Drafting an Agreement between Co-owners

Hi Guys,

A friend and I are going through the process of embarking on a JV.

JV Project: Purchase of a property c.$600k in Sydney, renovate and flip within an agreed timeframe - most likely 18 months.

We want an agreement drafted setting-out the whole JV agreement/ arrangement and clearly defined and agreed exit strategies which can be executed once they are reached.

An example: Once comparable sales in the area suggest the property could achieve $800k both parties agree to take it to market.

Another example: Either party agrees that they cannot press for a sale until the property is valued at $800k+ by three local and recognised estate agents.

Another example clause: First right of refusal clause.

Questions:

1. Can anybody offer any further suggestions/ advice.

2. Can anybody recommend somebody (in Sydney) who can draft the above for us?

Thanks in advance everybody!

 

Who will be the owner of the property?

 

What happens if the property doesnt reach 800k for a few years?

 

A friend and I Terry.

 

We will hold it.

 

It sounds like you would need a joint ownership agreement rather than a joint venture agreement.

 

Thanks Terry.

Assuming there are typical template drafts of these and they are amended by solicitors as required by the parties?

 

Yes only solicitors can draft legal documents

 

Any recommendations for Solicitors Terry?

Idea of approximate costs?

As always, appreciate and value your feedback.

 

prob cost $1000 to $2000 depending how far you would want to dig. I don't know anyone.

 

Thanks Terry. I had allowed $1,000.00. Seems reasonable.

 

Do we (the Parties) need to execute at the same time as the Contract of Sale?

Does it have any bearing on the financials?

I’m assuming it’s a separate deed, operating in its own right.

 

which then opens up a whole bag of different risks.

 

No, it could be done at anytime. But you might find the best time to do it would be at purchase.

You should also consider what could happen if one party breaches the agreement - not much without going to court which you could do anyway.

 

It does but as the saying goes. “if you’re not willing to risk the unusual, you’ll have to settle for the ordinary”.

 

At least the Agreement is there to provide clarity on the Parties’ pre-agreed obligations.

In theory, could one Party, regardless of the Sale clause being executed by the other Party under the Agreement, point blank refuse to agree to sell?

If the courts agreed that the Agreement has been breached, do they have jurisdiction to enforce the terms of the Agreement, i.e. proceeding to auction?

 

Yes you can ask the court to appoint a trustee to sell the property. This would be needed if one party refuses to sign a contract or transfer. Under NSW law I think s66W of the Conveyancing Act.

 

Ooof. Looks pricey!

I think those costs are enough to put either party off breaking the terms of the agreement. There’d be nothing to little left!!

 

I once asked a trustee what they would charge and was told around $10k, plus you would need a solicitor and barrister for the court application and filing fees - prob $20k plus.

 

Oh - I saw $100k quoted