A real estate joint venture (JV) is an agreement between several parties to cooperate and combine resources to develop a real estate project. Most major projects are financed and developed as a result of real estate joint ventures. JVs allow real estate operators (individuals with extensive experience in managing real estate projects) to work with real estate investors (companies that can provide capital for a real estate project). In both cases, a real estate developer should recognize the structure potential of a joint venture and reach an agreement that would encourage the parties to work together to achieve a common goal. A general joint venture agreement stumbles as follows: Many believe that joint venture agreements and development agreements are only for large real estate developments and not for small projects… and they`re wrong. If you are doing a real estate development project with someone else, you should have a development agreement or joint venture agreement from day one to ensure that the commitments of the parties are clear. The development agreement should also provide for an authorisation procedure for the design of the development. The initial approach should be added to the agreement and the landowner should obtain specific permission to deviate from the proposed concept. In the absence of a proposed concept, the question is whether the minimum requirements for the number of dwellings or commercial buildings and a quality criterion should be taken into account. In 2001, Lend Lease signed a dirty DA with VicUrban for the sale and development of part of the Docklands district in Melbourne. The parties agreed that the development should be orchestrated and that VicUrban transfer the country in tranches to Lend Lease. Lend Lease would occupy land, design, build and sell residential and commercial buildings in the countryside.
Each of Lend Lease and VicUrban would build different infrastructures on and around the earth. While you may have agreed on who is responsible for the main costs and who does most of the work, did you agree on the designation of development? What if we can`t agree on something? What if someone dies or becomes insolvent? If necessary, who will provide personal guarantees? A joint venture agreement documents all these things from the beginning, in order to avoid arguments in the future. These agreements have the advantage of removing any stamp duty that would be paid by the transfer of ownership of the original owner`s land to the newly created entity that would lead to development (depending on the value of the initial area used for development). Turn off this option if you don`t want to receive updates on critical or time-critical developments outside of your email notifications.