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Joint Venture (Joint Venture)

The term joint venture can be translated as joint business. It covers cases in which several persons or companies join forces with the aim of taking over the responsibility for a real estate project at joint risk. Usually, a project company is founded into which the project and the legal relationships associated with it in the external relationship are brought. Typically, individual contracts or the following contracts are concluded as part of an overall project:

  • Basic agreement or joint venture agreement
  • Partnership agreement for the project-executing agency
  • Different service and supply contracts between the individual partners of the joint venture and the joint project-executing agency.

The joint venture contract sets out the rules for the economic, financial and construction objectives of the real estate project. These may include

  • User structures of the investment
  • Planning and realisation time
  • Project costs and financing
  • Marketing and revenue planning
  • Distribution of expenditure budgets and revenues among the partners
  • Power of representation and the partners' rights of influence and control.

The project companies can take different legal forms. Both partnerships such as limited partnerships and limited liability companies (rarely public limited companies) are possible. The project company in turn then enters into legal relationships with the parties involved in the construction, such as engineers, architects, construction taxes as well as brokers and administrators etc..

The joint venture usually ends when its purpose has been achieved. The parties can define exactly when this is the case. In most cases it will be the complete execution of the construction project and its settlement until the company is deleted from the commercial register. The sole corporate purpose of such a joint venture company is usually to plan and implement the project in question and to lead it to economic success. As a rule, such joint venture companies are not designed to serve several projects. Liability reasons play a significant role in this.