Anytime you agree to undertake a real estate venture with another individual or entity, it's advisable that all parties put the agreement in writing. Joint venture real estate agreements are an excellent, legally enforceable tool designed to outline expectations and obligations between two or more individuals or entities. These agreements are ideal for one-time real estate projects or for developers looking to pool resources to receive enhanced lending opportunities.
Essential Provisions of Real Estate Joint Venture Agreements in New Jersey
Joint venture agreements, also known as JV agreements or JVA's, can take different forms; but a solid joint venture agreement contains numerous provisions intended to protect each parties' interests while also guiding expectations.
First, the joint venture will describe what each party is providing. For example, if two parties wish to flip a house, one party may provide financing, and the other may do the physical work. Respectively, these parties are generally referred to as the capital member and the operating member.
A New Jersey joint venture real estate agreement will:
- Define the ultimate goal of the venture
- Contain provisions describing how decisions will be made
- Outline investment obligations
- Specify how profits and losses are shared
- Dictate how interests in the venture are owned
- Specify when and how the agreement is terminated
- Describe venture-specific requirements, such as confidentiality
Although joint ventures operate similar to formal partnerships in practice, they are distinguishable from partnerships in that they are temporary. The management of a partnership is dictated by the business structure, while the management of a joint venture is dictated by the joint venture agreement.
Depending on the complexity of the venture, the joint venture agreement may also become very complicated. It's important to note that these agreements are legally binding contracts. As such, the joint venture agreement also needs to include provisions that set forth the governing laws and regulations, severability, notice requirements, and more.
Contact Hartmann Law
Whether you and others are planning to flip a house together, or you're an experienced co-wholesaler, it's always best to consult with an experienced attorney in the preparation of joint venture real estate agreements. At Hartmann Law, we understand that real estate joint venture agreements need to be uniquely tailored to each venture. To learn how Hartmann Law can help you, contact us today.