Real estate development agreement - the essence and legal nature

08.12.2009 15:17
As we mentioned in the previous article, the most characteristic feature of the development company - is giving it all (or most) of authority for the implementation of individual investment projects in the construction industry. Thus, the developer becomes a full "control" over all the processes and relations in the construction industry.

If we divide the construction process into stages and to isolate key legal figure in each of them, we can clearly understand what functions are performed by real estate developer.

Ironically, the very process of construction organization composed of all operations of the development company will be the penultimate (and perhaps not even the most difficult) stage. Indeed, within the purview of the company can come in and develop the concept of the business project and business planning, and design and integration, and only then - construction stage.

Real estate development company in its activities as the representative investor aggregates (seeking out the project, its coordination, acquisition), the functions of the Executive (by carrying out activities on the business plan, development control, building permit, etc.) and may function steward of investors' property (in the process of construction). Accordingly, the activity of real estate development companies involves relationships, similar to the contract orders, contracts for services, property management contract.

It should be noted that from the "similarities" with the contract management of property and the existence of legal relations of its elements, many developers are trying to move away as far as possible.
The fact that, in accordance with the rules of art. 4 of the Law of Ukraine "On Financial Services and State Regulation of Financial Markets" of 12.07.2001, № 2664-III asset management financial aktivami1 relates to financial services. Since the housing finance Goskomfinuslug took a very tough pozitsiyu2, "not recognizing" the investment relationship, bypassing the FFS-VON, the slightest suspicion as any other circuit generates a ban on its use.

We now turn to the existing law in order to position the developer's relationship as a civil law.

Treaty Land Development as a separate type of contract is not governed by the Commercial Code of Ukraine of 16.01.2003, № 436-IV (hereinafter - HC) and the Civil Code of Ukraine of 16.01.2003, № 435-IV (hereinafter - CC). He is mixed, as it contains elements of various contracts (orders, offices, services, contracts, property management, etc.).

In general, the contract is permissible Land Development guided by the art. 6 Civil Code, under which parties may resolve their legal agreement, which, although not provided for by applicable law, but it complies with such general principles as freedom of contract and freedom of entrepreneurship.

Since the relations between the Land Development Agreement are built primarily on the model order, then to the treaty to the extent not regulated by HC, the provisions of the Civil Code, which governs relations commission. We are talking about the alternative (additional) application of the rules of the Civil Code of the contract of development. Consequently, it can apply all the norms of Ch. 68 GA.

For example, we note that the provisions of Sec. 63 GC Services. General provisions do not address the question submission of the Executive report on the implementation of services (although in practice most often used the act of reception of work performed / services). Therefore, by Section 2 hours, 1 tbsp. 1006 GC can resolve the issue of the report developer. Recall that according to paragraph 2 of Part 1 of Art. 1006 SC attorney is required to submit a report on the execution order with the application of necessary supporting documents (copies of invoices and accounts, as well as documents proving the actual costs of an attorney associated with the execution order).

Since the powers of the developer are wide enough, he acts independently, for a long time, the reports developer (the customer) are an important means of ensuring the interests of the latter. Therefore we recommend to submit reports at least at each stage of the project.
Since HA is no indication on the form and content of the report, the developer has the right to independently determine its form. Desirable in this report information on the cost the developer, the volume and value of work actually performed, the degree of completion of individual stages of the project.

Summarizing, we note that the treaty Development is a complex legal structure, which contains the features of civil law contracts (investment, property management, contract for services, contracts and other orders).

Give an example of real estate development contract whose subject is the transfer of real estate development company as a customer in the building, the reception of the results and methods of construction of the property on the most favorable conditions.
г. ______________
«___» _____________ 200_Year
(company name)
hereinafter referred to as developer in the face ____________________________________________,
(Name, position)
acting on the basis __________________________________________________________,
(Constitutions, statutes, etc.)
On the one hand and___________________________________________________________________
(company name)
hereinafter referred to as Customer in the face ______________________________________________,
(Name, position)
acting on the basis___________________________________________________________,
(Constitutions, statutes, etc.)
On the other hand, collectively referred to as the "Parties"have concluded the following agreement.
1.1. Developer under this Agreement shall, acting on behalf of the Customer at its expense, perform the following legal actions:

* negotiation is a project to build a 12-storey office building at
  • _________________________________________________ (Further - Building);
* Obtain a permit for the building at the address;
  • * Enter into contractual agreement for construction of buildings;
  • * Monitor the progress of construction, compliance schedules, proper quality of works;
  • * Take the contractor constructed building;
  • * Implement the assistance in the registration of ownership of the constructed building for the Customer;
  • * After the registration of ownership of the building to carry out the implementation of office space in the building, and the Customer agrees to provide Developer the necessary means to fulfill its obligations under this treaty, agreed by the parties to reimburse the additional costs and also pay to Developer a reward for the job.
  • 1.2. In carrying out all legal actions developer undertakes to acquaint the customer and coordinate with them the conditions negotiated on his behalf and at his expense of civil contracts.
  • Introduction made by the Customer submits draft contracts in __ days before the planned date of signing contracts.
  • Matching is done by the customer-by-page viewing of draft agreements or by sending a developer in writing of the draft treaty with the agreed revisions.
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