Format of Development Agreement with Builder

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This Agreement is made here at (Place)

Between

(The name and address of the owner) Called the Owner.

AND

(The name and address of the contractor) Called the Contractor.

The expression of the terms Owner and the Developers, whenever they occur in the body of this Agreement shall mean and include their respective heirs, executors, administrators and assign unless and until is repugnant to the context or meaning thereof.

Whereas the Owner is the recorded Owner and is in possession of plot No. ………………………………………………………………………………, ad measuring ………..

Whereas the Owner is desirous of erection of a super structure as per the sanction plan  of the property to be obtained hence engaging the Developer for construction of a super structure on the land beneath the said property, on the terms and conditions that are set forth hereinafter.

Now this Deed Witnesseth as follows :

  1. That the Developer have agreed to pay a sum of Rs. …………… (Rupees …………… only) as security for due performance of the terms of this agreement and successful completion of the entire proposed project.
  2. The Owner shall sign the necessary documents to enable the Developer to obtain all necessary permissions and sanctions from the local authorities as may be required and shall execute attorney(s) by separate documents in favour of the Developer for submitting the applications, requisitions to the various authorities for obtaining permission, approvals, sanctions, allotment of building or other materials and concerning other matters required statutorily to be done and required in connection with the construction and completion of the said dwelling units/floors on the said property. However the Developers undertake not to cause to be done any act deed or thing which may in any way misuse, contravene any rule, law or regulation or to misuse the powers which may be conferred upon the Developers by the Owner to construct super structure as stated herein above on the land beneath the said building as per agreement.
  3. That the Developers shall get the suitable plans prepared for the proposed structure as per the requirements and mandate of the Owner, at his cost and the concurrence of the Owner shall be obtained with regards to final submission of plans.
  4. That the entire cost of construction of the new building including cost of material, labour and the charges for time extension for construction shall be borne and paid by the Developer.
  5. That the construction shall be as per the specifications given in the building plan and the Developers shall utilise the complete F.A.R.
  6. That the Owner gives licence and permission to the Developer to enter upon the said property with full right and authority to commence, carry on and complete development thereof, in accordance with the permission & terms herein mentioned. The said licence to develop the property will be only for the Developer and under no circumstance the Developer will assign his title, right and interest to any other party, except with the prior written consent of the Owner. However the Developer shall be entitled to enter into separate contracts in his own name with building contractor, architect and others for carrying out the development at his own risk and costs.
  7. That the completed area after the construction shall be owned and possessed by the parties as per the schedule  forming part of this development agreement with the developer.
  8. The Owner agrees to execute, sign and deliver the document which might be required for conveying first floor and second floor of the said property in favour of the intending purchaser or nominee of Developer as a confirming party when the construction has been completed by the Developer and full consideration has been paid to the Owner. It is hereby specifically mentioned and agreed that the Owner shall not claim any remuneration for execution of the aforesaid documents and all the expenses whatsoever for the transfer of the first floor and second floor of the said property shall be borne and paid by the Developer/his nominee(s)/intending purchaser(s).
  9. That the building shall be completed and finished in all respects within a period of ………… months and the first party’s share of property will be handed over to them within …………months from the date of sanctioning of plans/handing over the vacant possession of the plot for development, expect for reasons beyond second party’s control such as strikes, war, riots and natural calamities and due to any unforeseen circumstances like drastic changes in laws and hindrance caused by concerned authorities .
  10. If the Developer fails to complete building and fails to deliver the finished structures within stipulated period of ………… months then Developer shall be liable to give a sum of Rs. ………… (Rupees …………………… only ) per month to the party as compensation penalty.
  11. That except as herein before provided, the Owner shall not interfere with or obstruct in any manner with the construction of work for the said residential flats. However the Owner or his nominee or nominees shall have free hand and unfettered access to the construction site at all reasonable time and he shall be free to point out to the Developer or their agents, subcontractors or administrators and the Developer shall rectify such defective construction, workmanship or use of inferior materials.
  12. That this agreement shall not to be deemed to constitute a partnership between the Owner and the Developer or an agreement for sale of the plot by the Owner to the Developer and shall not be deemed to bind the parties hereto expect specifically recorded herein. The Developer shall solely be liable and responsible for any liability in connection with the construction of dwelling units in the land beneath the said building. The Owner and the Developer shall be solely responsible from the date of possession for various expenses, taxes such as water charges, property tax, electric bills in respect of respective portions as mentioned aforesaid.
  13. In case there is any accident in the aforesaid construction project, the Developer shall be fully responsible for all the consequences of the same under the Workmen Compensation Act or any other acts in force. If the Owner is ordered to attend a court or is requested or his presence is required by any other authority in this connection, he will empower the Developers to attend the court/authority concerned on his behalf and the Developer agrees to compensate the Owner fully in case an adverse order is passed or any compensation is ordered to be paid by the Owner by any court, judicial authority or any other competent authority.
  14. That during the course of construction all building materials and equipment used or to be used shall remain at the Developer’s risk and the Developer shall not be entitled to any compensation from the first party for any damages, loss or destruction of such works or material or equipment arising from the any cause whatsoever.
  15. If until the completion of building any case damage or harm occurs to the adjourning properties, neighbors, the Developer shall be fully responsible for all the consequences.
  16. That the Owner has declared and assured the Developer that property is free from all sorts of encumbrances, i.e., mortgage, charges, gifts, wills, exchanges, attachments, injunction notice prior agreement to sell/collaboration agreement and shall also keep the property free from all sorts of encumbrances till the completion of the building, sharing of the respective portions in the new building and registration of their respective portions.
  17. That the Developer shall be responsible for any eventuality or consequences arising out of the structural defects. Appropriate remedial measures to rectify such defects or remove such irregularities at the earliest shall be taken. The Developer shall also apply and obtain the C&D forms, electricity, water and sever connections, etc., from the competent authority/authorities concerned at his cost.
  18. That the Owner shall hand over all the original documents of the property to the Developer at the time of execution of this collaboration agreement. The same shall be returned back to the Owner on completion of the construction and possession of the Developer’s portion to him.

IN WITNESS WHEREOF, the parties hereto have set their respective hands on these presents on the date, month and year hereinabove first mentioned. In the presence of the following witnesses :

OWNER                                          BUILDER

WITNESSES


IMPORTANT DEFINITIONS OF A DEVELOPMENT AGREEMENT WITH THE BUILDER

Owner: Is the owner of the property or the party hiring the contractor to undertake the construction as per the scope of work given to him.

Builder: Often termed as Developer, he is responsible for the development of the property from the very beginning till the end of the entire construction and sale of the constructed area.
Contractor: The party responsible for the construction work assigned to him.

Site: The address with all other relevant details of the property where the construction is to be completed.

Description of work: A detailed description of the work and construction to be done by the contractor. You can also attach project plans and specifications to the agreement.

Contract price and payments: The total price to be paid for the work under all possible heads and how and when payments will be made.

Contract documents: any drawings, blueprints, exhibits or other documents that will part of the contract

Materials and labor: Which party will supply and pay for the cost of materials and labor.

Starting and completion dates: The date of commencement of the work and the date of completion of the work.

Subcontracts: Whether the contractor will hire subcontractors to help perform part of the contractor’s obligations

Work changes: How any changes to the agreed upon work will be handled once construction has begun.

Warranties: How long will the contractor warrant that his or her work is free from material defects.

IMPORTANT HEADS OF DEVELOPMENT AGREEMENT WITH BUILDER:

Indemnification: The contractor promises to be responsible for any loss or damages incurred by the owner arising out of the execution of the work at the construction site.

Dispute resolution: The mode of dispute resolution which can be through Arbitration, mediation.

Termination: When and under which circumstances,  the buyer or contractor can terminate the contract.

Inspection: Allows the owner to examine the work done by the contractor at any time during construction to see if it conforms with the contract terms.

Insurance: Owners and contractors are both responsible for obtaining insurance to protect against damages and defects, and claims and losses.

Liquidated damages: An amount per day that the contractor will be liable to pay to the owner for each day past the agreed upon completion date that construction is delayed.

Force majeure: Parties will not be responsible for non completion of the work due to unavoidable occurrences or circumstances beyond their control (e.g. hurricanes, earthquakes, shortage of materials, and change in contract plans).


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These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

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