- December 15, 2020
- Posted by: samdenis
The fundamental difference between an option agreement and a promotional agreement is that, after obtaining the building permit, the developer has the right to purchase the land at a price or formula agreed in advance. Conversely, the site is put up for sale with a promotional contract on the open market. This resolves all disputes related to its market value, as this is determined by a full market exercise, during which a number of parties bid for the site. The only certainty in bringing a more appropriate agreement closer is the need for clear and informed consultation. The best agreement will always be well drafted and will reflect exactly what the parties have agreed. Another great advantage of this model is that an option agreement can create a potential conflict between the two parties, with landowners and developers with a promotion contract having a great interest in achieving a common goal together – to ensure the best possible price for the country. The two forms of agreement are also very different in terms of the relationships it has between the parties concerned. A promotion agreement creates a much more collaborative relationship, with both parties wanting the best value for the country so they can contribute to the revenues. With an option agreement, there is much less cooperation, with the interests of the parties largely divided; the developer will want to secure the country as favorably as possible, within a period of time to adapt it. Whatever path you take, we can provide you with our technical expertise regarding the text of the contract, to ensure that there are no hidden pitfalls and to negotiate the best possible terms for you as the owner of the land in the possible contract.
They will probably face considerable sums of money, so if the developer`s share is agreed at 15% instead of the 20% initially requested, it will make a considerable difference. That`s why it`s important to invest in good advice from both Batcheller Monkhouse and a real estate lawyer at the beginning. One of the most important considerations for a landowner will be to what extent he wishes to be involved in the planning process. A transportation contract will give the landowner a greater degree of control and participation in the design and promotion and allow an owner to better understand the value he or she gets for the land before accepting the sale. On the other hand, an option agreement leaves these issues in the developer`s control under the terms of the agreement. There will often be a number of parties involved in the agreement, but each agreement will focus on the obligations of the landowner and the developer/promoter. While this may seem very favourable from a landowner`s point of view (and there is indeed a general consensus that such agreements should be preferred to landowners), an option agreement will often clarify each party`s obligations and will not include a mechanism to deduct planning costs from the purchase price. When you develop the site yourself, you will usually have to fund up to $500,000 to cover the fees and various survey costs (archaeological, ecological, travel, etc.) to develop a vast plot of 100 units or more. Few landowners would be willing to commit to this level without a building permit guarantee, which is why, historically, option agreements have generally been the preferred route.
As you can see, there are many ways to secure payments under a land assistance contract, and any particular circumstance will dictate which one is best suited to the transaction. No method is watertight and, since land aid is a development zone, the methods listed below are certainly not exhaustive.