The parties must carefully evaluate the scope of the services requested by an owner and the services provided by the developer. Detailed services are usually provided in the form of a calendar or annex to a DMA and may be as limited or varied as the parties need. Some examples of services provided by a developer as part of a DMA include general business development activities, legal and investment-related services, project financing, coordination and development of design documents, authorization processing, acquisition services, construction and project management, development marketing, leasing and distribution, as well as asset and asset management. It is increasingly common for owners of large rural or semi-agricultural plots, especially on the outskirts of high-priced capitals, to enter into development agreements with experienced and well-equipped developers in order to divide and sell rural plots at a lower cost and in a timely manner, which would not have been possible if the landowner had carried out the project himself. Therefore, one possible solution may be for the owner to pay funds into an account that the developer can access, subject to the owner`s agreement or other agreed settings. The funds disbursed will take into account the expenditures foreseen in the development budget. A detailed understanding of the above options is essential. For example, perhaps the most common method of calculation is that the development management fee is based on a percentage of development costs: what represents development costs is essential to properly link development management fees to development costs, while ensuring that an inefficient developer is not rewarded. A DMA should contain provisions for the establishment of a development budget with regard to development. This is usually prepared by the developer and is subject to the owner`s approval. The budget usually focuses on the expected development costs for the next 12-month period.
Two of the developer`s main commitments are to ensure that development is completed within the agreed budget, while an agreed development program is followed. When an owner attempts to develop their land or land and appoint a developer who does so on their behalf, the parties usually enter into a Development Management Agreement (DMA). An owner may use a developer as part of a DMA for a number of reasons, including the owner who does not have the expertise, experience or ability to carry out the proposed development or because the owner wishes to pass on development management, management and performance obligations to a third party. This article identifies some of the main issues to consider when concluding a DMA. The precise conditions depend on a number of factors, including the nature, size, location and complexity of the development. The developer may agree to incur costs below a certain threshold and demand a refund from the owner. However, there is a general reluctance to do so with regard to all development costs. A DMA is usually a tailor-made contract, it is necessary from the outset to obtain professional advice and expertise to ensure that the DMA effectively regulates the relations between the parties, minimizes the risk and improves the efficiency and quality of the resulting development. In addition to the standard suspension and termination terms, a DMA may be subject to more unusual provisions. The amount of services may include, for example, the sale and rental of the development.
Depending on the exact event of termination, the developer may claim compensation equal to the unsold value of the development. How to calculate the unsold value and from what date will be key questions. A DMA can be subject to key performance indicators (KPIs). The developer`s inability to comply with the PICs imposed by the DMA may be of such importance that it becomes a termination event.. . . .