There are potential cash advantages for a developer in using a financing structure in advance, as he will usually receive money for the sale of the land in advance, instead of having to wait until the completion of the development and final transfer of the property. A forward financing agreement may offer a tax-efficient investment opportunity, but this type of agreement is difficult and it is important that all appropriate legal measures are taken. Many lawyers, although they have experience in commercial real estate, have no hands on experience in future financing development agreements. You are one of them and would you like to be able to advise your clients with Forward Funding Agreements? Or don`t you trust futures? Then this course is for you. However, the duality of the role of the borrower/developer is a unique feature of pre-project financing. The borrower in a front financing may not have the experience or capacity or simply not want to develop the country itself. Instead, the borrower will own a lender/developer and the developer will in turn enter into contracts with the borrower to carry out the development. The funds lent to the borrower are then used by the borrower to pay the development costs to the developer. The interaction between the FFA and the BSG can be decisive in determining the tax liability on the SDLT (as explained above). If the agreements are linked in such a way that they are in fact a good consolidated deal for the sale of a developed property, the LTDS can be charged both for the price to be paid under the SPA and for all the amounts to be paid for construction work under the FFA. For example, if the developer does not deliver the land or otherwise meet its obligations under the FFA, the purchaser is able to recall the SPA and return the property (building) to the developer. In this case, the BSG and the FFA will be linked so that they are treated as a good deal on the merits. With regard to the structuring and documentation of forward financing agreements, specialized tax advice should always be obtained to reduce this risk.
Typically, it is a pension fund or other institutional investor looking for a better investment than it can find on the permanent market. The investor will agree to buy a development that has not yet been built (but can be pre-leased), with the advantage that the fund or investor will acquire an investment with a better return than if the development had already been built. Early financing agreements (also known as development financing agreements) are concluded if a person who funds the construction of a building provides interim financing for development. It allows investors to access a fixed return on their investments. As part of a debt agreement, the developer needs to find a willing buyer when the final development is put on the market. Until the development is sold, the developer will pay interest to the debt lender and could be faced with the choice to reduce the price of demand and reduce its yield or wait longer and see if someone will come up with an offer while the interest payments nibble at the profit margin. It should be noted the guarantees that will be obtained and with whom, since the contractor (and any subcontractor or any organization that is part of the professional team) does not enter into direct contact with the borrower and, therefore, with the lender in relation to traditional development financing.