We’re excited to partner with Andrew Newlands from Omni Development Partners on a practical series covering the five key contracts that underpin every successful development.

Omni Development Partners provide advice and guidance across all scales of property development, whether you’re a seasoned professional or making your first moves. Andrew believes that if you can ensure you manage your risk across these contracts, the development should track to plan.
 

Those contracts comprise:

1. The Sale and Purchase Agreement for Acquisition of Land
   This is usually the first contract for any development, the acquisition of the development site. At this stage of the development, you carry the maximum amount of uncertainty, and therefore it is vital to ensure you manage that properly.

 

2. The Authority to Develop
   This is a suite of agreements with consultants that ultimately culminate with award of a resource consent and/or building consent with associated approvals. Vanilla in some ways, a function of process and time, this crystalises what you are going to build. Emphasis should focus on the somewhat discretionary aspects of the resource consent, whether it might get notified and what the decision maker needs to consider.

 

3. The Pre-sale or Pre-lease Contracts
   These are the contracts that determine how you are going to make money from the development. There are many items to be wary of when negotiating these contracts, as they have a direct impact on your ability to fund a project.

 

4. Build Contract
   This is perhaps the most spoken about contract but often underestimated. There are many different types of build contracts you can enter into, but perhaps the most common three for developers are the standard Master Builders contract, the NZS3910 and the NZS3915 contracts.

 

5. Funding Contract
   Often the final contract you will enter into for a development, it is an important one to get right. The first thing to consider is that this contract can often hinge on those before it — any issues with the land purchase, resource consent, pre-sales or build contract can make securing finance difficult.

These five contracts form the backbone of any successful development. Understanding each one can be the difference between a smooth project and a costly lesson. Click below to take a deeper dive into Part 1.