Land Joint Venture and Partnership Agreement

What a good one includes

• A detailed breakdown of initial and subsequent capital contributions, including how land value is appraised and credited as equity.
• A clear waterfall distribution schedule that defines how profits, refinancing proceeds, and losses are shared among partners.
• A management structure outlining who holds day-to-day decision-making power and which major decisions require unanimous partner approval.
• A defined timeline of development milestones, such as securing permits and completing construction, to keep the project on track.
• Exit strategies and transfer restrictions that dictate how a partner can sell their share or buy out another partner during the project.
• Clear default provisions detailing the remedies and penalties if a partner fails to meet a capital call or breaches the contract.

Common mistakes to avoid

• Failing to specify how cash shortfalls and mandatory capital calls will be handled, which often stalls construction when unexpected expenses arise.
• Omitting a clear deadlock-resolution mechanism for major decisions, leaving the project vulnerable to expensive litigation and indefinite delays.
• Neglecting to define the exit strategy or buyout terms up front, causing bitter disputes when one partner wants to sell before the project is completed.
• Assuming that equal profit sharing means equal management control, leading to chaotic daily operations and overlapping authority on the job site.

Frequently asked questions