Joint Ventures for Real
It seems like everyone is talking about joint venture
partnering for real estate.
It is a great strategy for property ventures because two
heads are better than one.
Because everyone is different!
No one is good at everything.
Some people know how to spot a property bargain. Others
know how to add value to a property.
Some people know how to find finance to buy property.
Others know how to sell a property for top dollar.
Some people know how to renovate a property cheaply and
effectively. Others know how to obtain owners permission to
renovate straight away.
If two people combine their knowledge and their money in
a property venture, they will often achieve more as partners
than they would achieve on their own.
These two people are joint venture partners in a property
Video: How do Joint Ventures work for real estate
Investor’s Guide to Joint Ventures for Real Estate.
Click here for the
- Four situations where property joint ventures will
lead to better real estate profits than going it alone
- The bones of a joint venture agreement
- Where are the contributions made and the profits
taken in a joint venture?
- Which is the best legal structure for a joint
Did you know that joint ventures started in the coffee
houses of London in the 1750s?
Video: How Joint Ventures
Joint adventures flourished in the London coffee
houses in the 1750s.
Picture the scene in Edward Lloyd’s coffee house -
merchants, shipowners, bankers and insurers are earnestly
planning an expedition to trade textiles, slaves and sugar.
They sip their coffee. They agree to risk their funds and
use their skills to make a trading profit. It is an
adventure, which as Dr Samuel Johnson defines in his
1755 dictionary - is an enterprise where something is left
The English common law called these trading enterprises
The ship might set sail from Liverpool with a cargo of
English textiles and arms. First port of call might be in
the Niger Delta in Africa. From there, the ship might sail
across the Atlantic Ocean on the trade winds, with a cargo
of African slaves for the sugar plantation owners in the
The ship might sail home to the West India Dock in London
with its precious cargo of Jamaican rum and sugar, taking
care to avoid the ruthless pirates of the Caribbean.
The joint adventurers would share the profits, and
as a bonus, would use the sugar to sweeten their coffee, or
the new sensation from the Orient – tea.
Above – the gate to the West India
Import Dock, Docklands, London – which opened for business
1st September 1802
Right – a joint adventure being planned in a scene
from a London Coffee House in the 1750s
These days, joint ventures continue to flourish,
but usually with a little less adventure.
Merchant bankers use capital markets to raise ‘seed
capital’ from ‘angel investors’ to invest in businesses
ventures. The joint business ventures could be mining
projects, research projects or start-up businesses.
But some things never change – it is still possible to
plan property ventures over a latté in your local
café! And it is still possible to make sweet profits by
investing in a property joint venture.
Is a caveat good security for an investor in a property
Investors can make good profits by investing in a property
A common situation is a land owner who owns land which is
ripe for subdivision. But they are missing one vital
ingredient - the money - to obtain the approvals and to
carry out the site work.
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What happens when a purchaser
caveats the property they are buying?
Property vendors are anxious to know what happens when a
purchaser registers a Caveat over the property they are
selling under a Contract for Sale.
They ask: Will the Caveat derail the sale and what
should I do? This is a guide.
First: Why has the purchaser registered a Caveat? If it
is because they have released the deposit to the vendor or
if settlement is deferred beyond the standard time, then it
is perfectly justifiable for a purchaser to register a
Caveat, provided they have been granted a 'caveatable
interest' in the Contract for Sale.
Second: How does the Caveat affect the vendor? Anyone
searching the title will see the Caveat - if they are a
lender, they will not lend more money to the vendor; if they
are another purchaser, they will not enter into a Contract
of Sale with the vendor; unless the Caveat is removed. So a
Caveat restricts the vendor in refinancing or re-selling the
Third: Is there a dispute with the purchaser? If there is
no dispute, then the purchaser is using the Caveat to
legitimately protect their interests, and will come to
settlement with a Withdrawal of Caveat. But if there is a
dispute, the purchaser is using the Caveat as a bargaining
chip against the vendor. If so, the vendor needs to take
Fourth: What action can a vendor take to remove the
caveat? The process is called lapsing the caveat. The vendor
serves a lapsing notice which gives the purchaser 21 days
(in NSW) (14 days in Qld) to apply to the Supreme Court to
maintain the Caveat on the title. If the purchaser does
nothing, the Caveat will be removed from the title by the
Fifth: What happens if the purchaser goes to Court? For a
vendor, the most significant part is that the purchaser must
'proffer an undertaking as to damages' which means that they
accept responsibility to compensate the vendor for all
losses, if the court agrees to maintain the caveat on the
title until the dispute with the vendor is determined by the
In a recent case before the Supreme Court of NSW, the
purchaser applied to maintain their caveat. But when the
moment came, they refused to accept responsibility for
losses the vendor might suffer. As a result, the Court
ordered the Caveat be removed and the purchaser pay the
vendor's legal costs of going to court.
For my case note click
Will a purchaser's caveat stand
without an undertaking as to damages?