Understanding Nominee Agreements
An agreement, based upon a legal engagement, to hold property or legal rights in the name of the nominee, who is obliged to comply with related instructions from the actual owner, so that the nominee is entrusted to act as the holder of an entitlement through on-going management. The nominee holds an equitable interest in the legal title. A nominee acts as a conduit rather than a direct owner regarding expressed entitlements.
Architecture is not just about bricks and water. That may be so when it comes to the construction itself, but when you are developing a realistically unique building, much of the skill involved may be in its design, where new architectural materials may apply, or in bespoke internal fitting-out. Imaginative, innovative design is now at the forefront when managing architecture and one the defining associated skills of an architect.
In a situation where an architect is creative and innovative, a comprehensive nominee agreement may be definitely useful so that the legal title to entitlement over a project can be held via a structure that permits creativity and innovation to be fully explored without impinging on other subjects of ownership or matters such as neighbour rights. Often, commercial arrangements work best where a corporate entity can be set up to own the property itself, such that the legal rights actually belong to that entity rather than an individual. The remainder of the prescribed ownership can then be vested in the corporate entity to hold for the benefit of its shareholders with the actual controlling interest being determined by a separate arrangement (e.g. a shareholders agreement or quasi-partnership agreement of some other sort), such that the contractual basis of ownership may not necessarily be identifiable. The nominee agreement may provide a basic legal entitlements structure to effectively manage the ownership chain to facilitate the architectural as well as any other practical considerations raised by the development or proposed execution of the project.
In a scenario where an architect is exploring that space, it is ideally suited to a consultancy client work arrangement involving one solicitor and one client, with the solicitor acting as the nominee of the client to manage the development. To maximise the usefulness of the legal structure created, as much detail as possible can be captured in the original agreement with the architect (in this particular case) so that the precise concerns and intentions of the nominee and his/her/their legal advisor are clear from the outset to all involved. The legal advisor uses the nominee role as a way to effectively manage the development with the architect. When it comes to dividing up the shareholdings of the nominee entity, a separate shareholding structure may be entered into once the legal title to the nominee group is secured, although that legal divide can easily be anticipated from the hidden agreements currently in place if the nominee is clear what the nature of the arrangement with the architect should be in terms of rights that must remain clear, such as intellectual property in design, limitations of responsibility regarding materials or workmanship, and what precisely are the rights of the architect in regard to the client and vice versa.
How is this relevant to an average person seeking the services of an architect? Overall, the key thing is that financial management, client and relationship relations, and legal management all have to be effectively managed in tandem from day one to secure the ultimate aims of the project. Legal concerns do not exist in isolation, and neither do architectural concerns. All of these elements need to be woven together so that no crucial detail is overlooked. Overall, the effort can result in a much more efficient use of resources in a financially prudent manner, as well as have the associated benefit of securing a situation where all parties are content with the outcome.