Land Development Promotion Agreement

Posted by on December 11, 2020

In the case of larger development sites, the parties may agree that the proponent will carry out certain infrastructure works to maximize the potential for sale. Under a promotion agreement, the developer can avoid paying the option fee or non-refundable surety – a nice benefit if he sits on the same side of the bargaining table as the landowner. However, it would be customary for the developer to cover the legal costs of the landowner when the promotion contract is concluded – which is similar to option contracts. Landowners should be wary of whether the benefits of an aid contract could be lost. Is there a risk that the organizer will sell immediately and profitably on the site? It is possible that the courts may also characterize a concept that the proponent cannot refuse to approve proposals inappropriately. The amount the developer can receive from the landowner is unknown until attempts are made to impose the federal government. Damage can only represent a small part of the claimed development value. It is best for the landowner to identify a project developer with relevant local knowledge, contacts, expertise and balance sheet to ensure that the promotion agreement has the best chance of success. A transportation agreement allows the developer, once a satisfactory building permit for the landowner has been issued, both for the landowner and for the developer, that the developer may compel the landowner to sell the land, as a rule as long as certain conditions are met.

For example, the landowner may require a minimum price to be met before being forced to sell. This may be a disadvantage for the landowner if he is forced to sell to a developer who may not be their preferred bidder or at a time when greater economic influences can drive down the price (albeit with the “minimum price” safety net). While there is no guarantee that planning authorization will be granted or that the country will be sold at some point, the aim is to ensure that deadlines are met and that the likelihood of litigation is reduced. When assembling land into a construction zone, it is customary to enter into an option contract with the landowner. However, in certain circumstances, it may be preferable to enter into a transportation contract. In this article, we explain what they are, what are the differences between option agreements and promotion agreements and when they should be used. While landowners may decide to question the assessment, it takes time and is costly. The developer always has the advantage, because the estimate is based on the building permit and the technical information it provides. There are many other agreements that can be considered (see the following article “What are a landowner`s options for strategic land development?” for more information), but option and transportation agreements are generally the most popular. Under the terms of an option contract, the developer has the option to acquire the land, but is not required to do so.

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