Joint development & sharing agreement

As it is immovable property registration is compulsory.  You have to enter into an Partition deed of your 40% share (between the owners). It is better to add the Builder as confirming party to the above deed. The partition deed should be registered.  In Telangana, the stamp duty is 1% on the govt. market value plus registration charges. 

Generally the joint development agreement between the builder and land owner(s) will be registered with the relating terms and condition, however the sharing arrangement of the particular flats though will be reduced to writing between them, since it is a mutual arrangement, it generally remains unregistered and this will not make any impact on he buyer since he will be going the registered sale agreement/deed with whomsoever he transacts in this regard.  This is the general practice in vogue and popularly prevalent in Bangalore, however considering your doubts about its genuineness, you may take a second opinion about this from a local lawyer by sowing the relevant papers to him.

I too have the same question.

JDA is registered.

Supplementary agreement is notarized, but not registered. The landonwers are 5. which distributes flats among these 5 land owners. Developer also signed this.

However there are 4 parties within the 1st land owner.

There is another supplementary agreement which is not registered which mentions the sharing between 4 parties of the 1st land owner. Developer is not part of this.

Now one of the 4 parties is selling one of the flats of his share to me.

One of the 4 parties will sign the agreement to sell.

Are these unregistered sharing agreements legal and claim the title of the flat which is to be sold.

Will there be any problem in this case. 

Thanks a lot

Originally posted by : T. Kalaiselvan, Advocate
	Generally the joint development agreement between the builder and land owner(s) will be registered with the relating terms and condition, however the sharing arrangement of the particular flats though will be reduced to writing between them, since it is a mutual arrangement, it generally remains unregistered and this will not make any impact on he buyer since he will be going the registered sale agreement/deed with whomsoever he transacts in this regard.  This is the general practice in vogue and popularly prevalent in Bangalore, however considering your doubts about its genuineness, you may take a second opinion about this from a local lawyer by sowing the relevant papers to him.

I have the following questions:

The reason why developers don't register the sharing agreement is to evade the stamp duty. I am recently enquiring about buying a flat in one such property, and the builder's lawyer categorically said they didn't register the sharing agreement because it will attract Rs. 80 lakhs of stamp duty. But if the builder or the land-owner file a case in future saying that the other party has sold flats from their own share, what protects the individual flat buyer ?

1) Can this unregistered document be admitted as evidence in case of any future court case (put by the landowner or the builder a few years after they sold the flats)? If yes, will the court ask for the required stamp duty + penalty up to 10 times the stamp duty ? In that case, it will be a huge burden on the individual flat owner / owner's association.

2) If this document attracts such a huge stamp duty, then it should have some value, right ? How is it that developers get away without registering it and the government is ok with it ? If it has no value, why does it have such huge stamp duty ?

3) The way I look at it - If the builder buys land directly from landowner, he is liable to pay the stamp duty + registration fees, which he's skipping because of joint development agreement without registering the sharing agreement. So this is a loss of revenue for the Government, and I suppose they will contest it when the unregistered document is presented as evidence ?

4) Can you quote any case where such unregistered document was admitted as evidence ?

Since I did not get any answer from the lawyers, I did some research on my own and formed a conclusion for myself (strictly my personal view point)

See the following link where Inspector General of Registration (IGR) has clarified :

https://www.deccanherald.com/content/381563/stamp-duty-benefit-apply-only.html

As per the above clarification :

- Builder should sell only the 'building' part separately 

- Land Owner should sell only the 'Undivided Share' of the land separately 

Only then, the reduced stamp duty is applicable on joint-development agreement.

If specific division of 'built-up' property (i.e., specific flat numbers) is mentioned in the agreement and it's brought up for registration, it will be deemed as sale conveyance and will attract normal stamp duty. i.e., actually the stamp duty will be calculated on the full built-up value (land + constructed value). It's worse than the situation where the builder buys and registers land directly.

It is exactly for this reason, the builder & land owners are not registering the sharing agreement.

But since the Government position is made clear, any one buying on the basis of 'non registered' sharing agreement: The document will not be accepted as evidence in court. It may not be an immediate concern, since it can be assumed that the land-owner & builder will not file cases against each other (since both will suffer) - This is true only if the sharing agreement is a genuine(and single) document. If either party tries to sell more flats by a fraudulent sharing agreement, that's another matter. We're talking of genuine sharing agreements in the current topic.

In most cases, the land is inherited, and hence the person is not an absolute owner in any case. He may be a Karta/Coparcener. The term land-owner is a misnomer.

Hence it is still possible that legal heirs/children/grand children of the Karta can file a case & bring the matter to dispute. At that point in time, the sharing agreement will be impounded until the required stamp duty is paid (and court imposed fine if any).

Who will pay the duty at that time ? It probably will be the flat owner (or the flat owners association), since the builder/Karta may not exist.