At CLEMENS, we offer legal advice at a high professional level, and we also work closely with advisors from other industries to create the right solutions and value for our clients.
In connection with project development consultancy, CLEMENS assists with all phases of project development, i.e. from the idea phase to the purchase of the property, plot of land or site, including studies of planning conditions and land use, preparation and implementation of renovation and construction work, financing and all the way to delivery and rental/resale of the turnkey project.
Project development can take place in both urban and rural areas (urban and rural zones). Project development can also consist of property conversion, i.e. the conversion and change of use of a property. Thus, a wide range of legal competencies are in play when advising on project development.
In connection with project development of a property, it is often necessary to enter into ownership agreements, cooperation agreements, purchase agreements, project sales agreements, development agreements, and advice on owners' associations and landowner and parcel association structures. Advice on these matters is also one of CLEMENS' core competencies, and we ensure that the project developer reaches the end of his real estate project safely and successfully.
Project development involves a number of different phases, and specialist advice is important at all stages. The phases below are not exhaustive or limited to specific property types, but represent the typical phases in the development of a property where advice from CLEMENS can be sought:
Idea phase/assessment phase
The background for project development stems from the initiative of a natural or legal person who wants to realize a real estate project. Most often, the motivation is a desire to make a financial profit, but there can of course also be other desires behind it, such as creating a particularly sustainable property or creating a particularly architecturally challenging project.
The scope of the project must be determined based on whether it involves the purchase of a building plot or the conversion of an existing property. In this phase, it must be assessed what is possible according to the existing planning basis, including whether a local plan may need to be created for the project.
The initial considerations of the project developer in this phase will include an assessment of the cost of implementing the project, the time factor, supply and demand in the market in relation to the specific property type, the situation in the construction sector, approved rent levels, etc.
In the idea phase, it should be clarified whether the property is to be divided into condominiums or whether subdivision or land transfer is to take place in connection with the implementation of the project.
The negotiation phase - making agreements
Project development involves many partners and the conclusion of many agreements, including land purchase agreements, financing agreements, construction contracts, consultancy agreements, administration agreements, ownership agreements, development agreements, etc. For the project developer, it is also about finding the right architect and contractor who can be trusted professionally and financially, as the agreement will lead to a year-long collaboration between the parties.
The agreements should be mutually conditional on each other's fulfillment, just as the agreements will be conditional on obtaining the specific permits, including building permits, in order for the project to be realized and implemented.
In the context of project development, the case may also involve a so-called delegated developer model, where a private developer works together with a social housing organization on the construction of a real estate project. A delegated developer model is used when developing a larger building/comprehensive building where it does not make sense to separate the social part for construction by a separate developer. This may be due to the integration of the social housing with the private part or due to site conditions, for example.
The property developer and the social housing organization will come to the negotiating table with different starting points, and therefore it is important that both the social housing organization and the project developer receive the correct advice on the benefits and risks of entering into the agreement. At CLEMENS, we have extensive experience in these types of agreements.
The construction or remodeling of the property:
Unfortunately, the construction process can present many different challenges and problems, including in relation to the new sustainability requirements for buildings. In addition to having a good construction contract, it is important that the planning of a construction project is prioritized, for example, by the project developer contracting a skilled and experienced client advisor.
During the construction process, questions and challenges may arise that require quick resolution, so it's important that the project developer is surrounded by professional advisors who have the skills and experience to evaluate the issue and provide quick advice on the problem at hand. If issues during the construction process are not resolved with the required speed, this can have major consequences for the construction project.
During construction, you need to be able to quickly address the issues that arise on an ongoing basis. If issues and potential conflicts are not resolved, it can lead to litigation and arbitration. At CLEMENS, our construction lawyers have many years of experience in dispute resolution.
Operational phase or sales phase
Once the property is completed, the entire project must be handed over to the developer and the property is then occupied. In rental cases, the developer has already signed the relevant leases with both commercial and residential tenants.
There are many issues that need to be dealt with once the property is completed and operational. Among other things, service agreements and management agreements must be entered into, and the operation of the property may subsequently involve new challenges and issues, e.g. in the form of defects in the property, disputes with tenants, divestment of parts of the property, obligation to make offers, participation in homeowners' associations, etc.