Sale & construction agreement confusion

Anukul Anand (Querist) 30 December 2023 This query is : Resolved
I am interested in purchasing under construction flat from the builder. My builder gave me two agreements. One Sale agreement states that the purchaser approached the builder to purchase uds interest right and title and the builder agreed to procure uds of land at a consideration amount with the right to construct a residential flat through the builder. Another is a construction agreement stating that the purchaser is interested in acquiring one of the residential flats in said project and entered into an agreement for purchasing uds share interest right and title and approached the builder to construct the said apartment. But in common sense, I am purchasing a flat from a builder, not the land. Why this type of agreement? Also for the sale deed they are saying registration will be done on the sale agreement value only. Don't you think the property valuation decreases for the purchaser? Also, the bank other than approved by the builder says the same thing and they are not accepting the construction agreement because of less property valuation. What should be done in this scenario? Please guide me. Thanks in advance.

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Quick Summary

When buying an under-construction flat, you'll typically encounter two agreements: a Sale Agreement for your Undivided Share of Land (UDS) and a Construction Agreement for the flat itself. This structure is common as you're purchasing a portion of the land and the builder is constructing the property on it. Be aware that the registration value is usually based on the Sale Agreement's land value, which can impact property valuation and bank approvals. Seek professional advice to navigate these complexities.

T. Kalaiselvan, Advocate Online

(Expert) 30 December 2023
When an apartment is purchased, the buyer is allocated a certain amount of the land as their Undivided Share of Land (UDS). This share has no defined boundaries and is associated with every flat built on that particular plot.. UDS (undivided share) is a portion of the land held by the buyer of the flat in a residential complex on a plot on which the whole structure is built. Every flat constructed on that specific plot would have a share of the land but won't have any defined boundaries. The agreement copy should hold all the important details of the property in question including the details of the UDS. The same figure of the UDS mentioned in the agreement must also be there in the Title Deed when the registration is being done n general, developers, who are not builders, enter into an agreement on the construction of apartments. These activities attract VAT and SERVICE TAX. The average buyer must enter into two agreements. One, for the undivided part of the land, (sale agreement) and the other, construction agreement The Supreme Court recently held that no title could be transferred with respect to immovable properties on the basis of an Agreement to Sell or on the basis of a General Power of Attorney The sale consideration amount mentioned in the registered title deed to which applicable stamp duty paid has been paid shall be taken into consideration towards the purchase value of the property

This question was repeated in the forum section hence the same answer is given here

kavksatyanarayana (Expert) 30 December 2023
Yes. Very well explained by the senior expert Sri T.Kalaiselvan Sir.

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