Development and Asset Management Agreement: What You Need to Know
A development and asset management agreement is a legal document that outlines the responsibilities and expectations of both developers and asset managers for a real estate development project. This agreement is crucial in ensuring a successful and profitable project outcome.
Development Responsibilities
The development team is responsible for the design, construction, and overall management of the project. Their tasks include acquiring and preparing the land, obtaining the necessary permits and approvals, hiring the contractors, and overseeing the construction process. They must also ensure compliance with relevant laws, regulations, and environmental standards.
Asset Management Responsibilities
The asset management team is responsible for managing the project`s financial and operational aspects. This includes financing the project, leasing or selling the property, and managing the day-to-day operations such as maintenance, tenant satisfaction, and rent collection. They must also ensure compliance with local laws and regulations.
Allocation of Profits
The development and asset management agreement should include a provision on how profits will be allocated between the two parties. Generally, profits are split based on a predetermined percentage or formula.
Risk Management
The development and asset management agreement should also address risks and potential liabilities. Both parties should agree on how risks will be shared or allocated. For example, the developer may agree to bear the responsibility for construction-related risks, while the asset manager may take on responsibility for operational risks.
Dispute Resolution
The development and asset management agreement should include a provision for dispute resolution. This can range from informal negotiations to formal legal proceedings. The agreement should specify how disputes will be resolved and what steps will be taken to prevent them.
Conclusion
A development and asset management agreement is an essential document that outlines the responsibilities and expectations of both developers and asset managers for a real estate development project. It is important to address all aspects of the project, including development, asset management, allocation of profits, risk management, and dispute resolution. By carefully outlining these details, both parties can work together to ensure a successful and profitable project outcome.
