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PDS (IT)     11 September 2023

Property registration

I'm in the process of purchasing a plot within a development. The property is registered in the name of the landlord, but the plot falls under the developer's share. The developer is asking for a demand draft (DD) to be made in his name, even though the registration will be carried out by the landlord. From my understanding, shouldn't the DD be made in the name of the person registering the property? Can someone clarify the legalities and potential implications of this arrangement?



 4 Replies

T. Kalaiselvan, Advocate (Advocate)     12 September 2023

You say that it is the share of the developer and not the landlord, then what is the problem for you to pay the consideration amount to the developer.

Have you not perused the joint development agreement and all other property related documents?

In this situation you should consult a local advcoate and take his legal opinion before venturing into the purchase.

Real Soul.... (LEGAL)     12 September 2023

You must execute an agreement with developer and pay accordingly and landlord should be witness to each payment received by making him sign each payment receipt or otherwise you are certainly in trouble   

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LCI Thought Leader Rajesh Tandon ( Col (Retd))     15 September 2023

Dear Querist,

1. It is very important to understand that when a landowner gets into an agreement with developer, it generates two types of properties for sale i.e landowners share and developers share. The shares of landowner and the developer i.e landowner’s share and developer’s share are often different from each other.

2. While buying the property, a lot of times, a homebuyer /property buyer does not know as to which flat is the landowner’s share and which is the builder’s/Developer’s share.

3. What the homebuyer /property buyer should be aware of is that if there are multiple landowners the joint allotment agreement should specifically mention the flat number/plot number and the corresponding name of the landowner against it or at least the homebuyer/property buyer makes an attempt to check the ownership of his/her respective flat.

4. A lot of times the landowner insist upon executing our bilateral agreement. However, the safer option for homebuyer/property buyer is to avoid bilateral agreement especially when he knows it that landowner has given the land to developer to develop the property. In such a situation homebuyer/property buyer should ideally executing a tripartite agreement between the builder/developer, landowner and the homebuyer/property buyer.

5. Two important issues in the Tripartite agreement must be insured to avoid any dispute in future. These are as under :-

(a) That the property is sold by the landowner/Developer is without any pressure or coercion from anyone.

(b) The payment made to the landowner/developer is at market value, which is verified by him/her before the sale.

6. Specific issue raised by the querist of Developer asking a Demand Draft (DD). A lot of times, what happens is that the landowner gives marketing rights to sell their flat/plot to the developer. That takes away the authority from a landowner to sell their shares directly. Therefore it is in the interest of the homebuyer/property buyer to include the landowner as a party in the tripartite agreement with the developer. The developer might disagree with this but it is the responsibility of the homebuyer/property buyer to insist the developer to make the landowner at least the confirming party in the agreement so that the interest of the homebuyer/property buyer is safeguarded and to avoid any future litigation.

7. Desirable to have all legal heirs of the landowner signed the joint allotment agreement. The homebuyer/property buyer should identify all the legal heirs of the landowner and make them sign the agreement. This would prevent him/her from future disputes/claims by the legal heirs. Equally important to note that the similar process should apply to the developers share.

8. Therefore, while giving the Demand Draft (DD) to the developer, have a tripartite agreement including the landowner as well and do keep in mind the measures suggested above to avoid any legal hassles in future.

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