Property Development Agreements
A property development agreement, often called a joint development or collaboration agreement, is a contract in which a landowner makes land available and a developer builds on it at its own cost. In return the two share the built-up area, the sale revenue or both, in an agreed ratio.
The landowner keeps title until the built units are sold or allotted, and usually gives the developer a power of attorney to obtain approvals and sell its share. The agreement has to work with the Transfer of Property Act, 1882, the Registration Act, 1908, the Real Estate (Regulation and Development) Act, 2016 and, in Haryana, the licensing regime for the development of land.
When you need it
When a landowner is approached by a developer
The developer’s draft decides how much the owner receives, when, and what security it has if the project stalls.
When a developer is taking up land
The developer needs clean title, the right to build and sell, and protection against the owner changing course.
When redeveloping an existing building
Owners or a society hand over an old building for reconstruction in return for new units.
When family land has several owners
Every co-owner has to be a party, and their shares in the built area have to be set out.
When a project is delayed
The owner’s remedies depend on the deadlines, penalties and termination rights that were agreed.
How the process works
Six stages. Timings are typical, not promised.
- 1
Agree the commercial terms
Depends on the partiesRecord the land, the sharing ratio, whether it is area or revenue, any deposit paid to the owner and whether it is refundable, who bears which costs and the overall timetable.
Documents
- The term sheet or offer
- The land’s title documents and revenue records
- 2
Check title and what can be built
Two to four weeksReview ownership, all co-owners and heirs, mortgages and litigation, the zoning and permitted use, and the licences and approvals the project will need.
- 3
Draft the agreement
Three to four weeksSet out each party’s obligations, approvals and deadlines, the sharing and how units are identified and allotted, the developer’s right to raise finance, marketing and pricing, quality, delay and its consequences, termination and what happens to a part-built project.
- 4
The power of attorney
Alongside the agreementPrepare the power of attorney the developer needs, limited to obtaining approvals, building and selling its own share, with protections for the owner if the developer defaults.
- 5
Stamp and register
At signingPay the stamp duty and register the agreement and the power of attorney. A development agreement transfers rights in land and is compulsorily registrable.
- 6
Approvals and regulatory registration
Depends on the authoritiesThe developer obtains the licence and building approvals and registers the project with the real estate regulator before advertising or selling any unit.
Common questions
An agreement in which the owner contributes land and the developer contributes construction, approvals and marketing, and they share the result. The owner does not sell the land outright, and the developer does not pay the full land price up front.
In area sharing, the owner receives a fixed proportion of the built units and can keep or sell them. In revenue sharing, all units are sold and the owner receives a proportion of the sale proceeds as they come in.
Yes. An agreement that gives a developer rights to develop and deal with land has to be registered under the Registration Act, 1908, with stamp duty under the state’s law. An unregistered agreement cannot be relied on to enforce those rights.
The definition of promoter in the Real Estate (Regulation and Development) Act, 2016 is wide, and a landowner who shares in the area or revenue is commonly treated as a promoter alongside the developer, with liability to buyers. The agreement should allocate that responsibility between them.
The agreement should set a completion date with a grace period, compensation for each month of delay and, for prolonged delay, the owner’s right to terminate and bring in another developer. Buyers have separate remedies against the promoters under RERA.
Only if the agreement allows it. Owners usually limit any mortgage to the developer’s own share and require that their share stays free of charge.
For an individual or Hindu undivided family, section 45(5A) of the Income-tax Act defers the tax on a registered development agreement to the year in which the completion certificate is issued. Other owners, and the indirect tax on development rights, need separate advice.
A power of attorney given to a developer who has an interest in the project is generally treated as irrevocable to that extent, under section 202 of the Indian Contract Act. That is why its scope, and what ends it, should be drafted carefully.
Related
To discuss a development agreement, write to info@ireniclegal.com or call +91 96547 47331. Written by Adv. Kanika Marwaha Bindal; last updated 7 October 2026.