1. Imbalance in Bargaining Power
Large developers typically have:
- Extensive legal and financial resources
- Experienced negotiation teams and consultants
- Access to alternative land options and markets
This can create an asymmetry in bargaining power, making it difficult for smaller landowners or sellers to negotiate favorable terms without professional representation.
2. Complex Agreement Structures
Developers often propose detailed contracts involving:
- Joint Development Agreements (JDAs) with performance-linked clauses
- Revenue or area-sharing models with multi-tiered conditions
- Long-term commitments tied to project timelines and phasing
Understanding and negotiating these complex structures requires legal expertise and due diligence to avoid future disputes or unintended obligations.
3. Stringent Due Diligence Demands
Large developers conduct thorough legal, financial, and technical assessments before entering into agreements. This may involve:
- Requests for complete title chain and land mutation records
- Verification of zoning compliance, encumbrance status, and litigation history
- Demands for clarifications or indemnities in case of gaps
Satisfying these demands can be time-consuming and costly, especially if land records are not fully digitized or clear.
4. Extended Timelines for Closure
Due to internal approvals, investment board decisions, and regulatory reviews, negotiations with large developers often face:
- Delays in term finalization and agreement signing
- Multiple rounds of negotiation with legal and financial advisors
- Conditional approvals based on external clearances or project milestones
This extended process may cause uncertainty for the landowner or local partner.
5. Aggressive Commercial Terms
Large developers may push for:
- Lower land valuations justified by infrastructure investment promises
- Higher developer share in revenue or built-up area
- Inclusion of exit clauses or performance penalties that favor the developer
Without proper negotiation support, landowners risk entering unbalanced deals.
6. Post-Agreement Control Issues
Even after signing, landowners may face challenges such as:
- Limited influence over project design or implementation timelines
- Delays in receiving revenue share, constructed units, or promised infrastructure
- Disputes over accounting transparency or area calculations
Managing ongoing coordination requires regular communication and contractual enforcement mechanisms.
7. Regulatory and Taxation Implications
Negotiations with large developers often require:
- Understanding the tax impact on capital gains, GST, and TDS
- Structuring agreements to ensure compliance with RERA, FEMA, or local land laws
- Dealing with stamp duty and registration formalities for complex agreements
These legal and tax implications need careful handling to avoid future liabilities.
