Development agreement verification

When is it necessary to verify a development agreement?
  • Before concluding any contract with a developer, it is necessary to check all documents, the legal status of the property, the developer’s credibility, financial standing and the history of his investment.
  • The development agreement and the development company must be checked in every case, because there are many potential legal problems related to real estate that can be identified only by a professional legal advisor.

How to verify a development agreement?

Verification of a development contract may cover basic parameters (basic report) or comprehensive analysis of all aspects of the investment (full report).

Below you can find standard variants of a verification report:

Basic report

The basic report includes:

  • Analysis of the land and mortgage register of real estate
  • Verifying the developer’s right to the plot / building / flat covered by the development agreement
  • Verification if the property is mortgaged
  • Identification of all legal risks
  • Verification of the developer agreement and answering the following questions:
    • are there any provisionsin the development contract which are unfavorable for the buyer?
    • is it necessary to change the content of the contract to protect the buyer’s interest?
    • how to change the content of the developer agreement?
    • how to formulate changes to a developer contract?
  • Verification of other documents – depending on the contract with the developer, these may include:
    • reservation agreement
    • agreement for the sale of a parking space or ownership of an internal road
    • agreement regardinga bank account for the buyers
    • information prospect
    • payment schedule
  • Explanation of all proposed changes to the documents and answering questions that will appear after reading the report
  • Answering all additional questions until the conclusion of the development contract
Full report

The full report is recommended in the event of doubts regarding the legal status of the property or the developer’s credibility, as well as in the event of purchasing more than one premises:

  • Analysis of the land and mortgage register of real estate
  • Verifying the developer’s right to the plot / building / flat covered by the development agreement
  • Verification if the property is mortgaged
  • Identification of all legal risks
  • Verification of the developer agreement and answering the following questions:
    • are there any provisionsin the development contract which are unfavorable for the buyer?
    • is it necessary to change the content of the contract to protect the buyer’s interest?
    • how to change the content of the developer agreement?
    • how to formulate changes to a developer contract?
  • Verification of other documents – depending on the contract with the developer, these may include:
    • reservation agreement
    • agreement for the sale of a parking space or ownership of an internal road
    • agreement regardinga bank account for the buyers
    • information prospect
    • payment schedule
  • Explanation of all proposed changes to the documents and answering questions that will appear after reading the report
  • Answering all additional questions until the conclusion of the development contract
  • Verification of the developer’s credibility (and especially – of the investments successfully completed, how ended the activities of his previous companies)
  • Verification of the developer’s financial situation (analysis of the developer’s financial statements for 2 years back and verification in the debt registers)
  • Obtaining from public institutions and analyzing additional documents regarding the real estate
  • Verification whether there are any disturbing information about the surrounding of the property
  • Verification of other legal risks (I adjust the scope of the report depending on a specific property)
Full report and negotiations

The full report and negotiations include:

  • Analysis of the land and mortgage register of real estate
  • Verifying the developer’s right to the plot / building / flat covered by the development agreement
  • Verification if the property is mortgaged
  • Identification of all legal risks
  • Verification of the developer agreement and answering the following questions:
    • are there any provisionsin the development contract which are unfavorable for the buyer?
    • is it necessary to change the content of the contract to protect the buyer’s interest?
    • how to change the content of the developer agreement?
    • how to formulate changes to a developer contract?
  • Verification of other documents – depending on the contract with the developer, these may include:
    • reservation agreement
    • agreement for the sale of a parking space or ownership of an internal road
    • agreement regardinga bank account for the buyers
    • information prospect
    • payment schedule
  • Explanation of all proposed changes to the documents and answering questions that will appear after reading the report
  • Answering all additional questions until the conclusion of the development contract
  • Verification of the developer’s credibility (and especially – of the investments successfully completed, how ended the activities of his previous companies)
  • Verification of the developer’s financial situation (analysis of the developer’s financial statements for 2 years back and verification in the debt registers)
  • Obtaining from public institutions and analyzing additional documents regarding the real estate
  • Verification whether there are any disturbing information about the surrounding of the property
  • Verification of other legal risks (I adjust the scope of the report depending on a specific property)
  • Negotiating the terms of the development agreement
Here you can download a sample report regarding development agreement verification:
Frequently asked questions regarding development agreements
1
Is it always required to verify a development agreement?

Concluding an agreement with a developer is a significant decision regarding an investment worth at least several hundred thousand zlotys, often financed with a bank loan, therefore it should always be preceded by analysis of the development agreement.

2
How expensive is verification of a development agreement?

The cost of analyzing an agreement depends on how much time it will take to review and correct the documents. Exact costs are always provided before we start working on the case, when I review the sample of the development agreement.

Standard variants of analysis reports are:

1). Basic report

The basic report covers all the necessary steps to minimize legal risks that are most often associated with development agreements.

2). Full report

The full report provides a more detailed verification of the legal status of the development project, therefore this option is recommended especially in case of doubts regarding the legal status of the property, investments planned nearby or the credibility of a certain developer.

Detailed analysis will also be a recommended solution in case of buying more than one apartment or if it turns out that the developer has a history of unsuccessful investments.

3). Full report and negotiations

The full report and negotiation includes a detailed examination of the development project and negotiation of the price and terms of the agreement with the developer.

 

3
What are the steps of preparing the report?

After verifying the development agreement, I provide:

  1. the development agreement with proposed amendments,
  2. a report, which indicates why each of the proposed changes was made, what is the legal status of the property (including its encumbrances), and what are the other results of the analysis.

 

After that, I explain proposed changes and answer your additional questions.

4
Is it possible to review an agreement remotely (by email / phone)?

Yes, the entire document verification process can be done remotely (by phone and email).

5
How do I get the development agreement and other documents from the developer?

Every developer provides a draft development agreement, prospect and all other documents upon buyer’s request as it is their legal obligation.

You should ask the developer to provide the development agreement and other documents.

6
Will the developer agree to the proposed changes in the development agreement?

In most cases it is possible to make changes to the development agreement. Everything depends on what kind of changes we propose and how we explain the necessity of their implementation.

7
How much time does it take to analyze a development agreement?

Usually documents are verified within 2 working days. The exact date is agreed individually.

In some cases the analysis of a development agreement and negotiations with a developer cannot wait even 2 days. In urgent cases, after prior agreement, it is possible to prepare documents in a shorter period of time.

8
How can I have the development agreement reviewed?

Feel free to contact me, I will explain all the details and provide a list of necessary documents.

Feel free to contact me
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