E-Khata of ‘B’ Wing- Land
6)Noc – MOEF
7)Pollution Control Board – NOC
8)Sanction Plan – B Wing
9)Site Plan, Stilt, Section & Elevation
Below points are not taken care
1)Registration is not done for each flat owner.
2)Still Occupancy certificates are not provide individual flat owner
When I asked for tri agreement to developer .He told me that landowner has given his property to his relative. In this scenario there is no role of developer. Hence tri agreement is not required.
Even developer will not help for registration also.
1)Please provide me suggestion that I need to buy a flat from land owner or not?
2)Please suggest me whether I need to take any additional documents which are required from land owner or developer?
3)In this scenario how registration process will execute?
1. Personally i don’t suggest. There is also a probability that this property is benami. You may check authenticity of gift deed.
2. You may check list of documents available on my website
3. Registration will be done by builder only
hi Nitin,
Recently came across a property which i am willing to buy in bangalore , however on enquiry i came to know that SBI has not approved the project because JDA was not registered and as an agreement btw builder and landowner 1 percent of stamp duty was paid(some 11 lakh of 11 crore property value) but it wasn’t registered.
builder promising OC in writing in Agreement .Will there be problem in getting khata transfer done to my name in future since JDA is not registered ? What are the demerits and could be problem with the aforesaid property .Kindly provide your inputs.
You may not face issue in Khata transfer if the construction is as per approved layout plan but JDA should be registered. If it is not registered then there is always a possibility of fraud, dispute etc among builder, land owner and buyer.
thanks. they say you can get into a triparty agreement .Is it still not safe.
The risk will always be there though in many cases JDA is not registered. SBI and some other banks may not approve home loan.