Ask Our Law Expert: Maples Teesdale on Acquisitions, JV Agreements and Negotiations
The skills, knowledge and level of professionalism of the Team of Professionals Property Developers surround themselves with, can determin the success or failure of any Development Project. Law Partners are no exception.
Maples Teesdale have answered three questions from our Developers Members, showing how their strong Property Legal Team can successfully support SME Developers on their law and conveyancing requirements.
Q - During an acquisition process, what can a solicitor do to add significant value to their developer clients, above and beyond the standard conveyancing process?
What would be your USP to make you standout ahead of other options available?
A - Our approach is to ask ourselves the questions the plot purchasers will ask, and to ensure that there are robust and mortgagee-friendly answers to those questions. So, we would identify and arrange for appropriate title insurance where there are uncertain or ambiguous title issues, and we would work with the broker to ensure individual splinter policies can be provided to plot purchasers. We would work to tidy up the title, by securing removal of any historic and spent title entries, removing for example unilateral notices on the title registrations and generally working to get the title into a Council of Mortgage Lenders acceptable condition. We would then work with the client to populate a comprehensive data room, including on complicated sites a title summary to point buyers’ solicitors in the right direction.
Our USP is that because we act for both developers selling and those buying serviced plots we have a detailed understanding of the issues relevant to both sides.
Q - Joint Venture Agreements are a particularly hot topic at present. As a solicitor, how would you advise clients to structure this, and other key considerations you should note when discussing with joint venture partners?
A - Joint Venture agreements need to include some key elements on order to avoid disagreement and fall out in the future; they should state clear commercial objectives (against which any future disagreement can be assessed), they should provide for simple voting structures, and dispute resolution procedures which include (inter alia) escalation provisions whereby any potential dispute is first referred to CEO/MD level of each client before going to a formal expert determination procedure. Experience shows that this often leads to a pragmatic and more cost-effective solution.
Thought needs to be given to the ability of either party to sell or assign their interest, and rights of first refusal / offer should be considered to protect the remaining partner from finding itself in a JV with an incompatible entity.
Worked examples, preferably on “live” excel spreadsheets showing the agreed financial treatment of costs and receipts should be annexed – the production and approval of those will throw up any misunderstandings between the parties, and should ensure that both enter with a shared understanding of how the key commercial financials are intended to operate.
Q - When two parties on either side of a negotiation approach you jointly to mediate/help conclude a successful negotiation, would you advise each party of their own individual representation, or would you be happy to provide holistic advice to them all jointly?
A - As solicitors we need to be very careful not to put ourselves in a position of actual or possible conflict. Generally, we would default to advising each party to secure independent advice however in limited circumstances where the parties bargaining strengths were equal, the issue in debate would apply equally to both, and both were prepared to jointly instruct us to advise them jointly we could do so. However that would automatically rule us out from advising either party should the joint venture subsequently become contentious.
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