Managing risk through the property development agreement
Date
1995
Authors
Calder, Alexander James
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Abstract
This research report analyses the effectiveness of the property
development agreement as a tool in managing the risks inherent in the
property development process, It incorporates an examination of a sample
property development agreement and draws concluslon from market
research conducted by means of a questionnaire,
In Chapter 1 the property development agreement is defined, The
necessity for such an aqreement is examined in Chapter 2 by identifying
and describing the various stages of the property development process
and by establishing the risks Inherent In each stage.
Chapter 3 comprises a critical review of a typical existing development
agreement. In this chapter a distinction is drawn between the "standard"
clauses and those "essential" clauses which are instrumental in the
allocation of the risks in property development. The agreement is then
evaluated as a risk management tool and the ancillary topics of
establishing those parties protected by and tnose left vulnerable by the
agreement, the effects of the power and relative positions of strength of
the Signatories and the enforcement of the rights arising out of property
development agreements are explored. Finally, this chapter looks at some
typical shortcomings of development agreements.
The methodology behind the market survey is explained in Chapter 4, the
responses of the sample of 50 property industry operators are analysed
and concluslons are drawn from the answers to the questions posed.
Chapter 5 concludes that property development agreements do exist, are
necessary and are useful In creating certainty with regard to rights and
obligations flowing from the property development process and that they
are valuable in ensuring that risks are allocated as the parties intended
they should be.
This chapter also contains a checklist of items to be aware of when
drafting a property development agreement and details some
recommendations for possible further studies in this field.
Description
A research report submitted to the Faculty of Architecture, University of
the Witwatersrand, In partial fulfillment of the requirements for the degree
of Master of Science In Building.
Keywords
Property development agreement