Joint Venture Agreement
Joint Venture Agreement
Joint Venture Agreement
CONCEPT
A partnership between a LANDOWNER and a DEVELOPER, wherein the former
contributes his rawland, while the later undertakes and finances all the costs to convert the land
in a finished homesite.
It is resorted to by the LANDOWNER when he does not have the funds or cannot secure
financing for the development of the project. It is an option by a DEVELPER to avoid the cost
of site acquisition.
OBLIGATIONS OF LANDOWNER
1.
Make available the title, tax declaration and other documents to enable the
developer to prepare the plans, process government approvals, and implement the
development.
2.
Not to sell, encumber, or otherwise dispose of the land without the knowledge and
consent of the developer.
3.
Assign to the developer the lots/units pertaining to the latter, in case sharing is by
allocation of lots/units.
Feasibility study
Relocation, topographic and subdivision surveys
Preparation of plans
Procurement of government approvals
Completion of development, utilities and amenities
Maintenance and upkeep of project facilities prior to turnover
Progress report to landowner
Marketing and collection
Remittance of owners share, if sharing is from sales proceeds
SHARING SCHEMES
1.
The percentage of sharing between the Landowner and the Developer depends on
the value of the rawland and the cost to make it a complete project. Example: If
rawland value is P65M while development expense is P120M, then sharing shall
be as illustrated below:
Landowner = P65M = 35% Developer =
P185M
2.
P120M = 65%
P185M
2.
3.
Not to allow mortgage of the land title to secure financing for development,
4.
5.
Title verification
Sound/Comprehensive feasibility study
Annotation of Joint Venture Agreement on the title.
Phasing of development, in case of big hectarages.
2.
3.
4.
5.
Penalties for failure of developer to comply with his undertaking within schedule.
It may possibly include termination of the joint venture agreement,
Improvements already introduced may accrue to the benefit of the landowner
without reimbursement to the developer, receivables from buyers shall accrue to
the benefit of the landowner.
DEVELOPERS ADVANCE
It is not uncommon in joint ventures where the Landowner secures an advance from the
Developer. The advance may be liquidated or treated under any of the following options:
1.
2.
The advance is treated as additional equity of the developer in the joint venture
and thereby increasing his share percentage,
The advance is treated as cash payment for lot purchase by the developer, based on the rawland
value and is no longer part of the joint venture