Real estate investment partnerships are enforceable contracts that allow two parties to run a real estate investment firm together. When deciding if you genuinely need a real estate partner, partnerships’ benefits and drawbacks must be considered. Before moving further, think about who your partner should be and the format of your real estate investment partnership agreement. Working with a partner may be your biggest nightmare if you do not make the right choice. You can do it alone or form a partnership with someone. To determine whether partnering is the best action for your real estate investing plan, continue reading.
A partnership agreement should be created to define your obligations and rights formally. A real estate partnership agreement is helpful with the onerous burden of buying or maintaining real estate alone. Because of the risks and duties, many investors decide to form a partnership. However, for everyone to keep half of the contract, any formal partnership must be formed on paper. We are providing you with a basic Real Estate Partnership Agreement form that you can use to describe the objectives of your new company. We will also go through all the information you need to complete this form in detail.
Is a Real Estate Partner Necessary?
If they contribute something to the deal you lack, that is the sole justification for partnering with them. You need to conduct an honest, critical self-evaluation to identify your strengths and flaws and the qualities you require in a mate. In some instances, the partner will likely provide the necessary funds for the transaction, while the partner may also contribute new talents in other cases. A partner with the same abilities as you and is in a comparable financial circumstance to you is not bringing anything to the transaction you need. The contribution of complementary abilities or resources adds value to a partner in your real estate investment plan.
What exactly is a Real Estate Partnership Agreement?
A real estate partnership agreement is employed to form a partnership between two or more people to buy or manage real estate. It lays forth the partnership’s ground rules and what each partner is expected to do and commit to in the case of a legal or another conflict. This agreement will define the partnership’s terms, including ownership, management arrangements, and other pertinent information.
you should know: Supplementary Agreement Drafting And Notarization
The Benefits of a Real Estate Partnership Agreement
The rights and obligations of each partner in the transaction should be spelt out in a written agreement that you should draught and sign if you are buying real estate with another person. This document is known as a real estate partnership agreement. When disagreements over the right to sell or lease the property, the distribution of rental revenue or investment losses, property management choices and obligations, or development expenses and oversight emerge, these agreements provide little opportunity for ambiguity or interpretation.
A Real Estate Partnership Agreement: When Should You Use One?
There is no legal need for a partnership agreement, but it may be helpful in several situations. For instance, a real estate equity partnership agreement may assist in keeping track of the amount each partner contributed to the transaction and the percentage of the company they control.
If you want to buy or manage a property with family members, a family real estate partnership agreement may also aid in safeguarding your ties. Establishing the partnership in writing from the start might help avoid misunderstanding since doing business can often damage relationships.
In order to clarify the terms and circumstances of any business relationship, including the acquisition or administration of the real estate and prevent misunderstandings or disputes, consider utilizing a real estate partnership agreement.
May be you want to know: Partnership Agreement Drafting And Notarization
What Should Be included under Real Estate Investment Partnership Agreement drafting?
At a minimum, a real estate investment partnership agreement should have the following:
- A list of the partners’ names.
- Equity and investment made by each partner
- Where is your company located
- The property’s address (or properties)
- The duration of the relationship (if applicable)
- The goal of the collaboration
- How will earnings and losses be allocated?
- The steps to take if a partner wishes to break the contract
- Further applicable bylaws
To fit your requirements, you may add further terms and change the agreement afterwards. Use the example real estate partnership agreement below, or modify it to suit your needs.
Does a Real Estate Investment Partnership Agreement Need to be drafted by an Attorney?
Please only attempt to construct a real estate investment partnership agreement if you are confident in your knowledge of the material you are reading and the relevant legal terminology. One day, you could need to use that paper in court. Utilize the knowledge and experience of your lawyer, who has probably seen business relationships at every stage of their evolution. For any legal drafting services, please do not hesitate to contact our Drafting Lawyers at Notary Public Dubai.
Hassan Humaid Al Suwaidi is a UAE Citizen and the founder of the firm HHS Lawyers. He has a vast experience of 20 years of dealing with high-value and complex notary requirements. Hassan has been involved in some of the largest legal settlements in the UAE and is commended for his ability to attain the most favourable outcomes for his clients.