Investment is costly. But it is always one way to expand your market and double your revenue. In real estate, a joint venture is standard and typical. So, whenever like-minded people come together intending to do some work to generate income, they are said to be working in a partnership. There can be several forms of a business partnership, such as verbal or written. However, it is always advised that partners should securely keep a written agreement so that all roles and responsibilities, all duties and rights, all remuneration, and profit sharing details are marked. This way, boundaries are well-known beforehand, and one can proceed will a free mind regarding their efforts and the consequent rewards associated with that effort.
Exchanging and sharing of any property in real estate is always supported with hard legal documents to avoid disputes. In this case, you need a real estate partnership agreement that contains the requirements, terms, and conditions to secure your assets. It should apply laws and legal rights of both parties to avoid miscommunication in ownership.
People want to own a property that they can call their own. Today, many investors are willing to commit to company partnership with the rising population of realtors today. Perhaps, according to an analysis report released by Statista, there are 1.4 million National Association of Realtors (NAR) members as of 2019. Contrary to this, it is an advantage to form a small business partnership to potentially reach more significant success. But before that, everything must be pen down in a document both parties can keep.
You have to be very careful when writing your agreement with the other party. Keep in mind that a business contract contains policies that are relevant to real estate and property-owning. With this, you can follow our guide below as we list the essential steps in making your real estate partnership agreement.
One of the first things that you must do when writing a shareholder agreement is to discuss what this partnership is all about. The right thing to do is to place a title in your letter. Is this a joint venture partnership agreement? Or a real estate investment agreement? With this, it will be easier for the people involved to understand what the contract is about without getting through the entire content.
Next, allocate a space in your business formal letter to recognize the parties involved. For company partnerships, you can put the name of the firm. Or place the full name of the CEO. This is a critical section because it is substantial to clarify who is responsible for the contribution of properties, cash, or other services that is necessary. If disagreements happen in the future, you can easily file legal charges to the right person.
While it is essential to identify both parties, you can discuss profit and losses. Will the liabilities and failure be allocated to both parties with 50% each of interest? When will the revenue be given? Because each side of the group has different financial plans and needs, it is substantial to divide the proper proportion when it comes to money. With this, investors and your company will settle for the right terms.
Incurring financial losses should be every party’s responsibility. But maybe, you want to make definite rules, so be wise when managing the duties of each. For example, who will keep the financial statements? Is it necessary for the real estate company to record payments and withdrawals every month? Think ahead and plan out for this section correctly. Who wants to get in trouble in between the process? With this, you can easily track down who is liable for any failure.
Lastly, finish your general partnership agreement by outlining all of the laws and policies related to the real estate legal partnerships. In this section, ensure to include the payment method and schedule, limitation of property partnerships, and separation or real estate termination of the agreement. You need to prioritize this to secure your assets in the future.
When one party leaves the partnership, it will automatically be dissolved. Thus, it will no longer be liable for any movement in the process.
For most, they follow particular steps. It starts with reviewing the agreement, then followed by discussing the possible dissolution. It is not an instant procedure but still needs a thorough process.
There are four types of partnerships. It includes the general, limited liability, public-private, and limited partnership.
It’s good to expand your business. Part of that is a partnership with investors that could potentially develop your revenue in the future. But as mentioned, you need to keep things legal. So, start owning a document where you can secure your assets. Make an agreement that will help both parties understand the limitations.