What is - Undivided Share in Land and Why it should be in Mentioned Your Property Buyer Agreement ?

by Mr. Manish Chauhan

You bought your “Dream House” and you are on top of the world. The joy &  pride you have after buying your house is amazing.

The property is at great location & the prices are appreciating, and you feel you are the Hero ! .

Now you want to sell your flat (Apartment) for some reason & you are more than confident that you will get a buyer and the deal will take just few weeks and you will be bathing in cash from top to down.

UDS in india

Prospective buyers have started meeting you &  they want to buy the property, but they are all rejecting it. They are “informed investors” who take care of every single detail &  they ask you that killer question -

“Everything is fine, but where is your undivided share of land (UDS) in flat buying agreement?”

You are wondering whats going on, quite amazed only to realize later that you were only sold the building which is depreciating each moment, but “Plots of LAND” , which is the real thing is not owned by you.

You are SCAMED or / FOOLED ! or /  both ! .

 Let me introduce to the term “Undivided Share of Land” or  / UDS as its called generally in real estate world and why you can not ignore this at any cost while purchasing properties.

What is Undivided Share of Land (UDS).. ?

I will keep it short and simple. Undivided Share of Land - UDS is the share of plot of land owned by you when you purchase the property.

Basically when you buy a flat or / apartment,  you are buying 2 things

**  The constructed building – where you actually reside

**  The proportionate share on the land, where the whole property is built

The Price Appreciation in real estate actually is the appreciation in land prices, because technically the building will depreciate overtime. Its not that cement and concrete structure which is the prime thing, but the land.

Mr. Manish Chauhan

Undivided Share of Land : Have you ever thought what will happen if there is an Earthquake & the building collapses ?

What is in future, the govt wants to acquire the land for some national project and wants to give compensation to you ?

Leave all that, imagine in future your building after many years needs to be redeveloped & a new construction has to happen. At that time, the amount of land you own will matter.

Note that incase of co-operative societies, the Undivided Share of Land might be on the name of society and not on the home owner name, because they are share holder in the society, which is fine.

The sum of all the flat owners Undivided Share of Land  (UDS) has to be equal to the property land size. You should also know that the undivided share of land will be proportionate to your property area.

Example 1..

 If there is land measuring 1,000 square and there are 10 flats or / equal size is constructed on that land, then each owner will have 10 per cent of the land as his / or her share.

Example 2..

 Lets say there is a big township where 100 units of 2 BHK flats of 1,000 square feet and 50 units of 3 BHK measuring 1,500 square feet . Then the total constructed area is (100 units * 1000 square feet) + (50 * 2000 square feet) = 2,00,000 square feet . Anyone who owns a 1,000 square feet flat will have 0.5 % share in the total land (Because 1000 is 0.5 % of 2,00,000) and anyone who owns a 2,000 square feet flat (3 BHK) will have 1 % UDS .

There has been cases where the builder has allocated less undivided share to flat owners and kept some part of himself and the original land owner (a lot of times, builder buy the land from someone else).

Here is one such example

  Current flat which I am staying is 10 years old apartment. Building having total 24 flats. Whereas builder made total 26 undivided share. Other than 24 flat owners one share for builder and one share for Land owner. In the share of builder and Land owner they constructed few shops in building cellar.

Important Point – The above example is for flat system . If its a co-operative society, then the land share is equal for each member, irrespective of their property size.

Undivided Share of Land : What to check in flat buying Agreement ?

When you buy the property, your builder will give you a date when you have to come to registration office & all the agreement work will be done.

Most of the times, builders / promoters are reluctant to show you the buyer agreement copy.  But, they will be ready to share someone else agreement copy at their office or at the main site.

Just have a look at that agreement which is such as a specimen or / the format, on some of the page, you will see “Details of Undivided Share of Land” and it will be mentioned in percentage terms like “0.45 %” or exact area in square feet terms.

Just read the whole thing carefully.

Then when the actual agreement has to take place, you can then read the buyer agreement in detail and make sure you look after this point in your agreement copy.

A small tip here is that when builder calls you for registration, tell him you would like to come before 1 hour from the scheduled time & have a detailed look at the agreement, if possible also get a lawyer with you and have him look at the agreement.

About the author... 

Mr. Manish Chauhan , Author of Jagoinvestor.com 

Jagoinvestor is a movement, a vision aims to demystify the world of Financial confusions and a journey started in the year 2008 and today flourishing nationwide  with more than thousands dedicated readers.

Src: http://www.jagoinvestor.com

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