What are Land Owner Units?
What are Land Owner Units?
Should You Buy Them?
Should You Buy Them?
Real estate projects can be broadly classified into two categories based on ownership of the land on which the project is being constructed
Real estate projects can be broadly classified into two categories based on ownership of the land on which the project is being constructed
- Land owned by the builder
- Land owned by one or more land owners
In the second case, land owners enter into an agreement with Builder to construct the project on their land and receive a few units in exchange. This kind of development agreement is called ‘Joint Development Agreement (JDA)’ or ‘Development cum General Power of Attorney (DGPA)’. Such projects often lead to a situation where the buyer has a choice to buy either from the developer of the project or the land owner.
In the second case, land owners enter into an agreement with Builder to construct the project on their land and receive a few units in exchange. This kind of development agreement is called ‘Joint Development Agreement (JDA)’ or ‘Development cum General Power of Attorney (DGPA)’. Such projects often lead to a situation where the buyer has a choice to buy either from the developer of the project or the land owner.
Though it is the same project that you are buying, you have to exercise the following care while buying from landowner:
Though it is the same project that you are buying, you have to exercise the following care while buying from landowner:
- Do clear due diligence of the title flow of land owner and the unit you are buying
- Cross check if land owner is registered as promoter in the RERA registration of the project1
- Understand the reputation of landowner using online search or any expert who can give you market insights
- Ensure that the amount you transfer goes to the designated RERA accounts of the project or account approved by RERA. The account name generally will include ‘Project Name’ and ‘Collections A/c’ for your reference 2.
- Cross check the registered development agreement for the following
- Whether the unit you are buying is allotted to the land owner
- Is there any timeline before which land owners cannot sell their units. If there is such clause, wait till the period is over before committing your amount to the land owner
- Agreement of Sale (AOS) that you enter with the land owner should be in the format specified by RERA. Refer to our article on ‘Agreement of Sale’ to understand the key details that you have to focus on in the agreement
- We recommend you to ensure that the payment schedule is not aggressive and you hold a certain amount till handover of the project
Land owner units are generally available at more attractive prices than the developer units. Buying them can be a very effective way to save money. But we always recommend you to exercise caution before buying one.
Land owner units are generally available at more attractive prices than the developer units. Buying them can be a very effective way to save money. But we always recommend you to exercise caution before buying one.
Note:
Note:
Some JDA/DGPA give landowners a share of revenue of the project instead of units. This is kept out of scope of this article since this kind of agreements do not lead to the situation involving land owner units.
Some JDA/DGPA give landowners a share of revenue of the project instead of units. This is kept out of scope of this article since this kind of agreements do not lead to the situation involving land owner units.
References:
References:
- THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016
- Circular No. 1558/TG RERA/2024 Dt 09.09.2024
TS RERA Website: https://rera.telangana.gov.in/
TS RERA Website: https://rera.telangana.gov.in/