The arrangement is everywhere in Karachi. A family owns a plot or an ageing bungalow. A builder proposes to demolish and construct apartments, funding the construction, and the two share the finished units.

The owner contributes the single most valuable thing in the transaction — the land — and typically signs a document drafted by the builder, in the builder's favour, with no security if the project stalls.

It stalls more often than anyone expects.

What the owner is actually risking

Understand the exposure before the terms.

The owner hands over possession, the building is demolished, and the plot is committed for years. If the builder runs out of money, disappears, or simply slows down, the owner has neither the old building nor the new one — and frequently no straightforward way to remove the builder and start again.

Meanwhile the builder has usually pre-sold units to third-party purchasers, who now have their own claims. That is what makes these disputes so difficult: by the time the owner acts, there are twenty innocent buyers in the picture. See files, plots and developer risk.

Diligence the builder, properly

More of these projects fail on the builder than on the market.

  • What have they actually completed? Visit finished projects, not renderings
  • Are they a registered company, and what do the filings show? See registering a business in Pakistan
  • Litigation history, and any history with the building control authority
  • Financial capacity to fund construction without relying entirely on pre-sales — a builder funding purely from bookings is passing the risk to you and to the buyers
  • Who is actually contracting — the company, or an individual with no assets?

The terms that matter

The share, and how it is identified. Not "40 per cent" but which units — by floor, size and orientation, marked on the approved plan and scheduled to the agreement. Vague shares are re-negotiated later from a weak position.

Timeline, with consequences. A completion date, milestones, and what happens if they are missed — liquidated damages, or a right to terminate.

Approvals as a condition. Who obtains the building plan approval, and what happens if the sanctioned plan permits less than the parties assumed. Nothing should be demolished before approval is in hand. See building control in Karachi.

Specifications. Materials, finishes and fittings, scheduled — not "as per brochure".

Security for the owner. This is the clause owners most often lack:

  • Title stays with the owner until defined milestones, with a power of attorney limited strictly to what the builder needs
  • A bank guarantee or performance security
  • A charge or lien over the builder's share until the owner's units are delivered
  • Restrictions on the builder pre-selling its share before defined stages

Control of the power of attorney. Owners routinely give a broad, irrevocable general power. Give a special power, limited to identified acts, and revoke it on termination. This single point causes more owner losses than any other. See giving a power of attorney from abroad.

Third-party sales. Whether the builder may sell its share before completion, and on what terms — because those buyers become parties to any dispute.

Termination. What happens to a partly built structure, to materials on site, and to buyers who have paid.

Handover. Completion certificate, utility connections, sub-division of title into individual units, and formation of the owners' association.

Dispute resolution, and where. See the arbitration clause you sign today.

Register the agreement

These arrangements are frequently left unregistered to save duty. That is a false economy: an instrument requiring registration that is not registered can be inadmissible exactly where it matters most, and the owner is the party who then cannot prove the terms.

If the project has stalled

Act on the documents, not on assurances.

Establish what the agreement actually permits — whether time is of the essence, whether termination has been triggered, and what security exists. Then move for injunctive relief to prevent further sales or transfers, and to preserve the site, before the position deteriorates further.

Where third-party buyers have paid, expect them to be joined. A resolution that does not deal with them is not a resolution.

Where the builder has sold beyond its share, or transacted outside the authority given, that is a separate and stronger claim — and may disclose offences. See someone has occupied your land.

For overseas owners

Families abroad are the most common counterparties in these arrangements, and the least able to supervise them.

If you are entering one from abroad: instruct your own lawyer here, give a narrow power of attorney, insist on the security provisions above, and have someone independent inspect progress against the milestones. Do not rely on a relative who is friendly with the builder. See property disputes from abroad.

How the firm can help

We act for landowners and for builders in redevelopment arrangements: structuring and drafting the agreement, defining and scheduling the share, putting security and milestone protections in place, drafting the limited power of attorney, and handling registration.

We also act when projects stall — injunctions, termination, claims for delay, and disputes involving third-party purchasers — and we conduct diligence on a proposed builder before you commit.

If a builder has approached you, contact the firm before you sign or hand over possession. Once the building is down, your negotiating position is gone.