Are you thinking about entering into a joint venture agreement to purchase real estate? Maybe you have an excellent opportunity to purchase a great piece of property but you just don’t have the resources to handle the investment yourself. In this case, instead of missing out on this wonderful opportunity you’ve decided to enter a JV agreement with other partners since they can help you handle the responsibility, finances, and overall workload.
But what makes a joint venture agreement enforceable? Many people have wondered about this in the past and they will continue to wonder about it in the future. All in all, it’s quite easy to understand what makes this enforceable if you know and understand the rules. Ultimately, we would like to tell you about real estate joint venture agreements so that you fully understand the process before entering into a deal to buy real estate with partners for the first time.
The Key to Making a Real Estate Joint Venture Agreement Enforceable
At the end of the day, a joint venture agreement is going to be enforceable once you enter into a contract with two or more individuals. Once you have a legally binding contract between all parties, the agreement amongst everybody is legally enforceable by the law. Remember, it’s very difficult to get out of a contract once you’ve signed it, so you better be comfortable with all of the terms of the contract before entering into a joint venture agreement of this type.
Whether you know it or not, entering into a JV agreement of this sort is very serious indeed. Not only will you have to put up your money and time in many cases, you’ll also be responsible for any of the profits or losses that are incurred as part of the joint venture project. So you definitely better be prepared to enter this partnership agreement with your eyes wide open. Because you are going to be responsible to meet all of the terms of the contract once you’ve signed your name on the dotted line.
What Is a Real Estate JV Agreement Anyway?
Although we’ve explained it a bit, it’s important to know that a joint venture agreement is a contract between two or more parties. As a party to this contract, the stipulations will delegate that you’re responsible for the profits, losses, costs, and income generated by this agreement. So if you aren’t willing to take on this type of responsibility, you should never enter into a partnership agreement of this type.
On the other hand, when you enter into a real estate JV agreement, you’ll typically end up purchasing one specific type of real estate as part of the project. This makes it easy for all parties involved and lets everyone know exactly what they’re responsible for because the terms of the agreement are always going to remain the same.
As an example, if you enter into a JV agreement for rehabbing properties, you’ll be expected to put up a certain amount of money to fix up the place, put up a certain amount of money to advertise the place once you put up for sale, and you’ll also need to perform a certain amount of work according to the contract.
But every contract is going to be different and every real estate JV is going to have its own specific points. You may not be responsibility to do any of the manual labor as long as it isn’t stipulated within the contract. But if it is a contract stipulation, then you’ll definitely have to perform manual labor to help fix up the place.
Or maybe your role in the partnership agreement has you putting up the bulk of the money to pay for repairs and supplies and things of that nature. You’ll be responsible to put up the money while your partners perform most of the heavy lifting and manual labor.
The Bottom Line on Real Estate Joint Venture Agreements
As you may or may not know, these real estate JV partnerships can be very fruitful for all parties involved. But on the other hand, you are definitely taking on risk as a member of this partnership agreement so you have to be prepared to potentially lose money if things do not go your way.
All in all, a real estate agreement of this type is going to be enforceable as soon as all parties have signed the joint venture partnership agreement documents. Once you’ve signed on the dotted line, you may need a lawyer to help you break the contract if you no longer wish to participate as a member of the JV partnership.