The Landowner’s Joint Venture: Ten Terms Which Decide Whether You Get Your Units

In short, a joint venture between a landowner and a developer is the commonest way a plot in Nairobi becomes a block of apartments, and the commonest way a landowner ends up in the Environment and Land Court. The landowner contributes the land, the developer contributes the money and the building, and the landowner is paid in finished units. Whether those units arrive, on time, unencumbered and in the landowner’s name, depends on ten terms in the agreement, and on almost nothing else. This article sets them out from the landowner’s side, with the structures available, the tax on each, and the questions to put to a developer before anything is signed.

The offer on the table

You own half an acre in Kilimani, or an acre in Kileleshwa, or a family parcel in Ruaka or Kiambu Road where the old house sits on land now worth more than the house. A developer has approached you. He proposes to build sixty apartments on it at his own cost and to give you a share of them, perhaps a fifth, perhaps a quarter, and to keep the rest to sell. You put in no money. You end up with twelve apartments worth far more than the land is worth today. It sounds like the best deal you will ever be offered, and for the landowners who get the agreement right it is. For the ones who do not, it is four years without rent, a bank charge over land they still own, a half-built block and a developer who has stopped taking calls.

We draw these agreements for landowners, and every one of the ten terms below is there because a landowner somewhere in Nairobi lost money without it.

The three ways to structure it

The first question is not the share. It is the structure, because the structure decides who owns the land during construction, who pays tax and when, and what the landowner is left holding if the developer fails.

A contractual joint venture leaves the title in the landowner’s name throughout. The developer builds under a licence or a development lease, the units are divided on completion under a registered sectional plan, and the developer’s units are transferred to him or his buyers at the end. This is the structure we prefer for landowners, because the land never leaves them, and it is the one the rest of this article assumes.

A joint venture company takes the land in as a transfer for shares, with the developer holding the balance of the shares against his money. It suits large mixed-use schemes with several funders, but the transfer attracts stamp duty and capital gains tax on the day the land goes in, the landowner becomes a minority shareholder in a company he does not control, and if the company borrows, the land is the security. Landowners are put into this structure far more often than it suits them.

A sale with the price paid in units is the third, and it is a sale, not a venture. The landowner transfers the land, the developer owes him units, and the landowner’s protection is whatever security he took for the debt. Where the developer is well capitalised and the security is real it works. Where it is a promise in a sale agreement, the landowner has sold his land for a receivable.

Whichever structure is chosen, the agreement is a contract and not a partnership. The distinction is drawn deliberately, because a partnership makes each party liable for the other’s debts, and a landowner who is found to have been in partnership with a developer is liable to the contractor, the bank and the buyers alongside him. The agreement says in terms it creates no partnership, and it is drafted so the courts agree.

The ten terms

1. The title stays where it is. The land is not transferred to the developer, to a company or to anyone else before the units are built, and the agreement says so. What the developer receives is a development lease or a licence to enter and build, registered if the parties want it visible on the title, and expiring on the long-stop date. A developer who insists on the title being transferred to him before he has laid a foundation is asking you to lend him the land.
2. Conditions precedent, with proof of funds. Nothing the landowner gives up takes effect until the developer has satisfied stated conditions within a stated time, and the conditions include the county development permission, the environmental licence, the approved plans, and written evidence of the money, whether a bank facility letter, a funder’s commitment or audited accounts showing the cash. If the conditions are not met by the date, the agreement lapses and the land reverts unencumbered. In a 2026 Nairobi joint venture we act on, the developer pledged proof of funds at a joint meeting and the conditions were drafted to require it in writing, and it is the clause the landowner is relying on today.
3. Your share, in units, not in percentages. A promise of twenty percent of the development is a promise of an argument. The agreement schedules the landowner’s units by floor, type, size in square metres and orientation, with the parking bays and stores attached to each, and it fixes how the schedule adjusts if the design changes, so a redesign which shrinks the building does not shrink only the landowner’s share. The finishing specification for the landowner’s units is scheduled too, because the developer’s show flat and the landowner’s handover are otherwise two different buildings.
4. The programme, with a long-stop date and money for delay. The agreement fixes the commencement date, the milestones, the practical completion date and a long-stop date beyond which the landowner may terminate. Delay past the completion date carries liquidated damages per month, payable to the landowner, and the amount is set at what the landowner’s units would have earned in rent. A programme without a long-stop date is a programme the developer controls.
5. Compensation while you wait. The landowner gives up the use of the land, and usually the rent from it, from the day the tenants leave to the day the units are handed over. The developer pays for the loss. In the 2026 joint venture mentioned above the developer pays the landowner KES 700,000 a month, quarterly in advance, from the landowner’s notice of vacant possession until practical completion, with no set-off against anything else. The figure is negotiated. The principle is not, because a landowner who receives nothing during construction has given the developer an interest-free loan of the land for four years.
6. Financing, and what the bank is allowed to hold. Most developers borrow to build, and most banks want the land as security. The agreement decides in advance whether a charge over the title is permitted at all and, if it is, on what terms. The charge secures only the construction facility, not the developer’s other borrowings. The bank gives a written undertaking to release the landowner’s units from the charge on completion without payment. The facility is drawn against certified construction stages, not in a lump sum. And the landowner’s units are ring-fenced so no default by the developer reaches them. A landowner who signs a charge over the whole title without those terms has pledged his land for the developer’s overdraft.
7. Off-plan sales, and where the buyers’ money goes. The developer will sell his units off-plan to fund the build, and he is entitled to. He is not entitled to sell the landowner’s units, to sell units the plans have not yet been approved for, or to receive buyers’ deposits into his own account and spend them on another project. The agreement requires deposits to be held in an advocate’s client account and released against certified stages, and it requires the developer to report every sale, because the buyers of his units will one day be the landowner’s neighbours in the corporation, and a development sold on unfulfillable promises is a development the landowner lives in.
8. Approvals, risk and liability sit with the developer. The developer obtains and keeps every approval, insures the works, employs the contractor, complies with the National Construction Authority and the county, and indemnifies the landowner against every claim arising from the construction, from a worker’s injury to a neighbour’s cracked wall to a buyer’s deposit. The landowner’s exposure is limited to the land, and the agreement says so. The developer’s indemnity is worth what the developer is worth, so it is backed by insurance in joint names and, where the developer is a special purpose company with no assets, by a guarantee from the group behind it.
9. Sight of everything. A landowner who sees nothing until handover finds out about the problem at handover. The agreement gives the landowner a seat on a project committee which meets monthly, monthly progress reports, the quantity surveyor’s stage certificates, the project bank statements, copies of every sale agreement for the developer’s units, and the right to inspect the site with his own consultant. None of it is a burden on an honest developer. All of it is unwelcome to the other kind, which is the point.
10. Default, step-in and exit. The agreement names the events which are default, a missed milestone by more than a stated period, an unpaid month of compensation, an unauthorised charge, an insolvency event, a sale of the landowner’s units, and says what follows. The landowner may terminate, the licence ends, the developer leaves the site, and the landowner may step in and complete the works with another contractor, using the buyers’ escrowed deposits and the facility if the bank agrees, or may sell the part-built works and account to the developer for his contribution after the landowner’s losses. The developer may not assign the agreement or transfer control of his company without consent. Disputes on money go to arbitration in Nairobi, and disputes on value go to a single expert, because a landowner with a half-built block on his land has no time for a five-year suit.

The share, and how it is worked out

The landowner’s share is a ratio of two numbers, the value of the land and the cost of the building, adjusted for the developer’s profit and the risk he carries. On a half-acre in Kilimani worth KES 200,000,000 supporting a building which costs KES 600,000,000 to construct and sells for KES 1,000,000,000, a landowner who asks for a fifth of the units is asking for KES 200,000,000 of finished apartments, which is his land back at today’s value, and a landowner who asks for a quarter is asking to share the development gain. Between fifteen and thirty percent of the units is the range Nairobi deals settle in, higher where the land is scarce and the developer is eager, lower where the plot is difficult or the developer is bringing an anchor tenant. What matters more than the percentage is fixing it in units in a schedule, valued on the developer’s own selling prices, and adjusted only by an agreed formula. A percentage of an undefined whole is worth whatever the developer decides it is worth on the day.

Tax, which nobody mentions until it is due

A contractual joint venture carries the least tax at the start, because the land is not transferred. It is not tax free. When the developer’s units are eventually transferred to him or his buyers, the landowner has disposed of an interest in land for consideration, which is the value of the units he keeps, and capital gains tax at fifteen percent is payable on the gain, with stamp duty payable by the transferee on each transfer. The development lease itself is stamped. Where the landowner takes his units and sells them, each sale is a further disposal. The agreement says who pays each tax and when, and it deals with the value the parties will declare for the developer’s units, since the Government valuer takes his own view. A joint venture company brings the whole tax bill forward to the day the land goes in, and a sale for units brings it forward to the day of the sale, with the landowner paying tax on units he has not yet received. The structure is chosen with the tax computed, not after it.

Two other consents arise more often than expected. Agricultural land, which includes a surprising amount of Kiambu and Kajiado, needs Land Control Board consent for the lease and for the eventual transfers. Land which is a matrimonial home needs the spouse’s consent to the joint venture, and a developer who has spent a year building on land whose owner’s spouse never signed has built on a contested title.

The questions to ask before the first meeting ends

Who owns the developer, and what has he finished. Where is the money coming from, and will he show it in writing. Has he built on a joint venture before, and will he give the landowner’s name. Does he expect the title to be transferred, and if so why. Does he expect to charge the land, and to what. What will he pay during construction. Where will his buyers’ deposits sit. And who will be drawing the agreement, because a joint venture drafted by the developer’s advocates is a document written to protect the developer, however reasonable the people across the table appear.

What we do

We act for landowners in joint ventures from the first approach to the last title. We assess the developer, obtain the proof of funds, structure the venture and compute the tax on each option, draw or negotiate the agreement around the ten terms above, register the development lease and the landowner’s protections against the title, sit on the project committee where the landowner wants a lawyer in the room, and enforce the agreement when a milestone or a payment is missed. The fee is quoted as a fixed sum for the structuring and the agreement, with the project committee and enforcement work quoted separately, and it is a small fraction of the value of a single unit in the schedule.

Questions we are asked every week

What share of the units should a landowner get in a Kenyan joint venture?

Between fifteen and thirty percent of the units is the range Nairobi deals settle in, driven by the ratio of land value to construction cost. The share is fixed in a schedule of specific units, not as a percentage of an undefined whole.

Should I transfer my title to the developer or to a joint venture company?

Not in a contractual joint venture, which is the structure we prefer for landowners. The title stays in your name, the developer builds under a development lease or licence, and his units are transferred on completion. A transfer into a company brings forward the stamp duty and capital gains tax and puts the land at the company’s risk.

Is the developer allowed to charge my land to his bank?

Only if the agreement permits it, and then only on terms which limit the charge to the construction facility, ring-fence your units and bind the bank to release them on completion without payment.

What happens if the developer runs out of money halfway?

Under a properly drawn agreement, the landowner terminates, the developer leaves the site and the landowner steps in to complete or sells the part-built works, with the developer’s contribution accounted for after the landowner’s losses. Without those terms, the land sits under a half-built block and a bank charge while the parties litigate.

Is a joint venture a partnership?

Not if it is drafted correctly. A partnership makes each party liable for the other’s debts. The agreement states it creates no partnership and is structured so the landowner’s exposure is limited to the land.

Do I pay tax when I go into a joint venture?

In a contractual joint venture, not until the developer’s units are transferred, when capital gains tax at fifteen percent arises on your disposal and stamp duty on the transfers. In a joint venture company or a sale for units the tax falls due at the start.

How long does a joint venture development take?

Three to four years from signing to handover for a mid-sized apartment block in Nairobi, once the approvals are in. The agreement fixes the programme and pays you for every month the developer runs over it.

Next step

If a developer has approached you, send us the proposal or term sheet and a copy of your title by e-mail to peter@pmlaw.co.ke or WhatsApp through +254 714 644 080. We reply within one working day with a view on the structure proposed, the questions to put to the developer and a fixed fee for the agreement. Nothing is charged until you instruct us.

Peter Maina is a Partner of Peter Maina & Company Advocates, Hazina Towers, Nairobi. He is an Advocate of the High Court of Kenya practising in conveyancing and real estate, corporate and commercial, and capital markets law, and draws and negotiates joint venture agreements for landowners and developers in Nairobi and the counties.