JOINT VENTURE CHECKLIST and INFORMATION BOOKLET This Checklist is intended to raise important issues for you to consider for your Joint Venture. It is not a substitute for legal advice. Your Joint Venture Agreement should address the issues that you consider important for your particular Project. You should not let this Checklist limit the issues you consider. Once you have completed this Checklist, please return it to David Netherton by email (david@pacificlaw.com.au) or fax (07 5479 4953) so we can prepare your Joint Venture Agreement. Phone: 07 5443 4744 Fax: 07 5479 4953 Level 1, 5 Plaza Parade, Maroochydore Qld 4558 PO Box 1669, Sunshine Plaza Qld 4558 www.pacificlaw.com.au Email: info@pacificlaw.com.au ABN: 51 155 136 486
WHO ARE THE PARTIES TO THE JOINT VENTURE? It is important to know the full and proper names for the Parties to the Joint Venture. Please list the full names of the Parties, including any relevant Trusts. Full Name Contact details (eg address, phone, fax, email) Authorised Signatories (eg Directors/Trustees) Full Name Contact details (eg address, phone, fax, email) Authorised Signatories (eg Directors/Trustees) Full Name Contact details (eg address, phone, fax, email) Authorised Signatories (eg Directors/Trustees) Have all relevant Trusts been established? Yes No Have all relevant Companies been incorporated? Yes No www.pacificlaw.com.au Page 1
WHAT TYPE OF PROJECT WILL THE JOINT VENTURE UNDERTAKE? It is important that the Parties agree on exactly what work is involved in the Project. Work to be done Tick box if Yes Buy and Hold/No work to be done Application for a Development Approval Demolish Current Dwelling Renovate current dwelling Add Granny Flat Add Second Dwelling Subdivision (How many lots will be created..) Construction of a new house(s)/duplex Construction of a Residential Unit or Townhouse Building (No. of units ) Creation of a Community Title Scheme/Body Corporate for Units/Town Construction of a Commercial/Industrial Building Other It is important that the Parties agree on the long term plan for the project after the work is completed. Rent Rent entire property Rent some lots or units ( ) Who is to determine the rent price ( ) Sale Sell all lots or units Sell some lots or units ( ) Minimum price the lots or units will be sold for ( ) Who is to determine the sales price ( ) Other Other What is your target location for the project? (eg suburb or Qld mining town ): www.pacificlaw.com.au Page 2
WHAT ARE THE PROJECT TIME FRAMES? Your Joint Venture is likely to have three (3) phases: Buy, Build and Rent/Sell. It is important that the Parties agree on a target for each stage of the Project. What are the intended Project timeframes? Phase Action/Steps Timing Buy Build eg locate property 3mths enter contract of sale 1wk to negotiate perform due diligence and apply for finance 3 wks settlement of contract for purchase 30 days after contract of sale Rent/Sell eg apply for development approval/building approval/operational works 6 mths construct dwelling or perform operational works subdivide land create body corporate/community title scheme (if applicable) eg appoint agent market property sell property What is the total estimated project timeframe? www.pacificlaw.com.au Page 3
FEASIBILITY AND FINANCIAL GOALS Have you performed a feasibility of the Project? If so, please attach a copy to this Checklist. What is the financial goal of the Project? What is the financial goal of the each Party and by what date do you expect this result? Party 1 Party 2 Party 3 WHAT CAPITAL IS REQUIRED TO COMPLETE THE PROJECT? Have you prepared a budget of the expected cost of the Project? If so, please attach a copy to this Checklist. What is the expected capital required to complete the Project? Over what timeframe will the capital be required? WHAT CAPITAL CONTRIBUTIONS WILL BE REQUIRED OF THE PARTIES? The Parties should be clear from the outset the money they will be required to contribute to the Joint Venture and when that money must be contributed. What capital contribution will be required? $ When must the capital contribution be made? (date) How is the capital contribution to be made and stored? (eg Joint Venture bank account, stakeholder s bank account) Does the capital contribution differ between the parties? If so, describe the requirements. (eg party 1 contributes $100,000, party 2 contributes $200,000) Who will control the monies? (eg dual signatories) WHAT BORROWINGS ARE REQUIRED? The Parties should agree on the anticipated borrowings and the nature of the facility. What are the expected borrowings required to complete the Project? Over what timeframe will the borrowings be required? www.pacificlaw.com.au Page 4
WHAT ROLES DO THE PARTIES FILL? For each of the parties, consider their contribution. Party Land Owner Financial Building Work Other WHO ARE YOUR TEAM OF PROFESSIONALS? The parties should agree on who will be engaged to perform work for the Joint Venture. Who will fill the following roles? Lawyer Accountant Builder Financier (bank) Town Planner Surveyor Real Estate Agent Project Manager WHAT IS THE ROLE OF PROJECT MANAGER? If you will have a Project Manager, all parties should be clear on what they will do and when. Who is the Project Manager? What are the terms of their role? (eg limits of their authority, ability to make design, budget and legal decisions) If there is a monetary limit to which the Project Manager is free to spend, what is it? $ WILL THERE BE A PROJECT COMMITTEE? You should decide if you will delegate any of the decisions to a Committee comprising representatives of some or all of the parties. Will there be a Project Committee? Yes No If so, what decisions will they make? (eg colour choices, design choices etc.) How often will the Project Committee meet? (eg twice per quarter, once a week) www.pacificlaw.com.au Page 5
WHO WILL ADMINISTER THE FINANCIAL SIDE OF THE JOINT VENTURE? Aside from the actual Project, you may have specific ideas about how the finances are to be managed. Will the financial decisions be made by a meeting of the Joint Venturers? Yes No Will the voting be: proportionate to ownership equal between each joint venturer WHAT WILL BE THE DISPUTE RESOLUTION PROCEDURES? The parties may not see eye to eye at all times. What happens when you cannot agree on how the Project is to be managed? Must the party enter mediation? Yes No Who will be the mediator? Chosen at the relevant time by the parties Chosen at the relevant time by the president of the Law Society WHAT HAPPENS IF A PARTY DIES? It is important that the parties agree on what is to happen if one of the parties dies? If a party dies, their Estate: Will become a party to the Joint Venture with full rights Will become a party to the Joint Venture with no voting rights Will be entitled to demand payment for its interest Must sell its interest to the other Joint Venturers if they elect Any other provisions? (eg different rules for different Joint Venturers) Will the parties obtain life insurance to protect the Joint Venture? Yes No Do you require a referral for Life Insurance? Yes No WHAT ARE THE CONDITIONS FOR EXITING THE JOINT VENTURE? A party may wish to leave the Joint Venture after commencement, but before completion of the Project. You must agree to what circumstances will allow a party to leave the Joint Venture. A party can leave the joint Venture at their choice with the approval of the majority of the parties with the unanimous approval of the parties if they can find a buyer for their interest When a party leaves the Joint Venture, they will receive payment for their interest At the time they leave Within a certain time after they leave, namely At the completion of the Project www.pacificlaw.com.au Page 6
WHAT HAPPENS ON COMPLETION OF THE PROJECT? You should have a clear understanding on what happens to the profits on completion of the Project. To whom the profits will be distributed and in what order? (eg equally to all Joint Venturers, firstly in repayment of capital and then equally to all Joint Venturers) How will profit be calculated and when will the profit be distributed? (eg if not selling the lots/units, three market valuations to be obtained and take the average) THE NEXT STEP Return this Checklist to David Netherton by email (david@pacificlaw.com.au) or fax (07 5479 4953) and we can assist you by preparing your Heads of Agreement or Joint Venture Agreement. Pacific Law www.pacificlaw.com.au Phone: 07 5443 4744 Fax: 07 5479 4953 Po Box 1669, Sunshine Plaza 4558 www.pacificlaw.com.au Page 7