A Development Agreement is the foundational contract between a landowner and a developer in Indian real estate projects. It sets out the rights, obligations, financial consideration, and timelines that govern the construction and sale of a project on the landowner's property. The agreement reproduced below is a standard-form specimen used in Indian transactions; it should be read alongside current local bye-laws and urban land regulations.
ARTICLES OF AGREEMENT made at _______________ (city) this _____ day of __________, 20__ between (1) ____________ and (2) _________________ both of (city), Indian Inhabitants, hereinafter called "the Owners" (which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to include their respective heirs, executors, and administrators) of the One Part, and _______________________ of _______________ (city), Indian Inhabitant carrying on business at _____________________________, hereinafter called "the Developer" (which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to include his heirs, executors, administrators, and assigns) of the Other Part.
Whereas the Owners are absolutely seized and possessed of, or otherwise well and sufficiently entitled to, all those pieces or parcels of land situate, lying, and being at _______________ (city), admeasuring _____ square metres or thereabouts, and more particularly described in the Schedule hereunder written (hereinafter referred to as "the said property").
And whereas the said property is vacant, save and except a portion thereof which is presently occupied and encroached upon by some unauthorised occupants or trespassers who have constructed some unauthorised structures or huts thereon, of which fact the Developer is aware, having inspected the said property prior to the execution of these presents.
And whereas the Owners have represented to the Developer that a portion of the said property is under reservation under the sanctioned development plan and another portion is reserved under the draft development plan, of which fact the Developer is fully aware.
And whereas all of the said property has been declared surplus vacant land by the Competent Authority under the provisions of the Urban Land (Ceiling and Regulation) Act, 1976.
And whereas the Owners have agreed to grant to the Developer, and the Developer has agreed to accept from the Owners, exclusive rights of development of the said property upon the terms and subject to the conditions herein recorded.
NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO as follows:
- The Owners hereby grant exclusive rights to the Developer for development of the said property on an "as is where is basis", and the Developer accepts the same for the consideration and subject to the terms and conditions herein provided.
- It is specifically agreed that the Owners shall, through the Developer's architects, submit plans for the sanction of a layout for the construction of buildings and/or other structures on the said property or any part thereof.
- The said plans shall be prepared by the architects of the Developer and at the Developer's cost, and the Owners shall submit only such plans as are prepared by the Developer's architects. A copy of the finally approved plan shall be given to the Owners.
- Soon after the execution of this agreement, if so required, the Owners shall execute a Power of Attorney in favour of the Developer or any person nominated by the Developer to approach all public authorities and to submit and obtain sanction of plans from the Municipal Corporation and all other concerned authorities.
- The Developer is aware that certain portions of the said property are under reservation under the sanctioned development plan. It is agreed that the Owners shall under no circumstances be liable to remove the said reservations, nor shall the Developer be entitled to any reduction in consideration on account of them. However, the Owners shall sign all applications, papers, writings, etc. as may be required by the Developer for the purpose of removing such reservations.
- In consideration of the Owners granting exclusive rights of development under this Agreement, the Developer shall pay to the Owners a minimum consideration of Rs. ____________/- (Rupees ________________ only), or an amount calculated at the rate of Rs. 50/- per square foot of the FSI sanctioned by the Municipal Corporation of Greater Bombay, whichever is higher. This total consideration shall be paid as follows:
- (a) Rs. ____________/- (Rupees ______________________ only) on the execution of this agreement as earnest money or deposit, receipt of which the Owners acknowledge.
- (b) Rs. ____________/- (Rupees _____________________ only) as the balance consideration, to be paid by the Developer to the Owners on compliance with the following conditions:
- The Owners making out a marketable title to the said property, free from all encumbrances and reasonable doubts.
- The Appropriate Authority issuing its NOC under Section 269 UL(3) of the Income-tax Act, 1961.
- The Owners handing over complete vacant possession of the said property to the Developer under an irrevocable licence.
- The Owners giving the Developer an irrevocable right to construct buildings on the property, with the right to sell units to prospective purchasers on an ownership basis, and to appropriate the sale proceeds to themselves, although formal possession of the property shall be handed over to the Developer on execution of the Conveyance.
- Notwithstanding the preceding clause, the Developer shall be entitled after the execution of this agreement to erect fencing around the said property or any portion thereof in order to prevent further encroachments, subject to existing encroachments. The Developer shall also make arrangements for guarding the property. All costs and expenses in this respect shall be borne by the Developer alone. The Owners shall not be liable to remove or vacate existing encroachments or unauthorised occupants.
- As from the date hereof, the Developer shall be solely entitled, at his own risk, to deal and negotiate with the unauthorised occupants and/or trespassers on the said property and to take any proceedings against them, at the Developer's costs and expenses alone. However, the Owners shall, through the Power of Attorney to be executed, empower and authorise the Developer to effectively deal with the trespassers and receive possession of the areas occupied by them, subject to the consideration having been paid to the Owners.
- The Owners declare that:
- (a) They are the absolute owners of the said property, which is vacant save and except the portions in occupation of unauthorised occupants and the portions under reservation as aforesaid.
- (b) Subject to the Competent Authority granting permission under the ULC Act, the Owners have full power and absolute authority to grant exclusive development rights to the Developer.
- (c) They have not created, and shall not create, any right or encumbrance of any nature in respect of the said property or any part thereof during the pendency of this Agreement.
- Simultaneously with the execution of this agreement, the Owners shall deposit all title deeds relating to the said property with their advocates until the completion of the transaction. On completion, the Owners shall hand over all title deeds to the Developer against an ordinary receipt.
- Upon the Competent Authority granting the requisite permission under the ULC Act, and on sanction of the plans by the Municipal Corporation and all other concerned authorities, the Developer shall — after full payment of the consideration amount — be entitled to commence construction on the said property. The Developer shall also be entitled to enter into agreements with any person for the purpose of selling, allotting, and/or transferring any flats, shops, premises, garages, or other units to be constructed on the said property, and to receive and appropriate the consideration therefor for the Developer's own benefit. Such agreements shall be entered into by the Developer in his own name and at his own costs and risk; no risk or liability of any kind shall be incurred by the Owners.
- After receipt of the full consideration by the Owners, the Owners shall execute one or more Deeds of Conveyance as desired by the Developer, at the Developer's costs and expenses, in favour of a co-operative society or other body corporate formed by the purchasers.
- If, on receipt of the full consideration, the Developer does not desire to obtain the Conveyance of the property, the Owners shall, at the Developer's request, execute an irrevocable Power of Attorney empowering the Developer and/or his nominees to execute one or more Deeds of Conveyance in favour of the Developer or a co-operative society formed by the Developer. No further consideration shall be required for the execution of such Deed or Deeds.
- Prior to the execution of any Deeds of Conveyance, the Owners shall produce the requisite Certificate under Section 230A of the Income-tax Act, 1961. In the event the Deed of Conveyance is not executed at the time of payment of the balance consideration, an amount representing 10% of the total consideration shall be retained by the Owners' advocates until the production of such Certificate.
- The Owners shall pay and discharge all assessments, outgoings, and taxes payable in respect of the said property up to the date possession is handed over to the Developer. Thereafter, the same shall be paid and borne by the Developer alone.
- The Owners declare that no notice of acquisition or requisition by the Municipal Corporation or under any other statute has been served upon them. If any such notice or requisition is issued after the date of execution of these presents but before completion, the Owners shall comply with the same at their costs and expenses. The Owners hereby declare that no such requisition or acquisition is contemplated so far as they are aware. If the Owners have concealed any such notice, the Developer shall be entitled to cancel this Agreement and receive forthwith all amounts paid.
- All disputes and differences relating to or in connection with this agreement shall be referred to the sole and final arbitration of Mr. _______________ or, failing him, Mr. ____________, as the sole arbitrator, whose decision shall be final and binding. The arbitrator shall have summary powers.
- All out-of-pocket expenses of and incidental to this agreement, including the expenses for Deeds of Conveyance and other documents, stamp duty, and registration charges, shall be borne and paid by the Developer alone. The parties shall bear and pay their respective advocates' professional costs.
- The Developer shall be entitled to develop the said property either by himself and/or through his nominees, including a firm in which he is a partner or a company in which he is a director. However, all the obligations and liabilities undertaken by the Developer under this Agreement shall remain personally binding upon the Developer.
- The Owners hereby declare that they have not entered into any Agreement to Sale or Lease or created any third-party rights in favour of any person in respect of the said property.
In witness whereof the parties hereto have hereunto set and subscribed their respective hands the day and year first hereinabove written.
Signed and Delivered by the within-named Owners:
(1) __________________ and (2) ___________________
in the presence of: ________________________________
Signed and Delivered by the within-named Developer:
______________________________
in the presence of: ________________________________
RECEIVED from the within-named Developer a sum of Rs._________/- (Rupees _______ only) being the amount of deposit, paid by a Pay Order bearing No. __________ dated ________________, Bank ________________, Branch _________________.
Witnesses:
1. ______________________
2. ______________________
Practical Notes for Landowners and Developers
Development agreements of this type were widely used before the introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA). Under RERA, promoters are now required to register projects with the state RERA authority before advertising or accepting bookings, and both landowners and developers carry defined obligations toward buyers. Any development agreement executed today should expressly address RERA compliance, including the allocation of responsibility for project registration, the escrow of 70% of buyer collections, and adherence to the mandated project timeline disclosures. Failure to include these provisions can expose both parties to regulatory penalties and buyer compensation claims.
Landowners should pay particular attention to clauses governing consideration, title clearance, and delivery of vacant possession. It is common in practice for developers to seek possession before all title documents have been handed over; structuring payment tranches to align with genuine title verification milestones significantly reduces risk. Independent legal due diligence — including a search of the sub-registrar's records, revenue records, and encumbrance certificates for at least 30 years — is strongly recommended before execution. Regulatory requirements, stamp duty rates, and RERA provisions as of the original article year — verify current rules with a qualified advocate before entering into any development agreement.
DISCLAIMER: These legal forms and documents are provided for reference only. Any agreement you enter into should be drafted and reviewed in consultation with a solicitor or an advocate. Holiday Home Times will not be responsible for any claim arising out of the use of any of the documents reproduced above.