What Are Joint Ventures in Real Estate?

joint ventures

A joint venture can be many things, as long as at least two entities are pooling together their resources for a mutually beneficial project. These are common in real estate, where the purchase and management of property can be a huge cost in terms of time, money, and manpower. When you go in with a partner or partners, you can subsidize the costs by sharing the profits.

Joint ventures need to have deep and specific contracts to give all partners more than enough reason to hold up their ends of the bargain. These contracts should also contain consequences in the event that they don’t, detailing the procedure for getting back your investment.

To make sure your contracts and documents protect you, you need a real estate attorney to review and write your joint venture documents. Contact the attorneys at Mazzoni Karam Petorak & Valvano for the legal help your joint venture needs.

Why Join a Joint Venture?

This may make joint ventures seem intimidating, but it can be safer to go into a joint venture. If a joint venture goes wrong, there would still be less risk than if you had attempted the project on your own. You don’t have as much investment to lose, and you should have safeguards in place to recoup your losses in certain circumstances. Even if your loss isn’t due to one of your partners falling through, you still don’t have as much to lose.

But, this is only true if you have an attorney and the proper documents. If you don’t, you can be in a situation where you’re just as liable for everything falling apart as you would be if you weren’t in a joint venture. You need an experienced attorney to make sure that your joint venture protects you as much as it should.

What Are the Roles of a Joint Venture?

While there aren’t any rules regarding how partners have to conduct themselves or how many there have to be, there are typically two roles that need to be fulfilled in a joint venture. This includes the operating member and the capital member. Usually, one partner will serve as each, but they can both share responsibilities, or in cases where there are more than two partners, two or more can fulfill one role as another partner fulfills another role.

The operating member performs the mechanics of the project. In real estate, this could be who conducts the research, surveys the property, hires the necessary employees, and gets the necessary licenses. Typically, this partner already has the experience and a foothold in the real estate industry, so they can be trusted with this half of the venture.

The capital member usually finances a large amount of the project, sometimes even all of it. They typically pay for the real estate property and the supplies and resources the operating member takes on. Sometimes they also pay for the operating member’s employees during the time of the project, but this isn’t a necessity.

Get a Real Estate Attorney for Your Real Estate Joint Venture

Whether you’re an operating or capital member, you want a real estate attorney for your joint venture. If you’re the operating member, and your capital partner is short on their end of the bargain, you have resources and team members with no way to afford them. Without legal recourse, you can’t support them, and it would be as if you weren’t in a joint venture at all.

If you’re the capital partner, you run the risk of funding a real estate project where the operating partner produces nothing of worth or tries to steal the project from you. In this instance, the correct contracts and legal representation can work together to get you what you’re owed and what you deserve.

Don’t leave things up to chance, and don’t avoid potentially beneficial partnerships so you don’t have to take the proper steps to alleviate risk. Contact the real estate attorneys at Mazzoni Karam Petorak & Valvano. We’ll make sure your real estate joint venture is safe for you to proceed with.

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