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Joint Venture Variables To Negotiate

Chapter P

Perspectives On Building An Agreement
Venture Variables - What You Negotiate

Joint Venture Variable Checklist:

The second set of lease-purchasers split with each other, so they lost the money they had put up, but life happens. I go back to my partners, and guess what? My partners also had split with a
divorce at this point. The house, among their set of assets, became the wife's. I also got divorced at that time.

Everything has changed, so now what are we going to do with this wonderful little rental house? . We got it fixed up and got another lease-purchaser. At this point my partner the ex-wife got back together with her ex-husband, so the decisions that she had made were all now subject to the husband's review. Meanwhile, I just wanted out of this relationship. No fun.

We restructured our partnership agreement, because initially it was a 50/50 split of the profits with each of us contributing negative cash flow costs. Given my personal situation at the time and the divorce expenses, financially I couldn't handle my end on this particular deal. So I gave the partners more of the decision making power and a greater percentage of the ownership, in exchange for
their taking over most of the financial liability.

The partner husband basically took over. However, the decisions he made didn't happen to work. About a year later I decided his 90% ownership and my 100% management responsibility plus the negative cash flow wasn't fair. We renegotiated again and included an incentive for me to sell. I was responsible for $3,000 in the negative, and after that he would kick in. No matter what happened when we sold it, I would get 50% of the profit, regardless of the percentage of ownership. They needed the ownership for the tax break, and I had accepted it because it was
the most fair situation for both of us. We both recognized that things had happened since the onset of the partnership. Life had happened in between.

Venture Variables: What You Negotiate

Who Or What, Like A Trust, Holds Title, And In What Proportion?
Tenants In Common - What Percentage?
Beneficial Interests - What Percentage?

All real estate has a bundle of privileges and rights, and one of them is that whoever has the title to the property, has the tax benefits. Some of my partners need a tax benefit, so it's in their
names. Sometimes they want anonymity, so whose name would it be in? If you don't want your name on the title, it could be the trust, or a corporation, or some other entity. In other words,
whoever has the title of ownership has a benefit, so that's one of the things you work out on your list of variables on your partnership agreement. Dykes Boddiford suggests that a very powerful partnership venture could be with two corporations acting as the joint venture partners.

Who Gets The Tax Benefits?

It has to add up to 100%, but it doesn't necessarily have to be the same as ownership.

What Is The Length Of Holding?

It can be long or short. The agreement needs to state clearly the negotiated timetable for this venture. This is one component quite likely to be amended.

Joint Venture Variables to Negotiate - Chapter P

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