What is a Development Agreement Negotiation?
A development agreement is a legal contract that specifies all terms and conditions for constructing on, or improving, a property. It’s usually signed by a landowner and a property developer. The contract has to specify rules and commitments for the specific real estate project to minimize the risk of disputes.
Once a development agreement has been drafted, it should be reviewed. This will help you to see if there are any terms in the agreement that you’d like to negotiate.
Read the rest of this article for key terms to negotiate, what to consider for achieving a favorable outcome, and how a qualified lawyer with experience can assist you with the negotiation process to protect your interests.
What Key Terms are Commonly Negotiated in a Development Agreement?
A development agreement usually contains the following key terms that parties tend to negotiate.
- Project scope. Make sure that there are clear and measurable steps and deadlines. These can be negotiated to prevent project delays and other challenges.
- Financials. Set a clear budget and schedule for payments that’s reasonable to follow.
- Acceptance. Parties must agree on acceptance criteria and what is considered successful project completion.
- Changes. It’s in your best interests to require written approval before additional work or changes to the plan are made.
- Unexpected costs. Consider which party will take responsibility for additional costs, such as labor costs.
- Delays and charges. This is when the landowner negotiates an agreed amount that will be payable for any contractor delays.
What are Some Tips for Negotiating a Development Agreement?
When negotiating a development agreement, there are some key aspects of the arrangement to consider so that you don’t put yourself at risk.
Know Your Numbers
Before negotiations, calculate how much the development will cost and its expected profits. This will provide clarity on what the deal is worth so you can better strengthen your negotiating position. It also enables you to negotiate who pays for what.
Cap Your Financial Exposure
If you’re contributing land or capital, you should try to negotiate for a limitation on an agreed-on amount so that you’re not unnecessarily putting yourself at risk.
Push for Milestones
Instead of only establishing project deadlines in the agreement, you should tie payments to specific milestones so that they’re connected to progress. This will also prevent ambiguity over when payments are required.
Clarify Decision-Making Authority
Both parties should discuss and agree on who will approve certain aspects of the arrangement, such as plan changes, prices, and additional costs. Consider major decisions that require both parties’ approval, such as changes to financing.
Get a Legal Review
It’s worthwhile to hire a lawyer to review your development agreement so that you can feel confident about what the agreement contains. This will enable you to better negotiate any unfavorable terms with the other party.
Use an online legal platform like ContractsCounsel to find a suitable lawyer to review your agreement. ContractsCounsel is one of the largest online legal marketplaces that connects you to a curated network of vetted lawyers.
To ask a lawyer to review your development agreement, here are the easy steps to follow:
- Go to the ContractsCounsel marketplace, where it’s free to post a request or project.
- Select ‘One-time project’ and ‘Contract review.’
- Post your project. Try to include a few details of what you need so you can match with suitable lawyers, such as specific agreement provisions you’d like checked by a lawyer.
- Wait for bids. You’ll receive multiple bids from lawyers on the platform who have the experience to help you.
- Review the lawyer data. The platform provides extensive lawyer information, such as the lawyers’ location, years of experience, expertise, and client ratings for previously published projects completed on the platform.
- Select a lawyer and hire them to review your development agreement for a flat fee.
Do You Need a Lawyer to Negotiate a Development Agreement?
It’s not always easy to know how to negotiate terms in a development agreement if you don’t have experience with the process. A lawyer will be able to help you in various ways during negotiations, such as by:
- Reviewing the agreement to explain all terms and identify any missing information that could put you at risk. This will clarify what to negotiate.
- Negotiating your rights and obligations so that you don’t leave anything vague that could put you at risk in future.
- Checking that all financial arrangements are clearly defined and fair.
- Ensuring that any one-sided or unfair terms are discussed with the other party so that they can be revised.
- Helping you to plan for what happens if the project isn’t successful, such as regarding the money invested and the property.
- Making any changes to the development agreement after negotiations, such as removing unbalanced clauses. They’ll ensure that all changes are put in writing and nothing is left to chance.
Where to Find a Lawyer for Development Agreement Negotiation
If you need to hire a lawyer to negotiate terms in your development agreement, you don’t have to wonder where to find a reputable and experienced one. By using an online legal platform such as ContractsCounsel, you’ll access a network of lawyers who can assist you with the negotiation process.
ContractsCounsel provides access to lawyers who have been vetted and possess the expertise and skills to negotiate contract terms on your behalf. This gives you peace of mind that you don’t need to navigate the negotiation process alone, and it increases your chances of having a successful outcome.