What is a Land Use Agreement?
A land use agreement is a type of real estate contract that controls how property may be used and/or developed. The agreement can restrict the use of the land or even mandate that the land is used in specific ways. Depending on its content, a land use agreement may be an easement, a license or a deed restriction. In Florida, land use agreements also cross over into zoning laws. For example, a deed may place restrictions such as allowing only single-family homes.
Because land use agreements can limit the use of property , they are important tools in the context of real estate and development to benefit both property owners and lenders. When a property is being sold with a land use agreement, interested parties may perform research to determine if the property is encumbered by a land use agreement that has limitations. If the purchaser acquires the property subject to a land use agreement, the purchaser may be required to abide by the restrictions. Lenders also seek to determine if a borrower’s property is subject to a land use agreement with limitations because it could impact the value of the property.
Typical Land Use Agreement Terms
When landowners are contemplating granting a land use agreement, they typically want to know that they are controlling what happens on their land. And that is exactly the result that a well-written and carefully considered land use agreement can provide. That said, not every land use agreement template is right for every situation. Often, landowners and land users need to balance flexibility with required certainty to address all of their respective needs for a particular project or purpose. The following is a brief overview of common elements in land use agreements:
Parties – identifying landowner and land user (it is a good idea to leave out contact information). Parties should have their own preferences but typically corporate entities often waive service to save on the cost of having their addresses published in a public document like these.
Land Description – a legal description that is as tight as possible. This should adhere to survey plan, if there is one, and be sufficient to identify the land user’s "demised premises" (as it is frequently called) precisely. This is important, for example, in determining whether a land user gets a new land certificate if they undertake development (such as addition of buildings) that changes the legal description of the land they are using. Alternatively, where a land user elects to recognize a new survey plan and obtain a new land certificate for the land they are using and the cost of creating the new land certificate (including surveying costs) is borne by the land user.
Permitted Uses – defines what the land may be used for and what the land user may not do on the land. These clauses require care because they often are not as easily drafted as they appear, for example:
Easements – if the land user gets access or other rights, like power, water, roads, etc., then these can be set out in the land use agreement. Once these are put in a land use agreement, a land user may want to register the land use agreement against the land so anyone reading the land title has notice of the access rights.
Duration – identifies the term and expiry date (a good idea to have a statement that the rights will cease unless the land user and land owner agree to extend).
Benefits of a Well-Crafted Land Use Agreement
A well-drafted land use agreement can pay dividends of protection, clarity, and dispute aversion. When the parties to an agreement approach their understanding of each other’s goals clearly and deliberately, there tend to be fewer problems twenty years down the road. A clear understanding of what each party is entitled to and is responsible for creates less room for conflict. A lot of simple conflicts could be avoided if there were even relatively short agreements setting forth what each party believes they are supposed to do and to not do.
Challenges of a Land Use Agreement
Common challenges to the land use agreement include legal ambiguities and conflicting land uses. Other challenges not known at the time of drafting or review can be caused by subsequent municipal by-law amendments or government program amendments, possibly resulting in a future need to renegotiate or amend the land use agreement.
Land use agreements are site specific and are intended to address the unique issues (and mitigate the potential for impacts) that are expected to occur. This can mean that the owner of neighbouring lands does not benefit from the controls in the land use agreement. This can be problematic if the neighbouring lands are sold, or if the use of these lands becomes a use that is contrary to the controls in the land use agreement. Agricultural uses are another example of potential future problems. An owner may sign an agreement to permit agricultural uses, but a subsequent purchaser may not wish to use the land agriculturally, thereby causing a conflict with the ability to use the lands and the control put in place by the land use agreement.
Land Use Agreement Sample Terms
Section 1: Parties
This section should include both the sovereign nation that is allowing land use as well as the subdivision of the Indian nation that will be using the land. Be sure to clearly state both parties with full names and any abbreviations you will be using throughout the deed. Look at this example for guidance:
This Land Use Agreement (the "Agreement") is made and entered into this ___ day of ________, 20__, by and between the _____________________ Tribe of Indians (the "Tribe"), a federally recognized Indian tribe, and the ______________________ Subdivision of the ____________________ Tribe ("User"). The Tribe and User may collectively be referred to herein as the "Parties" and individually as the "Party".
Section 2: Description of the Land
In this section, you can briefly describe the land that you are granting the use of and if it is across the country, mention what its use will be. This example gives a general description:
- Land – The Tribe agrees to allow the User to access and use the following described land:
- Lot 33
- Block 52
- Riverside Subdivision
- Haskell County
- Oklahoma
- Water – The Tribe agrees to allow the User to access and use the following described water:
- Jackson Pond
- SW ¼ SE ¼ Sec 11
- T-6-N
- R-22-E
- Haskell County
- Oklahoma
Section 3: Duration
Once you have described the land that is being used, next explain how long it will last. Will it be ongoing for all eternity or will it last a set period of time? Here’s a look at part of the sample language:
This Agreement shall commence upon execution and continue in perpetuity unless terminated as provided herein or in Sections 5 or 10 of the Agreement. The duration of this land usage may be specified below (if applicable):
- _____________ years
- Until ___________ (date)
- Ongoing/Indefinitely
Section 4: Purpose
The purpose of the land use is often something where you need to include an in-depth description not just the purpose itself. Think about what you plan to use the land for and describe it in this section; will it be for hunting, business hours, hunting, the purpose, etc. The sample language here can be used to give you an idea of how much description is needed:
The Operations and structures described in Section 3, above, shall be conducted in the following areas:
1. 1. Safety of Persons and Property. The User shall take all necessary precautions to protect the persons , property and the natural resources of the land from all hazards.
2. Current and Future Plans for Development. The Parties agree to consult with each other if the User wishes to develop the land for any purpose and the Tribe agrees to engage in good faith negotiations regarding said development. If a term of this Agreement is challenged, or if the Tribe makes a good faith determination that any structure, improvements, operations or activities of User are a danger to the surrounding environment, than the Tribe shall have the right to terminate this Agreement within 60 days of such determination. If no challenge is made, than the provisions of this Agreement shall apply.
Section 5: Compensation
Will you be compensated in money or through other means? How to will the funds be collected? This is the section to cover that. Take a look at this example:
The User agrees to compensate the Tribe at the following rates, and in the following manner:
- $_____ for the first _______ acres
- $_____ for each additional acre up to _____ acres
- $_____ for each additional acre over _____ acres
- In lieu of compensation, the User may provide the Tribe with barrels of ___________________________
Section 6: Insurance
If there’s a risk that a person could get hurt or sued on this land, you’ll need insurance to protect yourself and the land user. You’ll also want to spell out how much insurance will be carried just in case anything goes wrong. This is a sample of what this provision might look like:
The User shall obtain at least $_____ in liability and casualty insurance, naming the Tribe as an additionally insured, and furthermore shall indemnify the Tribe against any injuries or damages arising out of the User’s activities on the property.
Section 7: Termination
Should the land use be terminated prior to the date specified in your duration paragraph, you need to have terms ready to go. Will you require notice beforehand or allow the other party to finish their plans? This is a sample of that language:
Any Party to this Agreement may terminate this Agreement with or without cause upon not less than ___ days prior written notice to the other Party. The Tribe may terminate this Agreement upon the failure of the User to maintain $_____ in the liability and casualty insurance (as described in Section 6), or any other type of insurance, bond, developer’s bond, or city permit required by the Tribe. However, the User shall be allowed ___ days to cure any deficiency prior to termination being effective.
These are just a couple of sections you might see in a sample land use agreement. Depending on your situation, you may need additional provisions or elements as well. Be sure to include strong provisions so that you don’t have issues later down the road.
Land Use Agreement Drafting Considerations
When it comes to drafting land use agreements, both developers and landowners should prioritize legal accuracy. Given that the contents of any land use agreement contain elements unique to the situation, carefully vetting the legal aspects often prevents misinterpretation or errors in judgment down the line.
Hiring appropriate counsel
The first step in ensuring that the legal elements of a land use agreement are upheld is to hire proper legal counsel. When constructing the deal, the business interests at stake will likely be balanced against specific legal requirements. An attorney specializing in land use agreements will know exactly what provisions need to be put in place to ensure all legal matters are handled properly.
Ensuring compliance with local zoning codes
A land use agreement will typically revolve around a specific property. The developer will have different plans for a property than the landowner, which is why a land use agreement is created. However, there are usually several laws or zoning codes at the local or city level that could affect how land can be used. It’s essential to establish a clear understanding of these laws before creating or signing an agreement. In most cases, it is the responsibility of the developer to ensure that the property adheres to local zoning requirements once construction has commenced.
Ensuring protection of intellectual property rights
In many cases, real estate developers will choose to include intellectual property in the approved plans. This is especially true in the case of any engineering works that will not be built according to the plans. For this reason, it is crucial to ensure that a land use agreement features a nondisclosure agreement and other protective terms that prevent the other party from sharing any sensitive information.
Land Use Agreement Negotiation Tips
Negotiating a land use agreement requires an understanding of not only the requirements of each party, but of the goals of the parties as well. When negotiating agreements, one problem is that parties tend to focus on what each side wants. But once the parties identify the underlying reasons each side wants to agree and what will make each side happy, the parties can craft an agreement that incorporates not just the demands of the parties, but their interests and goals.
A good meeting with the parties and their advisors or representatives at the outset of the negotiation will go a long way to identify each party’s goals for entering into the agreement. When negotiating the initial terms of the agreement, choose an area to focus on that is not one of the key goals of both parties. For example, a landlord looking to receive a rental that matches its projections and property owners seeking a share of an annual bonus based on the net income of the tenant are two parties with different goals where negotiations might fall apart over the calculations and timing of when those payments are made. While those elements are critical to the success of the deal, the negotiation of the share of expenses can be deferred until after the parties get through the other problems that may not be as pressing.
An example of one item that may be negotiated before the terms important to both parties are tackled might be to let the parties agree to use the form of agreement previously used by other parties in a similar situation, and then leave blank a list of items to be determined once the parties come to an agreement on the more urgent issues.
Land Use Agreement Samples
The best place to find sample land use agreements, templates for your own use, is through a professional association. A number of law associations maintain these directories.
For example, members of certain bar associations have online access to extensive collections of agreements maintained by their State Bar Associations. These commercial sites contain thousands of agreements , ranging from form documents to comprehensive agreements. Most of the agreements are form documents and not executed agreements. They will not be appropriate "as is" as they likely have no land to describe or budget information.
Other associations provide access to collection of annotated or integrated agreements. The California county refer to these types of collections as "forms manuals." Postal mail or email access is provided to members for many of these collections. Members of most professional associations can also request a search of similar agreements by staff or attorneys. Access to collections of agreements is also provided to members of many associations of councils of governments.
In addition to these collections maintained by professional associations of planners, the American Legal Institute also publishes a treatise that contains a chapter on land use agreements, including examples of agreements for different purposes. One can also review published case law on land use agreements from the major Westlaw or Lexis databases.