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Does anybody have any advice as to how they structure their JVs?


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I've been conducting a lot of research with regards to the structuring of JVs within the area of buy to sell. For example if I had close family member with money to invest in a property with me, but the proposal is for them to be taking a hands off approach and their role is limited to providing funds only. How could you legally structure this? The funds couldn't be gifted as the family member would expect interest on their investment to be paid upon sale of the asset.

I presume the investor can become a non-executive shareholder within a limited company structure, but this may not always be appealing as it could seriously limit your pool of investors, as in theory you would need to operate many companies for various deals. The below links are well worth a read, as from this I've concluded that many people are probably acting illegally from the point of view of offering unregulated collective investment schemes.

I know there are people out there doing this, but possibly they are just taking the risk and hoping for the best. I'd be grateful for peoples experience on this matter. Thanks in advance

 

http://www.russell-cooke.co.uk/media/1908/a-client-guide-to-property-joint-venture-vehicles-june-2011.pdf

 

https://www.fca.org.uk/consumers/unregulated-collective-investment-schemes

 

There does appear to be some permitted exceptions within the above article, namely where the investor is a "Sophistcated Investor or High Net Worth Individual" within what parameters does somebody qualify in English law as one of these descriptions?

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Hi Joe

 

You seem to have posted twice, so you might want to tidy up the other topic (link: 

 

It's important to do - and seen to be doing - the right thing for all concerned.  Whether you're family or not I think it's a good idea to formalise things (in whichever way is right for yourselves and the deal type) so you all know how things will work if everything goes to plan, the expectations of everyone and the return each person will get, and what will happen if circumstances change or things go wrong.

 

Personally I use limited companies even with family members.

 

But that's not the only way, as the Russell Cooke guide you include a link to shows, and seems to give quite a thorough explanation about.  Circumstances will vary and therefore inform the specific route you go.  Your financial situation, the type of deal, the situation of the other person(s) and other factors need to be taken into consideration.  You might want to seek guidance from your tax accountant and solicitor on the most appropriate mechanism for you.

 

Best wishes, André

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Hi Andre, 

Thanks for your reply. I have noticed that my post has duplicated, however I'm unsure how to delete it. I can only find the option to edit it and this isn't much use. I presumed although maybe incorrectly, that a moderator would remove it. 

The Russell Cooke link is a great guide, although it is a little vague as to the definitions of a CIS among other things as these guides often are. As you suggest I think taking advice from my accountant and solicitor will be the way forward. My accountant is great for my day to day operations for my non-property endeavors, but I'm not sure this will be his area of expertise.

thanks,

Joe

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