If you are considering participating in a real estate development project, it’s important to have an agreement in place, which sets out the terms and conditions of the project.
Agreement overview
The sections of the real estate development agreement may vary by project; however, there are some common elements that are generally included. The agreement should identify the parties and include a description of the property, which includes its location and boundary lines. It should also include a plan for the project design, floor plans, and project specifications.
It should include a timeline for project completion, and it may be helpful to list each phase of development to keep the work on track. It’s also important to consider zoning and land-use regulations that can affect the property, in addition to whether special permits will be required.
Financial and insurance requirements
Real estate development projects can be costly, and the agreement should reflect any project loan and financing terms that may apply, the purchase price for the property or the lease terms.
Occasionally, there may be project plan changes or amendments that can affect the development plan or the budget. There should be a process in the agreement to address those requests.
It should also include performance guarantees, to ensure the project is completed on time, and any financial penalties if it is not. The agreement should note insurance requirements, especially related to coverage for potential accidents, damages or other liabilities.
A well-drafted development agreement can prevent project delays and disagreements.
