Real estate partnerships can be a great way to invest in property and share the workload and risks with another party. However, like any business relationship, it is important to have a clear understanding of the terms and expectations outlined in a partnership agreement.
Here is a checklist of items to include in a real estate partnership agreement:
1. Partnership Goals: Start by outlining the overall goals of the partnership. This may include specific investment strategies, target property types, or a desired return on investment.
2. Partnership Structure: Indicate the legal structure of the partnership, including the names of the partners and their equity percentage in the partnership.
3. Responsibilities and Duties: Outline the specific roles and responsibilities of each partner in the partnership, including managing the property, sourcing and analyzing investment opportunities, and handling financial and legal matters.
4. Capital Contributions: Determine how much each partner will contribute to the partnership and how the capital will be used for property acquisition and management.
5. Distribution of Profits and Losses: Describe how profits and losses will be divided among the partners. This may include provisions for management fees, preferred returns, and carry interests.
6. Decision Making: Establish a decision-making process for major partnership decisions, including property acquisition and disposition, capital expenditures, and refinancing.
7. Dispute Resolution: Define the process for resolving disputes among partners, including mediation and arbitration.
8. Termination and Dissolution: Identify the circumstances under which the partnership can be terminated or dissolved, including partner withdrawal, bankruptcy, or death.
9. Confidentiality and Non-Compete: Establish provisions for maintaining confidentiality and preventing partners from competing with the partnership during and after the partnership term.
10. Governing Law and Jurisdiction: Specify the governing law and jurisdiction for the partnership agreement and any disputes that may arise.
By including these items in your real estate partnership agreement, you can create a comprehensive and effective framework for a successful partnership. It is always important to consult with a legal professional to ensure that all aspects of the agreement are legally sound and enforceable.