Are you wondering what a property development agreement is?
It is typically an agreement between two or more parties. These parties are usually a landowner and a property developer.
It governs each party’s individual rights and responsibilities.
There are numerous types of potential agreements that property developers work with. But for the purpose of this article, we’ll focus on what gets called a “service development agreement.”
This is essentially the type of agreement Little Fish works with. We manage development projects day in and day out. It’s our bread and butter.
Given that we are development managers, we call it a project management agreement.
So, in 7 simple steps, we’re going to explain all there is to know about a property development agreement.
Why Is A Property Development Partnership Agreement Important?
It is important because it essentially puts down on paper what is expected from the client and the developer.
This is super important because it means both parties understand what they are responsible for.
That way, if anything goes wrong, there is a written record to refer to.
The agreement should detail expectations. It should touch on the scope of the project. Payment or fee schedules are included.
Not only is having the agreement important, but everyone needs to be aware of the agreement.
We all need to stay on top of the terms and conditions.
Different Types of Agreements
Generally, there are three types of agreements in this game.
The first is a sale development agreement. This is when a landowner sells their land to the developer but controls the development.
Secondly, there is a joint venture agreement. This is between the landowner and a developer on a single project.
Each party retain their own assets. They jointly contribute to the project.
Finally, there is a services development agreement. This is where the developer gets engaged to manage the project.
The developer then accounts to the landowner for an agreed profit. This occurs after the homes are sold to the purchasers.
This last one is what we do at Little Fish, but as we mentioned above, we call it a project management agreement.
Choose the Right Business to Partner With
We’ve covered this in other articles, but it’s worth a repeat.
You want to ensure that you choose the right company for your partner. This can be a big step to take.
Read Google reviews too. Ask friends and family who have used them also.
Once you’ve made up your mind, you should be able to agree to the terms of an agreement quickly.
Then, it goes in the bottom draw, and you’re ready to get to work.
How the Little Fish Property Development Partnership Agreement Works
We want to spend a bit of time here on how we look at our project management agreements.
For us, the agreement is to protect our clients and investors. We want to give them the confidence they need to move forward so we can all profit.
From our perspective, we only want to work with people that want to work with us. We have no clauses locking anyone into our services.
We allow our clients and investors to break off and go their own way at any point.
They don’t even have to give us a reason. We have nothing locking them in at all.
Additionally, our payment structure is broken up into four essential milestone payments.
This means we only get paid when we hit the milestones – so we get paid when we deliver on our promises.
We are proud of our business model. It means that we give our clients and investors reason to move forward with us.
The proof is in the pudding.
We are confident that we are the best option on the market for our services.
So, we know that as long as our expectations and client expectations are aligned, we will deliver.
Everything gets captured in our agreement.
We back ourselves, and our clients see this in our work.
Some Information on Joint Property Agreement
A joint agreement usually works to protect both the service provider (or project manager) and the client.
At Little Fish, we also look at our agreement as purely protecting our clients and investors.
We want to give them the confidence they need to move forward with us.
From our perspective, if expectations are aligned, our security is our service. If we deliver, we get paid. If we don’t, we won’t.
This keeps us powering on and confident in our ability to deliver a successful outcome for our clients and investors.
A Word About Other Companies
Now, we know we’re not the only dual occupancy project manager in Melbourne.
But not all companies have the same outlook on agreements that we do.
You must seek professional advice if you aren’t confident in your own abilities.
Also, it’s never a bad idea to get a third-party opinion on an agreement, especially legally binding documents.
A lawyer’s fee may seem steep, but it could save you thousands down the road if you were about to sign a dodgy agreement.
Get a lawyer to review your property development agreement if you aren’t 100% confident.
Here’s a hot tip – the more complicated an agreement is, the bigger the red flag. These are small projects (dual occupancies).
An agreement for this sort of project should be simple. There’s no need for fine print or thirty sub-clauses.
Our Fee Structure
At Little Fish, we use a frontline flat fee structure. This is in every property development agreement we draft.
We don’t hide fees or tuck them away in a huge agreement. A flat fee means we agree on the cost to deliver the project. It doesn’t matter how long the project takes.
It’s where our clients and we agree on the scope of works and a fair fee. Again, it’s also on us here if we don’t deliver on time.
We break our fee up into 25% chunks in four stages, from start to finish. If we miss a milestone, we take the hit.
Consider a Dispute Resolution Clause
For a more extended project or a bigger one, you may also want to include a dispute resolution clause in your property development agreement.
Disputes can and do happen. They can delay projects and cost big bucks.
In addition, a dispute resolution clause should include a process for resolving disputes.
This might include mediation steps and contingencies. It should detail all the processes to go through to sort a dispute out.
Usually, the last step is litigation.
We have a standard dispute resolution clause in our agreements, but we are confident that our clients and investors should ever have to use it.
Want to Embark on a Property Development Venture?
By now you know all about a property development agreement.
If you’ve read this and like the sound of what we do, you may want to know more.
We can project manage a side by side dual occupancy development for you.
You can stay plugged in as much as you want. However, you may want us to handle it all while you sit back and profit.
We believe in what we do, and hopefully, the above content has given you confidence too.
If that’s the case, we’d love to chat. Call us now on 1300 799 277 to learn more.