Joint Venture Agreements: How to Protect Your Interests and Maximise Profit in Property Development

You're a landowner or developer in NSW or QLD and have been approached to collaborate on a residential or commercial project. It sounds like a win-win: one of you brings the construction and development know-how, and the other contributes the land. But without the right legal protection, what starts as an exciting opportunity can quickly become a nightmare.

Joint ventures (JVs) are a popular structure in the property development world. But too many landowners and developers enter into them on a handshake or vague terms - only to end up in costly disputes, stalled projects, or financial losses. This article will unpack exactly what a joint venture agreement is, how it can protect your interests, and why it's critical even when parties are related or "trust each other."

What Is a Joint Venture Agreement (and Why It Matters)

A joint venture agreement is a legally binding document that sets out the terms of a business arrangement where two or more parties agree to pool resources for a specific project - typically a property development in this context.

Unlike a partnership, a JV doesn't require forming a separate legal entity (although it can). It simply defines the parties' roles, responsibilities, financial contributions, profit splits, dispute resolution mechanisms, and exit strategies.

Why enter a JV?

Landowners can maximise land value without needing to fund the build themselves.

• Developers can secure prime development land without upfront purchase costs.

• Risk and reward are shared, potentially delivering higher profits to both sides.

But here’s the catch: unless the terms are clearly documented, misunderstandings, delays, and disputes are inevitable.

Key Protections in a JV Agreement

A well-drafted joint venture agreement should cover:

1. Project Scope and Roles: Who does what, and when? This sets the tone for the working relationship. Will the landowner be involved in approvals or only provide the land? Is the developer solely responsible for construction, or are there shared obligations?

2. Capital Contributions: Clearly outline what each party is bringing to the table. This includes financial contributions, assets (like land or intellectual property), or services (like project management or marketing). Having these recorded avoids disputes over who did what and whether the contribution matched the agreed value.

3. Profit and Loss Sharing: Specify the exact percentages or formulas used to calculate how profits will be distributed. Consider whether distributions occur progressively or at the end of the project. Equally, don't forget to define how losses will be managed - particularly if the project underperforms.

4. Decision-Making: Define what decisions each party can make independently and which require joint agreement. Consider including a decision matrix or voting thresholds for major milestones like finance approval, contractor appointment, or changes to plans.

5. Exit Clauses: What happens if one party wants out? What if the project is no longer viable, or one party breaches the agreement? Document scenarios such as buy-outs, forced sales, or rights of first refusal.

6. Dispute Resolution: Set out how disagreements will be managed. Options include mediation, expert determination, or arbitration before escalating to litigation. Including timelines and processes can prevent issues from escalating.

7. Tax and Structuring Advice: Engage accountants and lawyers early. The JV structure may involve a unit trust, company, or remain a contractual arrangement - each with different tax, asset protection, and legal implications.

But We’re Family / Mates / Related Entities… Do We Really Need One?

Yes. Absolutely.

Some of the nastiest disputes we've seen came from parties who were friends or relatives when they started the project. Memory fades, circumstances change, and so does goodwill. A JV agreement isn't about mistrust - it's about clarity and protecting everyone involved.

Even if you're structuring your development between related entities (e.g. your trust owns the land and your company is the developer), a written JV agreement ensures clarity for tax, asset protection, and future sale purposes.

These related-party transactions are also more heavily scrutinised by banks, tax authorities, and potential future purchasers. Without formal documentation, your ability to finance, refinance, or sell the project may be limited.

The Commercial and Legal Upside of Doing It Right

The right JV agreement doesn't just prevent disputes - it makes your development more efficient and profitable. Here's how:

• Clear timelines and milestones avoid delays and hold-ups that cost time and money.

• Defined roles and expectations reduce overlap, confusion, and blame-shifting.

• Transparent financial models and reporting build trust and facilitate informed decisions.

• Tax-effective structuring can deliver tens or even hundreds of thousands in savings.

• Credibility with financiers and investors: a signed JV agreement signals professionalism and reduces risk, making you more attractive to lenders.

Beyond the project itself, a JV agreement also allows parties to document intellectual property rights, branding usage, and other commercial rights that could be monetised beyond the life of the development.

Structuring the JV: Entity vs Contractual Arrangement

There is no one-size-fits-all approach. Your JV might be:

• A contractual agreement between parties acting in their own name

• A new company or unit trust specifically set up to hold and operate the project

The right structure depends on:

• Asset protection goals

• Taxation outcomes

• Exit and succession planning

• Regulatory and compliance requirements

• Lender preferences

This is where legal and accounting advice becomes crucial. The wrong structure can have serious tax and legal consequences.

Case Study 1: From Verbal Deal to Dispute

A NSW landowner verbally agreed to develop their acreage with a builder they knew from their local community group. There was no written agreement. The builder delayed construction, took deposits from buyers, and the landowner found themselves legally exposed. We helped salvage the project - but it cost years and over $250k in legal fees that a proper JV would have prevented.

In addition, the lack of GST planning led to unintended tax liabilities that further reduced the landowner's return. Had the parties documented the arrangement, they could have optimised GST treatment and had legal recourse when things went off track.

Case Study 2: Profitable Collaboration with a Clear JV

In QLD, we assisted a developer and a landowner in forming a JV with clear profit-sharing terms and documented stages. With clear milestones and reporting, the project finished under budget, and both parties profited over $1.2M each. Their agreement also included a GST-effective structure that saved them an estimated $180k.

The agreement made refinancing easier at the mid-point of the development, as the lender took comfort in the clarity of roles, obligations, and revenue-sharing mechanics.

Additionally, the parties agreed on an exit clause that allowed for a pre-agreed valuation method if one party wanted to sell. That clause was invoked at the end of the project, giving both parties peace of mind and a clean break.

Case Study 3:  Clarifying Roles With a Clear JV

A recent NSW townhouse development between a boutique builder and a property developer shows how a well-structured JV can drive success. By clearly defining roles, profit-sharing, and dispute resolution processes, the project was delivered on time, without disputes, and with a total profit of $2.4M split evenly. Smart structuring under the margin scheme also saved over $280K in tax. The JV not only aligned interests and attracted financing but also set the foundation for repeat projects—highlighting why formal joint venture agreements are essential for builders and developers seeking to maximise returns and minimise risk.

Leveraging JV Agreements for Bigger Opportunities

A JV done right is not just a legal document - it’s a business tool. Many of our clients have used a successful JV project as a stepping stone to larger developments, partnerships, or even securing joint venture finance from private equity sources.

With the right agreement, parties can:

• Reuse and refine the JV structure for future developments

• Build a track record to attract investors or new landowners

• Systematise their development model for scale

What Happens Without One?

Without a JV agreement:

• You're relying on memory and goodwill (and each person’s version is always different)

• Disputes are more likely and harder to resolve

• Tax and ownership confusion leads to audits or penalties

• Financiers may refuse to lend

• One party may end up doing all the work while the other reaps the rewards

In short, without a JV agreement, you risk the entire project - and the relationship.

Key Takeaways:

• Joint ventures can be highly profitable for landowners and developers alike - when done right.

• A written JV agreement is essential, even between friends or related parties.

• Legal and accounting advice is critical to get the structure, tax, and risk allocation right.

• A solid JV agreement can reduce disputes, improve funding outcomes, and increase profits.

• Structuring the JV entity appropriately can unlock asset protection and tax benefits.

Next Steps

Considering a JV or already in discussions? Don’t leave it to chance.
We’ll help you structure your agreement for clarity, compliance, and commercial success.

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About the Author: Erin Vassallo

Erin Vassallo is the Principal Solicitor and founder of Law Team, a values-led law firm with a strong reputation across New South Wales and Queensland. With over two decades of experience in commercial, construction, and property development law, Erin is a trusted advisor to developers, landowners, and business owners navigating complex projects and legal risk.

Her hands-on experience includes joint ventures, structuring development deals, contract negotiation, risk mitigation, and project governance across residential, commercial, and mixed-use developments. Erin holds qualifications in law, political science, mediation, and disruptive strategy (Harvard Business School) and is the founder of Certified BCorp Law Team, committed to ethical business practices and social impact

FAQ’s – What Clients Ask Us Most About Joint Ventures

• What is the difference between a joint venture and a partnership in property development?

  A joint venture (JV) is typically created for a single project or specific goal, like a property development. It doesn’t always require forming a new legal entity. A partnership, on the other hand, involves a continuing business relationship and can carry more extensive legal obligations and liabilities. With JVs, you can keep your existing business structures intact while collaborating with others.

• Do I really need a joint venture agreement if I trust the other party?

  Yes - trust alone isn’t enough. Circumstances, memories, and relationships change over time. A written JV agreement provides clarity, protects everyone’s interests, and helps avoid misunderstandings. In fact, many of the biggest disputes we’ve seen have involved friends or family who relied on verbal agreements or “trust” instead of legal documentation.

• Should the joint venture entity own the land or should I keep it in my personal or trust name?

  This depends on your specific goals, including asset protection, tax strategy, and the preferences of your financier. In some cases, the land remains in the owner’s name with rights granted to the JV; in others, it’s transferred to a project entity. The right structure requires careful planning with your legal and accounting team to ensure the best outcome.

• What happens if we can’t agree or the project fails - how does a joint venture agreement help?

  Your JV agreement should include clear dispute resolution and exit clauses. These might outline steps for mediation, arbitration, or buy-outs. Without them, disagreements can spiral into expensive litigation or cause the project to stall. The agreement acts like a roadmap during difficult times, guiding both parties toward a resolution.

• Can we still get finance from a bank if we use a joint venture structure?

  Yes - many lenders are familiar with joint ventures. In fact, having a well-documented JV agreement can strengthen your finance application. It shows banks that the project is organised, with clear roles, contributions, and exit strategies, which reduces their risk.

Disclaimer: This article is general information only and cannot be regarded as legal advice as it does not take into account your personal circumstances. For tailored advice, please call us on 13 55 29 or email us at hello@lawteam.com.au.