What should the owner think about it after opting for an aid contract? In general, the interests of the landowner and the developer under an aid contract are more consistent with the intent to maximize value than in an option agreement in which the developer wishes to acquire the land for as few as possible. Nevertheless, conflicting interests remain between a landowner and a developer with respect to the costs incurred by the developer in issuing the building permit and, to a lesser extent, the speed with which the land is sold after obtaining the building permit. She has developed a particular expertise in managing complex real estate development issues, including transportation 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? The decision will be made on the desire of the landowner to participate in the assistance process and on the relationship between the developer and the landowner. An expert lawyer will be able to guide the landowner in this decision and, crucially, ensure that the formal agreement with the developer reflects exactly what the parties have agreed. Good preparation will contribute to the success of the development project and avoid wasting profits in the event of costly litigation. Promotional agreements are attractive to developers because they do not need to find financing and must purchase the property themselves or have actual LTD costs. Whichever agreement is chosen, a landowner should be advised and carefully considered the tax situation. If a promotion contract is chosen, there are two immediate concerns. First, that the developer is required to collect VAT on all payments it receives (i.e., reimbursement of its transportation and development costs and its percentage share of the proceeds of the resulting net sale); second, landowners and developers run the risk of being treated in partnership and taxed as such.
This can be a complex area, as there are no two rules that are the same. Since the numbers are high, it is ideally important to get advice before signing agreements. As part of a promotion agreement, both parties are motivated to ensure that any planning gains are kept to a minimum. None of the parties wants to give too much to the local planning authority to obtain the building permit. The promoter must levy VAT on its promotional fees. Therefore, the owner of the land can make a choice of VAT to recover the VAT. 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. If you have mature land for development, how are you going to get the best possible return on its value? If you don`t have experience in design and construction, you`ll probably need the expertise of a professional developer to increase the value of the land. The two most common ways to organize it are an option or promotion agreement. Everyone has advantages and risks, and specialized legal advice is essential to make the right choice and ensure that a well-developed agreement is reached to protect your interests.
Most home builders will have a strategic part of their business, which will review planning approvals and open up to advance the land in the local plans that are emerging, and they will try to show why a development area should be advanced earlier than other areas. They will be highly qualified to ensure that the agreements meet their future objectives – but these objectives may not match those of the landowner or land representative! As part of a transportation agreement, landowners and developers work with: