Clauses to be stipulated in a Joint Venture Agreement:
- Joint Venture Agreement should clearly stipulate the time period for competition of Project by the builder and when the possession of the premises is to be handed over.
- Joint Venture Agreement should clearly stipulate the premises/ number of flats/apartments to be handed over to the landowner and the absolute inherit right of the landowner.
- Joint Venture Agreement should clearly stipulate that the project is to be registered under RERA.
- Joint Venture Agreement should clearly stipulate that all approvals, sanctions, etc are to be obtained by the builder.
- Joint Venture Agreement should clearly stipulate that the builder will be held liable to all penal and legal consequences for any unauthorized or illegal construction.
- Joint Venture Agreement should clearly stipulate that in case of any dispute between the parties; the party who is at fault is to pay all the legal costs borne by the aggrieved party.
- Joint Venture Agreement should clearly stipulate that the builder is not to pledge/mortgage the property towards funding the project.
- Joint Venture Agreement should clearly stipulate the property to be developed along with the schedule of the property.
- Joint Venture Agreement should clearly stipulate the “Sharing of Plinth AREA”
- Joint Venture Agreement should clearly stipulate “MEETING OF OBLIGATIONS” of both the builder & the landowner.
- Joint Venture Agreement should clearly stipulate that “Rectification of Defects”
- Joint Venture Agreement should clearly stipulate the “OWNERS INDEMNITY”.
- Joint Venture Agreement should clearly stipulate the “DEVELOPERS INDEMNITY”
- Joint Venture Agreement should clearly stipulate the payment to the owner by the developer as advance WHICH SHOULD ALWAYS BE NON- REFUNDABLE.
- Joint Venture Agreement should clearly stipulate “General Clauses” with regard to the name of the project, specifications of proposed constructions, etc.
- Joint Venture Agreement should clearly stipulate the “TECHNICAL SPECIFICATIONS” such as foundation, structure of the building, Floor, Wall Tiling, Kitchen Fittings, Grill, Plumbing and Water Supply etc
What to Avoid
- A General Power of Attorney is mandatory when entering into a Joint Venture Agreement with a builder/promoter. However, clauses with regard to mortgage of property & sale of the landowners share are to be avoided to avoid further legal litigation.
- An arbitration clause is to be avoided at all costs in the JV agreement due to the legal complications and the introduction of RERA to provide appropriate remedies to aggrieved parties.
- Third party builders should not be able to take over the construction from the builder without the permission of the landowner and without making an application to RERA for permission.
- Joint Venture Agreement should not stipulate the compensation to be owed to the parties in case of delay of possession, etc. the RERA tribunal & court of law should decide the compensation to be given to the aggrieved parties.
Please note that is it always advisable to consult with a lawyer before entering into a JV agreement & the above mentioned content is strictly for information purposes.