Real Estate Development Agreement (Non-Affiliated)

by Practical Law Real Estate

A Standard Document that sets out the terms and conditions for a property owner to retain a non-affiliated, third-party developer for a commercial real estate development project. This agreement outlines the developer's appointment and authority, establishing it as an independent contractor and defining a clear standard of care for its performance. This Standard Document provides a framework for managing the project across its entire lifecycle, detailing the developer's extensive responsibilities during the predevelopment, construction, and post-completion phases. It addresses key aspects of the commercial real estate project, including the preparation of the development budget and project schedule, selection of the general contractor and architect, and oversight of construction. The agreement also covers financial and risk-management elements, such as the calculation and payment of the development fee, insurance requirements for both parties, mutual indemnification provisions, and events of default. It further contains essential lender provisions, including the developer's consent to subordinate the agreement to any construction financing. While development agreements are generally governed by state law, this jurisdictionally-neutral template is useful and relevant in every state. This Standard Document has integrated notes with important explanations and drafting and negotiating tips for both property owners and developers.