Land owner and developer Joint Venture (J.V.) projects are a boom lately, especially after the bank closed
their lending window to plain land mortgages without a financial plan incorporated into it. Left and right we see the merging
of forces — big businesses fuse their efforts and assets for this type of housing development, condominium tower and
the like.
Most layman investor or homebuyer sees this as a good indication — of two big groups who have joined
together to do a project that redounds to reliability and soundness.
But, what they don’t know is that it is not as simple as it may seem.
Primarily speaking joint ventures arise from the developers’ short of capital or refusal to infuse
capital to purchase land — avoiding risk by pushing it to someone else. On the other hand, land owners welcome this
offer to develop his property at a value much higher than what he can fetch from just selling the property.
In many ways joint venture is more similar to a marriage of convenience. It is a mutually beneficial partnership
that doesn’t have the foundation of loyalty to last long, and is not really tied down to keep the vows like “for
poorer or for richer till death do us part.” Yes there is nuptial bliss but the union isn’t strong enough to weather
tough times together, that going on separate ways or thru divorce litigation is a quicker and better solution than working
things out during bad times.
When a marriage goes bad and marital disputes arise, the children are the victims of these unfortunate circumstances,
similarly if a J.V. partnership ends up in litigation… the victim is the buyer — patronizer of the unhealthy union.
Knowing the risk buyers of a joint venture project should insist to know the details of the joint venture
contract from the seller developer.
Be aware of the responsibility of each partner. As the land owner gives his land to be developed, the other
partner does the work of marketing and handling the project. .In the meantime it is only the developer collecting money from
the buyers while the contract of sell doesn’t require land owner to have direct responsibility to the homebuyers or
any legal obligation what so ever.
In some cases, the risks are higher when a government entity is the land owner partner. Changes in the administration
often result to alteration or renegotiation sometimes with impossible demands that the developer cannot cope with. Then problems
arise, buyer who paid and buy in good faith are left in a quandary.
