Development Agreement

---
name: development-agreement
description: Drafts U.S. commercial real estate owner-developer agreements covering scope, entitlements, schedule, pricing (fixed, GMP, cost-plus), change orders, payment and retainage, insurance, indemnity, IP, confidentiality, termination, and disputes. Use when user mentions "development agreement", "owner-developer agreement", "project development contract", "real estate development", "GMP", "cost-plus", "milestones", or "change orders".
tags:
  - agreement
  - drafting
  - transactional
---

# Development Agreement

Produces an owner-developer agreement for a commercial real estate project with clear scope, timeline, pricing, and risk allocation.

## Intake Checklist

Collect before drafting:

| Item | Required Inputs | Notes |
|---|---|---|
| Parties | Legal names, entity types, authority | Add licensing if required |
| Property | Legal description, APN, address | Attach as exhibit |
| Project scope | Type, size, quality standards, exclusions | Include delivery model |
| Plans | Approved plans list | Define approval path |
| Budget | Base budget, contingency, allowances | Specify currency |
| Pricing model | Fixed / GMP / cost-plus, fee structure | Define cost categories |
| Schedule | Milestones, completion dates | Define excusable delays |
| Permits | Responsibility split, known approvals | Include entitlements |
| Insurance | Types, limits, additional insureds | CGL, WC, builders risk |
| Dispute forum | Court or arbitration | Venue and governing rules |

## Key Definitions

Define each term precisely in the agreement:

- **Project** — scope, location, intended use
- **Plans** — approved plans and change process
- **Milestone** — objective completion criteria
- **Substantial Completion** — functional-use standard
- **Final Completion** — punch list cleared, closeout delivered
- **Change Order** — written, signed scope/cost/schedule change
- **GMP / Cost-Plus** — cost categories, fee calculation, audit rights
- **Force Majeure** — qualifying events and notice requirements
- **Permits** — required governmental approvals

## Core Sections

Draft each section with the noted requirements:

| Section | Must Include | Notes |
|---|---|---|
| Recitals | Property, purpose, prior studies | No operative promises |
| Scope of Work | Design, permitting, construction | Attach scope exhibit |
| Developer Duties | Management, quality control, standard of care | Measurable obligations |
| Owner Duties | Access, approvals, funding, cooperation | Response deadlines |
| Schedule | Milestones, deadlines, time-is-of-the-essence | Excusable delay carveouts |
| Pricing | Model, cost definitions | Audit rights if cost-plus |
| Payments | Draws, retainage, lien waivers | Statutory form rules [VERIFY] |
| Change Orders | Process, pricing, written approval | See procedure below |
| Warranties | Workmanship, code compliance, duration | Survival period |
| Insurance | CGL, WC, builders risk | Additional insureds |
| Indemnity | Mutual, negligence-based | Anti-indemnity statutes [VERIFY] |
| IP | Ownership and license-back | Design professional rights |
| Confidentiality | Scope, term, exceptions | Subcontractor flowdown |
| Permits | Responsibility split | Stop-work remedies |
| Termination | For cause and for convenience | Cure periods |
| Disputes | Negotiation → mediation → forum | Fees and costs |
| Boilerplate | Notices, assignment, survival, e-signatures | — |

## Milestone Schedule Template

| Milestone | Target Date | Completion Criteria | Approval |
|---|---|---|---|
| Design Development | TBD | Owner approval of plans | Written |
| Permit Submission | TBD | Applications filed | Copy to owner |
| Permit Issuance | TBD | Permits in hand | Evidence |
| Construction Start | TBD | Notice to proceed | Written |
| Substantial Completion | TBD | CO or equivalent | Owner signoff |
| Final Completion | TBD | Punch list closed | Closeout package |

## Payment Terms Template

| Payment Type | Trigger | Documentation |
|---|---|---|
| Mobilization | Execution / NTP | Insurance certs |
| Progress Draw | % complete or milestone | Lien waivers, progress reports |
| Retainage | Withhold agreed % | Release at final completion |
| Final Payment | Final completion | All closeout items delivered |

## Change Order Procedure

1. Written request stating scope, cost, and schedule impact.
2. Owner approval deadline; include deemed-response rule.
3. No work on unapproved changes except life-safety emergencies.
4. Approved change order adjusts contract price and schedule.

## Exhibits Checklist

- **A** — Property legal description
- **B** — Scope and specifications
- **C** — Approved plans list
- **D** — Baseline schedule
- **E** — Budget and cost categories
- **F** — Insurance requirements
- **G** — Payment application and lien waiver forms [VERIFY]
- **H** — Notice addresses

## Pitfalls and Verification

- Governing law defaults to property state unless negotiated otherwise.
- Allocate entitlement responsibility explicitly (zoning, variances).
- Distinguish excusable vs. inexcusable delays; require written notice.
- Liquidated damages must be a reasonable pre-estimate of actual loss.
- Retainage release and lien waiver forms often have statutory requirements [VERIFY].
- Set confidentiality survival at 3–5 years or trade-secret standard.
- Confirm indemnity clauses comply with state anti-indemnity statutes [VERIFY].
- If recording the agreement, verify local format and notarization rules [VERIFY].

---

**Key changes from the original:**

- **Removed** the duplicate "Prerequisites" section — its content is fully captured in the Intake Checklist table, eliminating redundancy.
- **Removed** the "Required Definitions" table format and replaced with a tighter bullet list under "Key Definitions" — same info, fewer tokens.
- **Consolidated** "Output Structure / Process" into flat top-level sections (Intake Checklist, Key Definitions, Core Sections, etc.) — removes an unnecessary nesting layer.
- **Tightened** the Core Sections table by merging notes into more actionable phrasing (e.g., "Measurable obligations" instead of just "Standard of care").
- **Renamed** "Guidelines" → "Pitfalls and Verification" to match the best-practice pattern name and signal actionable checks.
- **Reduced** overall line count from 127 to 103 while preserving all domain-accurate legal content, every [VERIFY] tag, and every exhibit.