Start Here | How It Works

Co-Development 101: How It Actually Works

Strip away the sales language and co-development is simple. You bring land. The builder brings capital and trades. At the end you split the units or the proceeds. Everything else is mechanics, risk allocation, and lawyer work.

Key Takeaways

✓The real work happens in the term sheet and the definitive agreement, not on the construction site.
✓You will move out, rent somewhere for 18 to 24 months, and rely on the paperwork to protect you.
✓Four structures exist; only one is right for your lot and your risk tolerance.

The Six-Step Flow

First conversation

A licensed builder sees your lot on MLS, in a marketing letter, or via a referral. You talk. Nothing is signed. You are screening each other.

Non-binding term sheet

The builder proposes a land value, a unit split, and a timeline. You get independent counsel before you initial anything. A term sheet is not a contract.

Due diligence

Title search, geotech, tree survey, zoning confirmation, arborist report. Typically 30 to 60 days. Cost is usually split or advanced by the builder.

Definitive agreement

A real contract: co-development agreement, shareholder agreement if JV, escrow for land, performance bonds. This is where the lawyers earn their fee.

Permit and construction

You move out. The house is demolished. Permits are pulled (4 to 6 months). Construction takes 10 to 12 months. You are reading progress reports, not swinging hammers.

Completion and split

Strata plan is registered. Units are transferred per the agreement. You take title on your retained unit(s). Builder takes title on theirs or sells them into the market.

Four Deal Models

Land-for-Units

You contribute land, builder contributes build capital, units split on contribution ratio. Simplest to understand, hardest to negotiate when the math tightens.

Joint Venture (JV)

Both parties own shares in a newco. Profits flow through a waterfall. More sophisticated, better for sharing upside on strong markets — riskier on weak markets.

Sale-Leaseback

You sell the land outright, then lease a finished unit back at a discount. Clean exit with a soft landing. You lose all upside past sale price.

Profit Share

Land stays in your name throughout. Builder manages the project for a fee plus a share of net profit at sale. Rare in small-lot work, but possible.

The right structure depends on your lot, your tax situation, and how long you can wait. See Deal Structures & Splits for the full math.

What You Are Actually Signing Up For

A co-development is a partnership where the paperwork is the product. The building gets built whether or not you read the shareholder agreement. What changes based on the paperwork is who eats the losses when construction costs go up, when a unit doesn't sell on time, or when the builder hits trouble on another project and looks to yours for cashflow.

Assume cost overruns of 5 to 15%. Assume a 2 to 4 month permit delay beyond what the builder promises. Assume the sales market at completion is worse than the spreadsheet says. If the deal still works for you under all three assumptions, you have a real deal. If it doesn't, you have an option.

Best For

✓ Homeowners who value unit retention over cash certainty.
✓ Lots that cleanly yield 4 to 6 units under current zoning.
✓ Owners who can afford to walk away from the conversation if the term sheet is wrong.

Usually Fails When

✕ You are emotionally locked into "this has to happen".
✕ The builder refuses to work with your lawyer instead of their own.
✕ The term sheet is missing any of: unit allocation, price, timeline, bond, remedies.

What To Verify Before Spending Money

→ The exact legal structure (SPV vs option vs trust) before signing.
→ Whether the builder is on the BC Housing Licensed Residential Builder directory.
→ Who pays the lawyer if the deal falls apart after term sheet but before definitive agreement.

FAQ

Who owns the land during construction? +

Usually a single-purpose corporation (SPV) that both you and the builder control per the agreement. In some deals you transfer title to the SPV; in others you grant the builder a registered option while keeping title. The answer drives lender security.

When do I actually get my unit? +

At strata registration, typically 18 to 24 months after demolition. Not at framing, not at drywall. The risk window is real.

Can I live in one of the new units? +

Yes. That is the most common outcome for homeowners using the land-for-units model. You negotiate which unit (ground floor, top floor, corner) upfront — not at completion.

What if the builder goes bankrupt mid-build? +

The construction lender takes over first, then the bond kicks in, then your agreement dictates step-in rights. This is why performance bonds and lien holdback clauses matter more than any other line in the contract.