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When Joint Ventures go Wrong

Tariq Mubarak, Solicitor and Head of the Commercial Team at rhw Solicitors LLP, offers two cautionary tales

May you live in interesting times - which according to Wikipedia “is an English expression which purports to be a translation of a traditional Chinese curse” - (albeit the actual Chinese curse can’t actually be found!)

While seemingly a blessing, the expression is normally used ironically, with the clear implication that "uninteresting times" of peace and tranquillity are more enjoyable than interesting ones, which, from a historical perspective, usually include disorder and conflict.

As we continue to suffer the economic malaise prompted by ‘that original sin’ - the referendum on whether we should Brexit - plus Section 24 and the SDLT surcharge, it is fair to say that we are certainly living in interesting times!

I have lived through the Asian Tiger crisis (of 1997/8) and the Credit Crunch (during which I launched a new law firm which kept on trading for 10 years until I merged it with my current firm, rhw Solicitors LLP). Why do bad economic times always have interesting names? Ah yes, interesting times call for interesting names!

Interesting times tend to highlight the worst in humanity. This Brexit economic malaise is no different. During the Asian Tiger crisis, businessmen jumping off skyscrapers having lost their fortunes in the stock market crash and an increase in crime featured in the daily news cycle. Now, I am seeing an increase in property joint ventures (“JV”) straining as the weak property market highlights the cracks in joint ventures. In this article, I will cover a recent case study.

First, some basics: I recently ran a webinar on the fundamentals of successful property joint ventures and the pitfalls to look out for. In that webinar, I highlighted quite a few issues to consider including, “the chemistry, values and personality of your potential JV partner, before entering into a JV with them.”

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