Joint Development Agreement Under RERA: Key Legal and Compliance Considerations for landowner(s) & Developers
Author: Editorial Desk
Introduction:
Land acquisition is often one of the biggest challenges in real estate development considering the investment, cost of the land, litigation etc. Instead of purchasing land outright, many developers enter into a Joint Development Agreement (JDA) with landowner(s) to develop the project while sharing revenue or built-up area.
While a joint development agreement model offers commercial flexibility, it also creates significant compliance responsibilities under RERA for both landowner and developers. Both Landowner and Developers must clearly understand who is treated as the promoter under RERA, how project registration is managed, how money collected, deposit, withdrawal and utilsation, and how responsibilities are allocated before construction begins.
What is a Joint Development Agreement (JDA)?
A JDA is a legal arrangement where the landowner(s) contributes land and the developer undertakes development i.e., approvals, construction, marketing, and project execution.
Unlike a conventional land purchase, ownership of the land generally remains with the landowner while the developer receives development rights under the agreement.
Depending on the commercial understanding, the parties may adopt different sharing models.
Types of Joint Development Agreements
Most projects follow one of the following structures:
Area Sharing Model | Revenue Sharing Agreement |
Developers and land owners share units in the project | The developer sells the units and shares revenue with the landowner. |
Landowners receive a predetermined share of built-up area. | Landowners receive an agreed percentage of sales proceeds. |
Common in residential developments (apartment or plotted) | Common where cash flow flexibility is preferred. |
The choice between joint development models depends upon commercial objectives, financing arrangements, and project feasibility.
Learn how GST liability is computed under JDA for revenue sharing agreements.
Does the Landowner(s) become a Promoter Under RERA?
One of the most common misconceptions is that only the developer is considered responsible under RERA.
In general understanding and practice, depending on the structure of the joint development agreement under RERA, a landowner(s) may also fall within the definition of a promoter if they participate in the development and sale of the project. However for the purposes of RERA Landowner(s) are also considered as promoter section 2(zk) of the RERA Act.
Further, Karnataka RERA has clarified through their circular dated 6th Nov 2019 that the Landowner is responsible under RERA.
This means responsibilities cannot always be shifted entirely to the developer. The obligations of each party should be clearly defined in the development agreement to avoid future disputes to protect themselves in case of differences.
Promoters should therefore assess:
- Role of the landowner(s)
- Rights to market or sell units
- Responsibility for statutory approvals
- Allocation of compliance obligations
- Execution of project documents
- Responsibility in case of delay in delivery of the project
- Responsibility in case of defect title deeds
- Who is responsible for the allottees in case of project does not complete
Clearly defining these responsibilities at the drafting stage helps reduce compliance risks during project execution.
Key Compliance Responsibilities Under RERA
A joint development agreement under RERA should clearly identify which party is responsible for each compliance activity.
Important responsibilities generally include:
- Project registration under RERA
- Obtaining statutory approvals
- Opening and operating the 70% separate bank account
- Collection, deposit, withdrawal and utilization of funds collected from the allottees
- Quarterly project updates
- Annual audit requirements
- Advertisement compliance
- Agreement for Sale execution
- Project completion and handover
Unclear allocation of these responsibilities often results in delays, disputes, and regulatory challenges.
Important Clauses Every Developer Should Include
A carefully drafted development agreement helps reduce legal uncertainty throughout the project lifecycle.
Developers should ensure the agreement clearly addresses:
Scope of Development Rights
Clearly define construction rights, marketing rights, and responsibilities of each party.
[H3] Revenue Sharing Mechanism
Revenue Sharing Mechanism
Where a revenue sharing agreement is adopted, the percentage, payment timelines, and reconciliation process should be expressly recorded. Clear definition of inclusion and exclusion from the Revenue definition.
Project Approvals
Specify which party will obtain approvals, permissions, and regulatory clearances.
Cost Allocation
Construction costs, statutory charges, consultant fees, and infrastructure expenses should be allocated clearly.
RERA Compliance
The agreement should identify responsibility for project registration, disclosures, reporting, and ongoing compliance.
Dispute Resolution
Include mechanisms for dispute resolution to minimise delays during project execution.
Common Compliance Mistakes in Joint Development Projects
Many compliance issues arise not because of the law but because responsibilities are not documented properly.
Developers should avoid:
- Assuming only the developer is responsible under RERA
- Vague allocation of compliance obligations
- Failure to define revenue sharing arrangements
- Inadequate documentation of development rights
- Delays in project registration
- Poor coordination between developer and landowner
- Non deposit of Landowner share of amount realised from the allottees into RERA separate bank account
Addressing these issues at the beginning of the project helps reduce regulatory and commercial risks.
Why Proper Documentation Matters
A collaboration agreement or joint development agreement should not merely record commercial terms. It should also provide a clear compliance framework for the entire project.
Developers should maintain:
- Signed development agreement
- Land title documents
- Statutory approvals
- Project registration records
- Financial records
- Construction progress reports
- Correspondence relating to compliance
- Borrowing against the hypothecation of project land
- Borrowings against the receivables from sold and unsold units
- Custody of original documents regarding to the Title, Approvals etc
Proper documentation supports smoother project execution and reduces the likelihood of disputes with stakeholders or regulatory authorities.
Conclusion
A Joint Development Agreement offers developers an efficient way to undertake projects without acquiring land outright. However, its success depends on more than commercial terms. Clearly defining responsibilities, allocating compliance obligations, and maintaining proper documentation are equally important under RERA.
Developers who address these issues at the planning stage are better positioned to manage compliance, minimise disputes, and ensure smoother project execution.
For assistance with Joint Development Agreements, or RERA project registration, and developer compliance requirements, connect with RERA Consultants LLP.
All your questions answered (FAQs)
A Joint Development Agreement is an arrangement where a landowner provides land and a developer undertakes construction and project execution based on agreed commercial terms.
Yes - By virtue of the Definition of the Promoter, Landowner is a promoter under RERA - Refer Section 2(zk) of the RERA Act
Under an Area Sharing Model, the landowner receives a share of the constructed area. Under a Revenue Sharing Agreement, the landowner receives an agreed share of the revenue generated from the sale of units.
They generally include project registration, statutory approvals, financial compliance, reporting requirements, execution of agreements for sale, and project completion obligations.
A well-drafted development agreement clearly allocates responsibilities between the landowner and the developer, reducing the risk of disputes, delays, and compliance issues during the project lifecycle.
Disclaimer:
The information contained in this article is provided for general informational purposes and does not constitute legal advice. Readers should not act or refrain from acting on the basis of any content included herein without seeking appropriate legal or professional advice on the specific facts and circumstances at issue.
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