docs: clarify local dev loop avoids terraform init

AGENTS.md

@@ -56,3 +56,26 @@ Do not implement in this phase:
 
 ## Output expectations
 Changes should keep the provider idiomatic, easy to contribute to, and ready for public/open-source usage.
+
+## Agent instructions
+
+### Local validation for this repository
+
+This provider is not yet published to the Terraform Registry.
+
+For local development, Terraform must use the locally built provider binary via `dev_overrides`. Because of that, `terraform init` is **not** part of the normal validation loop for agents working in this repository.
+
+Use this loop instead:
+
+```bash
+go build -o terraform-provider-dynu
+cd examples/read_only
+terraform validate
+terraform plan
+```
+
+If provider configuration or code changes, rebuild the binary before running Terraform again.
+
+Do not infer that `terraform init` is required just because it is common in normal Terraform projects.
+
+Leave GitHub Actions, CI workflows, and CI test behavior unchanged for this documentation guidance.

README.md

@@ -35,7 +35,23 @@ terraform validate
 terraform plan
 ```
 
-> With `dev_overrides`, Terraform uses your local binary for `dynu/dynu`. `terraform init` is not the primary local-dev loop here and may still try registry/network operations.
+> [!WARNING]
+> Do not run `terraform init` as part of the normal Codex/local test loop for this repo. Because the provider is not yet published to the Terraform Registry, `init` may attempt registry/network resolution and fail or give misleading results. Use `dev_overrides`, rebuild the local binary, then run `terraform validate` and `terraform plan`.
+>
+> With `dev_overrides`, Terraform uses your local binary for `dynu/dynu`.
+
+### Codex/local validation loop
+
+Use this expected loop for local verification and Codex-driven validation:
+
+```bash
+go build -o terraform-provider-dynu
+cd examples/read_only
+terraform validate
+terraform plan
+```
+
+When provider configuration or code changes, rebuild the provider binary first, then re-run `terraform validate` and `terraform plan`.
 
 ## Copy/paste starter configuration
 
@@ -163,7 +179,7 @@ data "dynu_dns_records" "selected" {
 
 - **Stale provider binary after code changes**
   - Symptom: Terraform behavior doesn't reflect latest code.
-  - Fix: rebuild binary (`go build -o terraform-provider-dynu`) and run `terraform plan` again.
+  - Fix: rebuild binary (`go build -o terraform-provider-dynu`) and re-run `terraform validate` and `terraform plan`.
 
 ## Developer workflow