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Collaboration Builder Agreement

Collaboration is an arrangement between an owner of the residential plot and a builder/ developer where owner contributes the land and the builder is entrusted with the task of approvals, architecture and construction at his own cost. Through collaboration, a builder can save on capital expenditure since the land will be provided by the landowner. Through such deals, the owner, too, makes a saving, as she is not required to spend money on development. Going back to the above example, the builder not only recovers cost but also earns a profit by selling that one floor. The other three floors remain with the owner.

Types of Collaboration Agreement:-

There are broadly two types of property collaboration agreements. The first type is where the developer enters into an agreement as an agent of the landowner to carry out the development. The second is where the builder signs a deal for purchase or lease with the owner and simultaneously commences development on the land. This is also known as agreement of sale and development, and is the more common type.

If you are signing an agreement under which you will get a certain number of flats (or floors), you will also have to sign a power of attorney (PoA) agreement in the builder’s favor. The builder needs this to get various approvals for construction and to sell the floor(s) or flat(s). The cost of approvals and paperwork is usually borne by the builder.