This is more of a legal question and I would suggest you to contact a US lawyer. But the rights (i.e., control) and obligations of partners can generally be traced back to the LPA. Next time, you may consider to have some clauses in the LPA to require them to seek your permission for certain large spending (exceeding a specific amount).
How can a JV agreement truly create joint control of the funds?
We are a Chinese developer that has already done one JV deal on a ground up construction of a high rise tower on the West Coast. For the most the deal went well, with the one exception that our partner, a U.S. developer, seemed to have substantially more control over the deployment of capital for the deal. We are looking at other similar opportunities, but would like to know how we can structure the agreement so we maintain more of a role with regard to capital deployment?
It can be done relatively easily, however, negotiation of this nature should be settled before the JV is signed. Equity capital is more difficult to come by nowadays and the capital should have a major say. I would suggest that a competent lawyer be part of the negotiations as well.
The means of control is in the suite of documents used in your venture and quality, experienced counsel should be able to accomplish that. It all starts with a term sheet or letter of intent that makes it clear that every aspect of control is joint between the members/partners. Most joint venture agreements provide that one partner/member is the manager but it can be co-general partners or another entity that is equally controlled by both partners. Each bank account, draw request or other material items can be set up to require joint signatures from both partners/members and any third party agreements with affiliates, such as a development agreement, asset management agreement or property management agreement, can be set up in the same manner with joint ownership and control. You may find that your American partners will not like these mechanisms because it can cause delays on taking or implementing actions, more opportunities for deadlocks or disputes, and they may question whether you have the capabilities and experience that an experienced local partner may have. But, through a well-designed suite of documents, competent counsel can implement a joint control regime as long as your counterparty is amenable. iPad
The JV agreements can easily specify who controls what funds under various circumstances. The bigger problem is making the system workable in the context of a specific project.