Property development joint ventures—acting for a developer
Property development joint ventures—acting for a developer

The following Property practice note provides comprehensive and up to date legal information covering:

  • Property development joint ventures—acting for a developer
  • Structure
  • Making the intentions of the parties clear
  • Funding
  • Conditions to development
  • Flexibility
  • Profit share
  • Decision making, deadlock and termination
  • JV with a public sector party

Structure

Reasons for the developer to form a JV

There are a number of reasons why the developer may wish to enter into a JV in relation to a development project such as:

  1. sharing risk with another party and placing specialist risk with the relevant JV party

  1. combining specialist knowledge and expertise to leverage resources on a larger scale and for greater returns

  1. gaining access to particular market knowledge from a party with specialist market experience outside of the developer's normal course of business

From a developer's perspective, it should be mindful not to over-complicate the JV structure where this may fetter its management of the development process beginning with the acquisition of land at the outset, continuing through the construction phase, and finally when making disposals following completion. For example, a more traditional contractual relationship (such as a development agreement) may be more appropriate where the objective of sharing in profits can be achieved through overage arrangements. In those circumstances, this may allow the developer more freedom and flexibility to proceed with the project unhindered.

Types of JV structures

For further information on types of JV structures generally, see Practice Notes: Types of development structuresProperty Joint Ventures—choosing the right structure, Joint ventures in property transactions—overview, and Overage—advice to clients.

Covenant strength of other JV parties

If the other JV party participating with the developer is a newly-created corporate vehicle, incorporated

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