Landowner and developer partnerships: sale, joint venture, co-ownership and GP/LP

Four ways to share a project

Every structure answers the same questions in a different way: who holds title to the land, who makes decisions, who carries the debts if the project goes wrong, and how each side gets paid. The table sets out the four structures. Our land value chapter covers the money side of selling against partnering. This chapter covers the legal rules behind each choice.

None of these is a form you fill in. Each one is a set of documents a lawyer drafts for your project: a purchase contract, a co-ownership agreement, a partnership agreement, or a limited partnership agreement plus the certificate filed with the registrar. The law fills in the gaps where the documents are silent, which is why it pays to know what the default rules say.

What the Partnership Act says about general and limited partners

Section 2 of the Partnership Act defines a partnership as "the relation which subsists between persons carrying on business in common with a view of profit". The definition turns on what the people do together. Two people who build and sell a multiplex together for profit can be partners in law even if they call their deal a joint venture. Section 4 adds two limits. Owning property together, as joint tenants or tenants in common, does not by itself create a partnership, whether or not the owners share profit from using it. Sharing gross returns does not by itself create one either.

The cost of being a general partner is in section 11: "A partner in a firm is liable jointly with the other partners for all debts and obligations of the firm." If a general partnership cannot pay its builder or its lender, each partner's own assets are exposed. A limited partnership changes that for its limited partners.

Part 3 of the Act covers limited partnerships. Section 50 says a limited partnership has one or more general partners and one or more limited partners. Section 51 says it is formed when a certificate, signed by each person who will be a general partner, is filed with the registrar. Section 53 requires its name to end with the words "Limited Partnership". Section 56 gives a general partner all the rights and powers, and all the liabilities, of a partner in an ordinary partnership.

Limited partners are treated differently. Section 55 says a limited partner may contribute money and other property, but not services. Land is property, so a landowner can contribute the lot. Section 57 says a limited partner is not liable for the partnership's obligations beyond what the Act provides, which in general means the value of what they contributed or agreed to contribute. Section 64 sets the price of that protection: a limited partner becomes liable as a general partner if they take part in the management of the business. A landowner who wants to run the project day to day cannot also keep the protection of a limited partner.

Co-owning the land without a partnership

Some landowners prefer to keep their name on title and bring the developer in as a co-owner, with each holding a share as tenants in common. The deal then lives in a co-ownership agreement that says who pays for what, who decides what, and how the finished homes or the sale money are divided.

The agreement matters because of the Partition of Property Act. Section 2 says all joint tenants and tenants in common may be compelled to partition or sell the land. Section 6 says that if co-owners holding half or more of the property ask for a sale, the court must order one unless it sees good reason not to. Section 7 lets the court order a sale at the request of any co-owner, over another's objection, if a sale would be more beneficial than dividing the land. On a single lot halfway through construction, a dispute between two 50% co-owners can end with a court-ordered sale. A well-drafted agreement sets out how a deadlock is broken and how one side buys the other out, so neither side needs the court.

Co-ownership has a marketing rule too. The Real Estate Development Marketing Act treats 2 or more shared interests in land in the same parcel as a development property. A shared interest is a co-ownership share where each owner's right to use the land is limited to part of it, such as one unit. Selling such shares to buyers can require a filed disclosure statement unless the superintendent grants an exemption.

Raising money from other investors

When a project needs more equity than the landowner and developer put in, the partnership may sell units to other investors. The BC Securities Commission's page on private and early stage businesses lists limited partnership units among the things that count as securities. Every issuer, the person or entity selling the securities, must file a prospectus, a detailed disclosure document reviewed by the Commission, unless an exemption applies.

The Commission's page describes four exemptions small issuers use. The family, friends and business associates exemption allows sales in any amount, without disclosure, to directors, senior officers and control persons and to their family members, close personal friends and close business associates. The page says a social media connection or shared group membership does not make someone a close friend. The accredited investor exemption allows sales in any amount to investors who meet asset or income tests, and some individuals must sign a risk form. The offering memorandum exemption allows sales to anyone if the buyer signs a risk acknowledgement (Form 45-106F4) and receives an offering memorandum in the required form, which is filed with the Commission within 10 days of the sale, and the buyer has 2 business days to cancel. The private issuer exemption covers an issuer with fewer than 50 security holders, not counting employees, selling only to the people the exemption lists.

The Commission's page says readers should consult a lawyer experienced in securities law. For a landowner, we would add one rule: do not accept money from anyone outside the original deal until a securities lawyer has confirmed which exemption applies and what must be filed.

Tax rules and the points to settle with a lawyer and an accountant

The CRA's page on real estate profits says that profit from buying land to build and sell is reported as business income. A partnership that builds and sells strata units should plan on that treatment. The BC home flipping tax has a rule for partnerships: the province's builders and developers page (updated 8 May 2026) says a partnership is exempt if one of its partners is a corporation, partnership or trust that builds on properties it buys and sells in the ordinary course of business. A partner who is an individual does not count for that rule.

GST has a partnership rule as well. RC4052 says the individual exception to the self-supply rule, for a builder who lives in the new housing, does not apply where the builder is a corporation or partnership and a shareholder or partner moves in. In that case the corporation or partnership is treated as having made a taxable supply. A landowner who plans to live in one of the new units should raise this before the land goes into a company or partnership.

Before signing anything, settle these points in writing with your own lawyer and accountant, separate from the developer's advisers. How is the land valued when it goes into the deal, and by whom? Who signs personal guarantees for the construction loan? Who pays for cost overruns, and what happens to each side's share if one side cannot pay? What happens if the project stops before completion, and how does each side exit? Is property transfer tax due when the land moves into a partnership or company? Does the landowner keep any unit, and on what terms? No guide can answer these for a specific project, and we do not describe our own partnership terms here.