Structuring a Joint Venture Agreement for Your Construction Project

Whether you're planning to build a multi-unit residential complex, a hotel, a retail plaza, or a mixed-use development, partnering with others can be a powerful way to get your project off the ground. Joint ventures — where two or more parties combine resources, capital, or expertise — are common in construction. They can open the door to new opportunities, reduce individual risk, and bring together the right combination of land, funding, design, and construction experience. But as with any partnership, success depends on how well the relationship is structured — and that begins with a clear, well-drafted Joint Venture Agreement (JVA).

At FCC Builders Canada, we’ve worked on many construction projects involving joint ventures between landowners, investors, developers, builders, and even municipalities. One thing is always true: when the Joint Venture Agreement is thoughtfully structured from the start, the project moves more smoothly, decisions are easier to make, and partners are protected throughout the process.

A Joint Venture Agreement is more than just a handshake or an informal understanding. It’s a formal contract that outlines how the project will be funded, managed, built, and ultimately, how the profits (or losses) will be handled. The JVA should clearly spell out who is doing what, who is contributing what, and how decisions will be made. It brings structure to the partnership, accountability to the process, and clarity when questions arise.

One of the first things to define in a JVA is the purpose and scope of the partnership. Is it a single-project joint venture, or will the parties work together on multiple builds? Will the agreement cover only development and construction, or also the post-construction management and operation of the building? Being clear about the scope ensures that everyone understands the boundaries of their involvement — and prevents scope creep or misunderstandings down the road.

It’s also essential to define ownership percentages and capital contributions. In some ventures, one partner may contribute land, while another brings financing. In others, each party contributes a portion of the capital, and responsibilities are split accordingly. These contributions should be clearly valued and documented in the agreement, along with any provisions for future capital calls if additional funds are needed mid-project.

Another key part of a solid JVA is the governance and decision-making structure. How will decisions be made during the project? Will one partner act as the managing partner, or will major decisions require unanimous approval? What happens if there’s a disagreement? It’s important to set thresholds for what decisions can be made unilaterally (such as day-to-day operations) versus what requires a vote or consensus (such as changing the project budget or selling the property). This structure helps avoid disputes and keeps the project moving forward.

Liability and risk allocation should also be clearly addressed. Construction projects always carry risks — whether related to site conditions, cost overruns, or delays. A good JVA will outline how those risks are shared, who is responsible for obtaining insurance, and how the venture will handle claims, disputes, or unexpected events. The goal is to protect the partners — and the project — from legal or financial exposure.

Financial matters deserve careful attention as well. How will expenses be tracked and reported? How and when will profits be distributed? Will there be a preferred return to investors? What happens in the event of a refinancing or early sale? The agreement should include clear language about how funds flow, including accounting methods, audit rights, and banking arrangements.

Finally, a strong Joint Venture Agreement will address exit strategies. What happens if one partner wants to sell or exit the project early? Can a partner transfer their interest to a third party? Are there rights of first refusal, buyout options, or drag-along provisions? Having an exit plan built into the agreement from the beginning helps avoid conflict later and ensures that all parties have a path forward if their interests change.

At FCC Builders Canada, we believe in helping our clients succeed not only in construction, but also in the partnerships that support it. We often work alongside our clients and their legal teams during the early planning phase to ensure that roles, responsibilities, and expectations are aligned — especially when multiple stakeholders are involved. We understand that a strong partnership is just as important as a strong foundation, and we’re here to support both.

If you’re considering a joint venture for your next residential, commercial, or mixed-use project, take the time to structure it right. A clear, well-drafted Joint Venture Agreement can protect your interests, prevent disputes, and pave the way for a successful and profitable build.

Have a project in mind and a partner at the table? Let FCC Builders Canada help you turn that vision into reality — with the structure and experience to back it up.