Property Joint Ventures—choosing the right structure
Property Joint Ventures—choosing the right structure

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

  • Property Joint Ventures—choosing the right structure
  • Contractual agreement
  • Partnerships
  • Unlimited partnership
  • Limited partnership
  • Limited liability partnership
  • Limited liability company
  • Community interest company

Property Joint Ventures—choosing the right structure

Property joint ventures are typically structured in one of three ways:

  1. contractual agreement

  2. partnership

  3. limited liability company

Contractual agreement

This is the simplest form of joint venture, and there are many occasions where a ‘simple’ project management agreement, development management agreement, or collaboration agreement (usually under which one party provides a service in return for an agreed share of any eventual profit) will be an appropriate way to proceed. Typical types of collaboration agreement are asset, property, or investment management agreements.

The advantages of such an agreement are:

  1. flexibility and relative simplicity (there are no formalities as to the nature of the agreement)

  2. confidentiality (there are no registration or reporting requirements)

  3. each joint venturer is taxed in accordance with their individual circumstances

However, there are also significant disadvantages with such an agreement:

  1. there is no separate legal entity within which the liabilities of the joint venture can be ring-fenced and which is able to enter into contracts in its own right

  2. the capacity to raise finance or enter into other contractual commitments may be restricted by the weak covenant strength of one or more of the individual joint venturers

  3. depending on the terms of agreement, one joint venturer may be able to bind all the others without reference to them

  4. caution must be exercised if the structure of the joint venture is based

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