Types of development structures
Types of development structures

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

  • Types of development structures
  • Choosing a structure
  • JV development company
  • JV agreements in development projects
  • Limited liability partnership
  • Limited partnerships
  • Forward funding and forward sale agreement
  • Land collaboration agreement
  • Development management agreement
  • Promotion agreement
  • More...

Types of development structures

Choosing a structure

Unless promoted by a single entity (whether or not with mortgage funding) many developments take place through collaboration. This Practice Note sets out the various joint venture (JV) corporate and contractual structures most commonly used to govern collaborations between landowners, developers, funder and investors in property development, see Practice Notes: Setting up a joint venture—choice of structure and Property Joint Ventures—choosing the right structure.

JV development company

A JV company has a legal identity separate and distinct from its shareholders and directors, who (subject to proper management and solvency) operate with limited liability. Shareholder agreements regulate the collaborative relationships between participants. Being a private document, the shareholder agreement is not available to competitors, creditors or employees.

The JV company in its own right may enter into separate contractual arrangements for:

  1. site acquisition

  2. planning and statutory agreements

  3. building contracts and appointment of the professional team

  4. pre-let agreements with tenants

  5. forward sale or funding agreements with ultimate buyer's, and

  6. legal charges and debentures with funders or funders

The principal disadvantage of using a JV company is the need for disclosure of commercially confidential matters and the necessary corporate administration required to comply with legislation. In addition, those entering into arrangements with a special purpose JV company (eg lenders, funders, tenants and local authorities concerned with planning obligations) may require additional security due to limited covenant

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