Understanding a Joint Venture in Chennai’s Real Estate

<?xml encoding="utf-8" ?>Have you ever heard of a joint venture construction? If you haven’t, fret not! A joint venture construction is a practical partnership in real estate wherein a landowner and a builder team up to construct a building. A prominent trend in the real estate industry in cities like Chennai, joint venture construction utilises the full potential of the property. <img alt="Chennai Real Estate Future: Trends, Opportunities & Growth Outlook" src="https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcR2yAuBJEZTw6R4Uo815Qy_5Ts7gVPXVqDd5g&s"><h2 style="text-align:justify">What are the Highlights of a Joint Venture in Real Estate?</h2>The profit sharing in a joint venture varies based on the agreement between the landowner and builder. Usually, it is in a 50:50 or 60:40 ratio. There is an investor who funds through cash, equity, or loan to complete the project. The builder is in charge of approvals, design, and building.<h2 style="text-align:justify">How Does a Joint Venture Work?</h2>Let us consider an example. Imagine Mr A has a land of 2800 sq. ft. in Guindy, which he inherited from his father. However, he has no clue how to utilise the land for the best profitability. This is where he contacted <a href="https://ramsrealestates.com/" style="text-decoration:none" target="_blank" rel=" noopener">RAMS Real Estates</a> to get a profitable solution. The real estate builder offered him a clear joint venture deal. Now, the empty land is converted into a 10-unit apartment complex. The 6 units go to Mr A, and 4 units go to RAMS Real Estates. Pretty neat, isn’t it?<h2 style="text-align:justify">Important Documents Required for a Joint Venture</h2><div> <table cellspacing="0" style="border-collapse:collapse; border:none; width:601px"> <tbody> <tr> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:198px"> Landowner Documents </td> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:403px"> <ul> <li style="list-style-type: disc; text-align: justify;">Title deed</li> <li style="list-style-type: disc; text-align: justify;">Patta</li> <li style="list-style-type: disc; text-align: justify;">Encumbrance certificate</li> <li style="list-style-type: disc; text-align: justify;">Mother deed</li> <li style="list-style-type: disc; text-align: justify;">Approval layout</li> <li style="list-style-type: disc; text-align: justify;">Tax receipts</li> <li style="list-style-type: disc; text-align: justify;">No objection certificates (NOCs)</li> <li style="list-style-type: disc; text-align: justify;">Adhaar Card and PAN card</li> </ul> </td> </tr> <tr> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:198px"> Developer Documents </td> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:403px"> <ul> <li style="list-style-type: disc; text-align: justify;">Common incorporation certificate</li> <li style="list-style-type: disc; text-align: justify;">GST registration certificate</li> <li style="list-style-type: disc; text-align: justify;">PAN card of the company</li> <li style="list-style-type: disc; text-align: justify;">Experience credentials </li> <li style="list-style-type: disc; text-align: justify;">Project plan</li> <li style="list-style-type: disc; text-align: justify;">RERA registration details</li> </ul> </td> </tr> <tr> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:198px"> Joint Venture Agreement </td> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:403px"> <ul> <li style="list-style-type: disc; text-align: justify;">Project details</li> <li style="list-style-type: disc; text-align: justify;">Profit sharing ratio</li> <li style="list-style-type: disc; text-align: justify;">Dispute resolution terms</li> <li style="list-style-type: disc; text-align: justify;">Timeline for execution</li> </ul> </td> </tr> <tr> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:198px"> Supporting Legal Documents </td> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:403px"> <ul> <li style="list-style-type: disc; text-align: justify;">Development agreement </li> <li style="list-style-type: disc; text-align: justify;">General Power of Attorney </li> <li style="list-style-type: disc; text-align: justify;">Indemnity Bond</li> </ul> </td> </tr> <tr> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:198px"> Approval-Related Documents </td> <td style="border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top; width:403px"> <ul> <li style="list-style-type: disc; text-align: justify;">CMDA/DTCP approval documents</li> <li style="list-style-type: disc; text-align: justify;">Building permit</li> <li style="list-style-type: disc; text-align: justify;">NOCs</li> </ul> </td> </tr> </tbody> </table> </div><h2 style="text-align:justify">What are the Types of Real Estate Joint Ventures?</h2><h3 style="text-align:justify">An Equity-Based Joint Venture</h3>The landowner and builder contribute capital in an equity-based joint venture. So, the risk and profit are shared by both parties based on their ownership percentage.<h3 style="text-align:justify">A Contractual Joint Venture</h3>This is a flexible agreement between individuals in which skills, capital, and services are given by each party. The profit-sharing ratio depends on the initial contractual agreement.<h3 style="text-align:justify">A Landowner and Builder Collaboration</h3>The landowner and builder come together for project execution. The builder provides construction expertise to complete the project on time. This is one of the most popular models used in Chennai’s urban development.<h2 style="text-align:justify">Top Things to Consider Before Entering a Real Estate Joint Venture</h2><h3 style="text-align:justify">Choose the Right Partner</h3>As a landowner, you should spend considerable time choosing a reliable builder with expertise in joint venture projects. It is important to check their project completion rate and previous projects.<h3 style="text-align:justify">Transparent Financial Planning</h3>It is essential to discuss the construction work and have a contingency buffer for material, labour, and other costs in the budget.<h3 style="text-align:justify">Compliance and Safety</h3>It is crucial to adhere to building by-laws, structural design codes, and project quality benchmarks. This helps protect the asset value and avoid regulatory penalties.If you have a large plot, a joint venture makes sense for you, as it can become a high-value asset by partnering with a reliable builder. Joint ventures of many builders in Chennai are not only successful but also lead to fruitful partnerships. You can choose a builder like RAMS Real Estates that has a good market reputation and has a high project completion rate.