Doing business in the property sector is exciting. There are new development projects to work on, properties to manage, or new listings to sell. Whatever section of the property sector that you’re involved with, there’s rarely a dull day.
Doing deals day in, day out, you’re used to making agreements. Many times, these require a contract drawn up by a business legal firm that can ensure all necessary causes are present to protect your interests before signing on the dotted line. Having someone dependable to cover the legal angle means you can focus on other matters of importance to your business.
Here are some ways that getting legal assistance in the property sector is helpful.
Joint Ventures and Partnerships
Joint ventures are typically created for two or more parties that wish to work together on a special project or a new business. Most of the time, people are already involved with other businesses and decide to create a separate venture together under its own trading name. Doing things this way creates a more formal, rather than ad hoc, arrangement that denotes the importance of the project to everyone involved.
Joint ventures should not be confused with a partnership. A partnership is a more permanent agreement between several parties to create a standalone business. In many partnerships, that business is the sole one for the parties involved whereas with joint ventures, it’s often an additional venture separate to other businesses that are ongoing.
A business legal firm can provide advice about what structure makes sense. Drawing up joint venture agreements, for instance, might be suitable for two property developers wanting to go into business together. Perhaps they are pooling their funds to buy into a pricey property and wish to share the risk between them? A joint venture might make more sense in this situation because at that stage, the deal is a one-off with no immediate plans to solidify matters with a more formal arrangement like a partnership or limited company with shared ownership.
Franchise Business Model
In the property market, there are plenty of estate agents that help in buying and selling homes, along with renting properties to people or companies only looking to rent. Opening as a single branch on a local high street, it’s not easy to expand into neighbouring suburbs or have local branches dotted all around the country.
One option is to try to borrow the money for a future expansion effort but unless well-backed, it will be challenging to expand from a single location into hundreds of them. Another way is to take on investors in each local area where they receive a stake of the profits from their local branch and run the operation, in exchange for their investment capital to cover leasing costs and other expenses. However, a better route is perhaps using the franchising model.
With franchising, an established business becomes the franchisor and sells franchises to people who wish to open their own business under the same brand. They leverage the existing business model which has been proven in the first location, so they’re not going in blindly opening a poorly-located estate agency branch with no idea how to operate the business. The beauty of a franchise model is that it takes the guesswork out of the process while property investors get to leverage their sales and property experience to get other people involved.
Drawing up all the legal contracts governing what is expected on both sides is part of what business solicitors like Harper James Solicitors do. They can create new legal contracts or modify existing ones to adjust deal points to suit potential franchisees looking for preferential terms when opening several locations in the same year. Having spent decades working with different parties in the franchise world, it’s comforting to know that they’re so experienced.
Another service that is extremely useful for property developers, property owners, and estate agents selling property is in dispute resolution. Sometimes, it becomes necessary to get a third-party involved to try to break a logjam in discussions or to resolve a business argument before it becomes completely unmanageable. Both sides may hire their own representatives to protect their interests during discussions on commercial matters and are often wise to do so.
Dealings in the property market can become rancorous at times. Given how much the residential and commercial property markets have appreciated over recent years, even a small difference in percentage points on a deal or disagreements over who is covering maintenance expenses on a large property can lead to protracted objections over substantial sums. Having a dispassionate representative who can work to resolve disputes amicably often makes short work of long-running disagreement.
It’s never clear when a conflict or an issue over a contract will arise. Sometimes, you get a sixth sense about it but oftentimes you’re caught completely off-guard. It’s always good to know you have a legal rep on speed-dial to refer to at these times.