Join Venture

When a land owner joins hands with a builder in developing a property, the land owner provides his land and the builder invests his money for construction. This type of arrangement is normally called as joint venture

The land owner gets a piece of his property as a flat or an apartment rather than selling it off as a whole in an outright purchase. He gets to live in his own property in a new house without spending any of his money

Absolutely, the land owner gets a huge tax benefit when compared with an outright sale.

• Joint venture ratio
• Liability after construction
• Payment terms
• Project timeline
• Rental expense
• Compensation for delays

What is the assurance provided by the builder after construction, is he providing any type of warranty after handing over the building. If there is no liability provided after construction, the building owners will have spend their hard-earned money to repair poor quality construction

The joint venture ratio will vary based on location and land price. For ex: The land price in Anna Nagar is more when compared with the construction, so the land owner will get 80% & the builder will get 20%. This percentage is converted into a ratio of 80:20 and called as joint venture ratio

The builder will pay the land owner an advance to get started with the project and an agreement will be formed. The builder will have to pay the land owner as cash or equivalent value as apartments. This will vary for every project based on location and owner requirements

The timeline varies for each project based on the requirements. If all the documents are clear and the land is empty, a G+3 joint venture project may take up to 18 months. This may vary if there is an existing building, multiple owners for the land and the documents are not clear

If there is an existing building where there are multiple people staying, the market rental value has to be calculated for the entire project duration and paid to the owner and it will be adjusted in the joint venture ratio or in advance. However, it might not be applicable for empty plots or certain locations where the saleability is low

The builder who takes up the project should be complete the project on the time promised in the agreement. If not he will have to provide rental expenses as penalties to the customer for the delayed timeline

What is the assurance provided by the builder after construction, is he providing any type of warranty after handing over the building. If there is no liability provided after construction, the building owners will have spend their hard-earned money to repair poor quality construction