Promotion Agreement Payment
marekbilek.cz - 15.12.2020The landowner may attempt to link a developer to a conditional sale agreement that will require the developer to purchase the land when planning is done. The agreement is tailored to the individual circumstances of the landowners, but implies that an option agreement is an agreement between two parties, usually a developer and a landowner, the developer having the opportunity to acquire land from the landowner, usually as soon as certain conditions are met. As part of a possible development, a developer may acquire the land concerned as soon as the land has a building permit at an agreed price. The price may be a fixed amount agreed in advance, or it can be assessed at the time the building permit is issued as market value, sometimes by deducting the developer`s fees when granting the authorization and, as a general rule, a pre-agreed percentage reduction to reflect and reward the developer`s efforts to obtain the authorization. Transportation agreements are also beneficial because they effectively place the landowner and project proponent on the same side of the table, as they work together to achieve a common goal. Both landowners and developers would benefit from improved values in the construction zone, so both parties have an interest in maximizing these values. Hazel Eccles, a senior partner in our real estate team and responsible for our agriculture and rural team, considers the pros and cons of entering into an option contract or promotion contract. Rebecca Mason, a development and land specialist and head of the Holmes-Hills team of commercial property solicitors, discusses the issue of payment security as part of land promotion 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 main drawback of an option agreement is that after a building permit is granted, the market is not tested to the point where the landowner sells the land to the developer. The land would not be put on the open market of third-party bids, and thus it is possible that the landowner could sell the land to the developer under the option agreement for relatively less than if they had tendered for the sale of the land on the open market. It is understandable that a developer always wants to pay the minimum for the country, and the landowner will always want the best price he can realistically achieve. This, of course, is where there will be the most reason for the difference between the two parties, because their interests will be misdirected. In its simplest forms, a developer obtains, as part of a transport contract, the building permit for the development of the land, which will then be sold, and the developer participates in the proceeds of the sale. 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. So far, there has been no court decision on the effectiveness of the various methods. In most years, there is no security for this payment and the parties will see it as a risk that deserves to be taken. However, as land values continue to rise and more and more promotion agreements are entered into, the importance of future payment by a landowner to a landowner under a land promotion contract should not be underestimated.