Development agreements between landowners and developers in Queensland

Published 24 September 2026

Many Queensland projects are delivered on land the developer never owns. The landowner keeps the registered title, the developer obtains the approvals, builds and sells, and the parties share the proceeds under a development agreement. The landowner captures development value without selling the site at today’s price, and the developer controls a project without funding a land purchase.

The structure only works if the agreement deals squarely with risk, money, security and default.

What a development agreement is

A development agreement is a contract under which a landowner engages a developer to deliver a project on the landowner’s land. The landowner remains the registered owner throughout. The developer contributes expertise, project management and often development funding, and is paid out of the proceeds of the completed project rather than by buying the land first.

The structure sits between two alternatives. At one end, the landowner sells the site outright and the developer takes all of the project risk and all of the project profit. At the other, the parties form a joint venture and hold the project together, sometimes through a company or unit trust that owns the land. A development agreement keeps ownership where it is and allocates everything else by contract. Where the parties prefer co-ownership, a joint venture agreement for property development does that job.

Why the landowner keeps title

The reasons for keeping title with the landowner are practical.

• Duty and tax. An up-front sale of the site triggers transfer duty for the buyer and is a disposal for the seller’s tax purposes. Where title stays with the landowner, those consequences may be deferred or avoided. The duty and tax treatment of a development agreement depends heavily on its terms, and revenue authorities look at the substance of the rights granted, so structuring advice belongs at the start of the deal.
• Sharing the upside. The landowner participates in development profit through the waterfall instead of accepting a land price fixed before the project is proven.
• Capital efficiency for the developer. The developer does not fund a land purchase, so its equity and borrowing capacity go into design, approvals and construction.
• Control of the asset. If the project fails, the landowner still owns the land, although that protection is only as good as the limits placed on any mortgage granted to the construction financier.

Risk allocation between the parties

Every development agreement is, at its core, a schedule of who wears which risk. The main categories are these.

• Planning risk. The agreement should say what happens if the approval is refused, delayed or granted on conditions that damage the feasibility, including any obligation to pursue a change application or an appeal before termination rights arise.
• Cost risk. The developer normally commits to a cost plan and a contingency. In most structures, overruns reduce the developer’s fee and profit share before they touch the landowner’s return.
• Program risk. Milestones, sunset dates and extension of time regimes decide who carries the cost of delay, including holding costs, land tax and finance costs on a stalled project.
• Market risk. Presale hurdles, minimum price schedules and approval rights over discounted sales determine how a soft market is shared between the parties.
• Site risk. Latent conditions, contamination and heritage or infrastructure constraints should be allocated against the due diligence actually done, and the agreement should say who wears the surprises.

A useful discipline is to give each risk to the party best placed to manage and price it. A landowner who wants no project risk at all is usually better served by a straight sale.

Payment waterfalls

The waterfall clause decides who is paid, in what order, out of what money. It is the most heavily negotiated clause in the document and the one most likely to be tested when the numbers move.

A common structure applies sale proceeds in this order:

1. Project costs, including repayment of construction debt and interest.
2. An agreed land payment to the landowner, either a fixed sum or an amount per lot or per stage.
3. The developer’s development management fee, where it has not been paid progressively as a project cost.
4. Remaining profit, split between the parties in agreed percentages.

The order changes with bargaining power. Some landowners insist on the land payment ranking ahead of any developer fee, and some developers insist on progressive fee payments so they are not funding years of work on a promise. Both positions are workable if they are priced honestly.

Drafting points that prevent later disputes include a precise definition of gross and net proceeds, express treatment of GST including whether the margin scheme is intended to apply, the timing of interim distributions, and open-book audit rights so the landowner can verify the costs deducted ahead of it.

Security for performance

Both parties are exposed for years, so both need security, and the two packages look quite different.

Protections for the landowner

The landowner’s core exposure is a developer that fails, financially or operationally, partway through the project. Common protections include guarantees from the developer’s parent company or its directors, performance bonds or bank guarantees, security over the developer’s contractual rights and over the project bank accounts, mandatory insurance requirements, and step-in rights that let the landowner take over and complete the project. Security over accounts and contractual rights is personal property, so registration and priority need care.

Protections for the developer

The developer’s fee and profit share exist only in contract, and the land it is improving belongs to someone else. Developers commonly take a caveat or a registered mortgage over the site to secure the landowner’s obligations, together with contractual restraints on the owner selling or further encumbering the land during the project. Any such security has to sit behind the construction financier, and the priority and consent arrangements should be documented rather than assumed. Caveats and second-ranking security follow the same Queensland mechanics that apply to caveat lending and mezzanine finance.

Planning and finance interaction

Because the landowner is the registered owner, its consent is needed for development applications over the site. The agreement should identify the applicant, allocate the cost of the application, give the landowner defined consultation rights over the design and the conditions, and state what happens if the approval does not support the feasibility. Planning approval also interacts with the underlying land title under the Property Law Act as it applies to Queensland developers.

Finance is the harder conversation. A construction financier will almost always require a registered mortgage over the land, which means the landowner grants security over its own title for a debt drawn and managed by the developer. No landowner should agree to that without strict limits, including:

• a cap on the facility amount and on what drawdowns may fund;
• a tripartite deed with the financier giving the landowner notice of any default and a right to cure or step in before enforcement;
• an agreed position on release of the mortgage if the development agreement ends early; and
• clarity that the landowner’s own covenants to the financier are limited to the security, without a personal guarantee of the project debt.

Presale requirements imposed by the financier also feed back into the sales program, the price schedule and the timing of the waterfall.

Default, exit and termination

Default mechanics decide whether a troubled project can be rescued or ends in litigation. The agreement should answer these questions before anyone needs them answered.

• Developer default or insolvency. The landowner needs termination rights, step-in rights, and the practical ability to complete the project. That requires the building contract and key consultancy agreements to be capable of novation to the landowner or a replacement developer, and it requires any caveat or security granted to the developer to fall away on termination.
• Landowner default. If the owner sells, encumbers or obstructs in breach of the agreement, the developer needs enforceable remedies, which is where its caveat or mortgage and a clear damages regime earn their place.
• No-fault endings. Sunset dates, failed conditions precedent and prolonged force majeure events need an orderly unwind, including who keeps the approvals, the design documents and the presale contracts.
• Disputes. Valuation and cost disputes are usually better suited to expert determination than to court, while termination and security disputes generally are not. The agreement should route each type of dispute to the right forum.

Exit should also be planned for success. Projects end in lot sales, a sale of the balance land, or sometimes an in-specie split of completed lots between the parties. Each route has different duty and GST outcomes, which should be worked out when the agreement is signed.

Frequently asked questions

Is a development agreement the same as a joint venture?

No. Under a development agreement the land stays in the landowner’s name and the parties’ rights exist only under the contract. A joint venture can go further, with the parties co-owning the land or holding the project through a joint company or trust. The right choice turns on tax, duty, finance and control, and it should be settled before any documents are drafted.

Does a development agreement trigger transfer duty in Queensland?

It can, depending on its terms. An agreement that gives the developer an interest in the land, an option over it, or effective control of dealings with it may have duty consequences even though no transfer is registered. The revenue treatment turns on the specific rights granted, so obtain advice on the structure before signing.

What security should a landowner take from a developer?

Common protections include guarantees from the developer’s parent company or directors, performance bonds or bank guarantees, security over the developer’s contractual rights and the project bank accounts, mandatory insurances, step-in rights to complete the project, and open-book audit rights over project costs.

What happens if the developer becomes insolvent partway through the project?

The agreement should let the landowner terminate, step in and complete the project or appoint a replacement developer. That only works in practice if the building contract and key consultancy agreements can be novated, the financier has agreed a tripartite position, and any caveat or security granted to the developer is released on termination. These mechanics have to be built in from the start.

If you are considering a development agreement, whether as a landowner or as a developer, contact GRM LAW to talk through the structure, the risk allocation and the documents before you commit.

Disclaimer: This is general information only and is not legal advice. For advice on your circumstances, contact GRM LAW.