Real estate development finance—introduction to the development documentation

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Real estate development finance—introduction to the development documentation
  • Building contract
  • Scope of building contract
  • Form of building contract
  • Pricing
  • Parent company guarantees and bonds
  • The sub-contracts
  • Professional consultant appointments
  • The professional consultants
  • Appointment of the professional consultants
  • More...

Real estate development finance—introduction to the development documentation

The development of property can be carried out by different procurement methods. For more information, see Practice Note: Real estate development finance—introductory guide to forms of procurement. The most common forms of procurement for the development of a property are:

  1. design and build procurement

  2. traditional procurement, and

  3. management contracting

The most frequently used method of procurement in the UK is the design and build method.

The procurement method will determine the nature and content of the development documentation. The development documentation is a key part of any real estate finance transaction which involves the development of property.

This Practice Note explains the key development documentation which is involved in development, ie:

  1. the building contract

  2. parent company guarantees and bonds

  3. the sub-contracts (which may include sub-contracts for design, in design and build procurement)

  4. the professional consultant appointments

  5. the insurances

  6. collateral warranties (or third party rights), and

  7. planning permission

The lender will typically want to take security over the borrower's rights under the key development documents. For more information, see Practice Note: Real estate finance—taking security over the key development contracts.

Building contract

Scope of building contract

The building contract is the key document in development transactions. It is entered into between the borrower (known, in this context, as the employer) and the building contractor. The scope of the building contract will depend on the method

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