Development Management Agreement
It is increasingly common for owners of large rural or semi-rural lands, particularly on the outskirts of high-priced capitals, to enter into development agreements with experienced and well-equipped developers to subdivide and sell rural land at a lower cost and in a timely manner, which would not have been possible if the landowner carried out the project himself. Another important provision within a DMA is clarifying the responsibility for purchasing development costs. While these costs should ultimately be borne by the owner, there are two main options: the owner can cover these costs directly at the request and instruction of the developer; second, the developer can bear these costs and later request a refund from the owner. The developer may still face problems due to the direct responsibility of the owners for the development costs. For example, the owner may be slow to pay and affect the development program and obligations imposed on the developer. A DMA may be precedent-set by meeting certain conditions. For example, a DMA may be subject to the owner`s acquisition of the land or land to be developed. In addition, development may be conditional on obtaining satisfactory approvals, such as the establishment of the plan.B. The level of authority granted to the developer by the owner must also be taken into account.
It is customary for the owner to retain an element of control over the management of a development by asking the developer to obtain his consent or authorization with respect to important decisions, processes, purchase options, or when the services provided lead to a breach of a financial threshold. An owner may also require representation on a project committee set up for development, as well as detailed and regular reporting obligations that the developer must fulfill. The benefits of a Development Management Agreement (DMA) mean that landowners with little or no experience in real estate development, if working capital is minimal to cover the pre-costs of such a development, can outsource these responsibilities to a party that has both the financial means to carry out the early stages of development and the experience of close cooperation with municipal councils. , planners, surveyors and marketing agents to rapidly develop the country and bring it to market, which must be carefully controlled by an owner and the services provided by the developer. A detailed level of benefits is generally included in the schedule or schedule of a DMA and may be as limited or broad as the parties require. Some examples of services provided by a developer in a DMA are general development activities, legal and investment services, project financing, coordination and development of design documents, processing of approvals, purchasing services, construction and project management, development marketing, leasing and asset management. A DMA is generally a bespoke contract, which is why professional advice and expertise should be sought from the outset to ensure that the DMA effectively regulates relationships between the parties, minimizes risk and improves the efficiency and quality of the resulting development. The developer may agree to incur costs below a certain threshold and to require a refund by the owner. However, there is a general reluctance to all development costs. A detailed understanding of the above options is essential.