Joint ventures: agree the exit before the entry

Development partnerships form easily: one party has the land, another has the capital, a third has the experience.

They fail on the questions nobody asked while everybody was enthusiastic, and those questions are always the same handful.

Who funds a cost overrun

A project needing more money mid construction is normal, and the partner who cannot contribute gets diluted, lends, or blocks the project entirely.

A written mechanism covering that single question prevents more disputes than any other clause in the agreement.

Who decides, and what needs everybody

Day to day decisions need one person, and a partnership requiring unanimity for a variation order stops moving within a month.

A schedule of reserved matters, listing what genuinely needs every partner's agreement, keeps the project running without removing anybody's protection.

The land is a contribution, so value it properly

A partner bringing a site usually values it at what they hope it becomes, and the capital partner values it at what it currently is.

An independent valuation at the start, agreed in writing, settles a question that otherwise resurfaces at every distribution.

Say plainly who is being paid, and for what

A partner managing the project is doing work, and a management fee for that is reasonable and should appear openly.

A fee discovered later, inside a cost line, damages trust far more than the amount ever justified.

Profit share is not the same as cash flow

A fifty fifty split describes the end. It says nothing about who gets repaid first, or who waits.

A distribution waterfall, naming the order of repayment and any preferred return, is what the partners actually experience month by month.

One partner will want out early

Circumstances change: illness, another opportunity, a family need. A partnership with no exit mechanism traps everybody or forces a bad sale.

A buy sell provision, with a valuation method and a timeframe, turns an emergency into a process.

Personal guarantees are not shared equally

A lender usually wants guarantees from whichever partner has the strongest balance sheet, and that partner carries a risk the others do not.

Recognising that in the return, rather than pretending the risk is equal, is what makes the arrangement last.

Decide the reporting before anybody needs it

A partner who asks for figures and waits three weeks starts to wonder what the delay hides, even when it hides nothing.

A monthly pack, on a set date, with the same figures each time, removes that entirely. Our guide to the finance model covers what belongs in one.

Death and incapacity need an answer

A partner's estate inheriting an interest in a half built development serves nobody, least of all the family.

A clause dealing with that, supported by insurance where the amounts justify it, protects the project and the people around it.

Put the structure in place before the land

The entity holding the site decides the stamp duty, the tax on the profit and what a lender will accept as security.

Changing it after a purchase usually triggers duty a second time, which is why this decision belongs before the contract rather than after it.

Write down what each partner contributes

Capital, land, experience, guarantees and day to day work are all contributions, and the partners rarely agree on their relative weight later.

Recording each one, with the value the partners agreed at the time, removes the argument that otherwise arrives at the first distribution.

Agree how the project ends

Selling completed stock, holding it, or one partner buying the others out are different outcomes with different tax and timing consequences.

Naming the intended exit at the start aligns expectations that otherwise diverge quietly over three years.

What to change first

• The agreement states who funds a cost overrun, and what happens if somebody cannot
• Reserved matters list what genuinely needs unanimity
• An independent valuation fixes the land contribution in writing
• Every fee to a partner appears openly
• A distribution waterfall names the order of repayment
• A buy sell provision covers a partner who wants to leave
• A monthly reporting pack arrives on a set date