Types of Collaboration Agreements for Developing Land

If you’re considering developing land and need to collaborate with others – whether that’s a landowner, funder, or fellow developer – the legal structure you choose will shape your project from start to finish.

In the advisory note below, our Commercial Property Partner, Owen Walsh, walks you through the main types of collaboration agreements used in land development. Each has different advantages, risks, and tax implications, so understanding the basics will help you choose the right route for your project.

Types of Land Development Collaboration Agreements: Your Guide to Making the Right Choice

If you’re considering developing land and need to collaborate with others – whether that’s a landowner, funder, or fellow developer – the legal structure you choose will shape your project from start to finish.

In the advisory note below, our Commercial Property Partner, Owen Walsh, walks you through the main types of collaboration agreements used in land development. Each has different advantages, risks, and tax implications, so understanding the basics will help you choose the right route for your project.

What are your options when collaborating to develop land?

Here’s a summary of the key legal structures used in land development collaborations:

1. Joint Venture (JV) Companies and Agreements

A JV company is a separate legal entity that brings collaborators together under one roof. It limits individual liability and allows the venture to contract in its own name. A shareholders’ agreement regulates the internal relationships and decisions, helping to reduce the risk of future commercial property disputes between stakeholders if the project encounters difficulty.

• Useful for: Formal, long-term projects with multiple stakeholders.
• Watch out for: Corporate admin burden and disclosure requirements.

Tip: Before you jump into drafting formal agreements, it’s worth putting together a Heads of Terms to outline the key commercial points.

2. Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs)

These partnerships offer flexibility and limited liability, and like a JV company, they can contract in their own name. A partnership agreement governs the setup, voting rights, funding responsibilities, and exit terms.

• Useful for: Single-project developments, especially where profits/losses need to be shared.
• Watch out for: Complexity in voting rights and decision-making.

3. Forward Sale, Forward Purchase & Forward Funding Agreements

These involve a fund acquiring a site either during or after its development. The fund may finance the project upfront (forward funding) or buy it upon completion (forward purchase).

• Useful for: Developers looking to avoid debt funding or secure a guaranteed buyer.
• Watch out for: Conditionality and the fund’s control over the development process.

These are just a few of the structured deal types commonly covered in land development agreements, where roles, responsibilities, and funding stages are clearly defined.

Because these deals often hinge on investor due diligence, it’s important to ensure there are no hidden risks in ownership or boundaries. Resolving title problems at the outset is, therefore, essential.

4. Collaboration Agreements

Often used by neighbouring landowners who want to join forces to secure planning permission and sell the site as a whole. These agreements govern cost-sharing, land pooling, and profit distribution. They frequently form part of wider land development agreements, especially where multiple parties are involved in bringing a site forward under shared terms.

• Useful for: Unlocking large development sites across multiple ownerships.
• Watch out for: Coordination complexity and tax considerations if ownership is pooled improperly.

Another approach some landowners consider at this stage involves granting early rights to potential developers through option and pre-emption agreements. These can work in tandem with or as alternatives to more complex collaboration structures, depending on the parties’ objectives.

5. Development Management Agreements

These agreements appoint a professional to manage a project on behalf of the landowner or JV company. The manager doesn’t own the land or fund the project but ensures the development progresses as planned.

• Useful for: Landowners lacking in-house development expertise.
• Watch out for: Clear definition of responsibilities and performance expectations.

6. Promotion Agreements

Here, a promoter works to obtain planning permission on behalf of a landowner, then markets the site to third-party developers. The promoter and landowner share the eventual sale proceeds.

• Useful for: Sites not yet ready for immediate development.
• Watch out for: Long-term commitment and choosing a promoter with a proven track record.

7. Overage Arrangements

Instead of a collaboration, overage agreements mean the landowner sells the land but retains a right to a share in future value uplift (e.g., if planning permission is later secured).

• Useful for: Landowners seeking a simple sale with a future upside.
• Watch out for: Loss of control over how or whether the site is actually developed.

Get specialist advice from GoodLaw

Choosing the right collaboration agreement can make or break a development deal. If you’re weighing up your options, get in touch with our experienced commercial property team.

We advise on all aspects of land development – from structure choice to drafting, negotiation, and exit planning. Scroll down to submit a contact form or call us directly on 01273 956 270.