Property Development

Property development generally involves the improvement of land for commercially driven purposes. Developments can range from small subdivisions to complex multi-use residential and retail high-rise buildings.

Developing property can be profitable but can also be financially risky. It involves various legal considerations and the navigation of numerous rules, regulations, standards and practices to ensure compliance, mitigate risk and personal liability, and enhance the potential for profit.

We provide comprehensive legal advice and guidance on all aspects of property development, from new home builds to major developments. We have a deep understanding of development and planning laws and have assisted numerous clients with a range of small and large-scale property projects.

What is a development agreement?

Development agreements are used to manage developments from simple residential subdivisions through to large and complex projects.

The term ‘development agreement’ is generic and usually describes several types of agreement. A development agreement is usually between a land owning and development entity which governs the development of a parcel of land. Unlike other commercial contracts, there is no standard development agreement.

Examples of a ‘development agreement’ include:

  • Sale of land by a landowner to a developer with the landowner maintaining control over what is developed.
  • A joint venture between a land owner and developer.

A building development agreement should include the parties’ respective contributions, rights, and responsibilities, risk appropriation, taxation, duty and other financial matters.

Security and finance

For most developments, the developer will usually obtain construction finance to fund construction of the development. The development agreement should specifically detail all security which may be necessary for development to commence and set out the parties’ respective rights and responsibilities.

It is important to be fully informed when negotiating finance to understand the terms and implications of the loan agreement and any incidental securities required. Company directors who provide personal guarantees under financing arrangements should be independently advised.

Due diligence clauses

Most development contracts contain due diligence clauses which ensure the land to be developed is not adversely affected by easements, covenants or restrictions. The zoning of the land and relevant planning instruments must be suitable in light of the proposed use of the property.

An effective and efficient due diligence clause should include:

  • A specified time for the buyer to undertake necessary and relevant searches and enquiries to satisfy any scrutiny before proceeding to settle a purchase;
  • The necessity for the seller to produce copies of all relevant documents relating to the land for inspection;
  • If the results of those searches and enquiries are not satisfactory, allow the buyer to terminate and obtain a refund of all deposit monies paid.

Depending on the specific terms of the contract, the parties may have a right to renegotiate some elements of the contract such as price, time for settlement or other critical elements.

Planning authorities and environmental considerations

Understanding the terms of a planning permit granted by the relevant local council is essential to ensure compliance and avoid delays in commencing development and preventing financial loss. Most building permits will usually be subject to specific conditions, for example, the creation of various easements for access or for repair and maintenance.

Failure to properly draft the appropriate documentation and carry out works strictly in accordance with the terms and conditions of the permit will create certification and registration issues, and of course incidental delays and cost implications.

Property development can be profitable but is complex and requires an understanding of many interrelated areas of law. With much at stake, it is important to have an expert on side from the beginning of your project.

We have considerable expertise in property, planning, environmental law, and conveyancing. We take a pragmatic and commercial approach to ensure our clients receive optimum advice and guidance no matter what size or type of development they undertake.

If you need any assistance, contact one of our lawyers at [email protected] or call 07 5495 2733 for expert legal advice.