A development agreement is a general term covering a wide range of agreements between developers, landlords, purchasers, finders, tenants. Each agreement will need to be tailored to the individual circumstances, however, there are some similarities than can be found in most of the agreements.
Types of development agreement
- Agreement for a lease or pre-letting agreement – tenants’ contracts to take a lease when the development is completed.
- Stand-alone development agreement – Landowner contracts with developer to carry out development project
- Forward purchase or forward funding agreement
Obligations on the developer
Most agreements will impose these obligations on the developer:
- To carry out development in accordance with the plans agreed to
- Letting obligations and lease forms with the minimum criteria the develop requires in any lease they hope to obtain
- There will be provisions ensuring the quality of the development.
- To obtain the provisions of the collateral warranties by the contractor and consultants to the purchaser or tenants.
- Timetable for the development, including longstop date.
- Most agreements will include inspection rights and termination rights
The development agreement covers only a small part of the agreements need to develop a construction. There needs to be separate construction documents to regulate the relationship between the partied to the development agreement and the building contractor and other construction professionals. These could include business contracts, professional appointments and collateral warranties.