- Names of the people/companies involved
- Legal address of the Joint Venture property
- Full name(s) of the Title holders for the property
Ok, those are obvious. Now the people involved have some decisions to make BEFORE entering into the partnership:
- Who will be the financial manager (day-to-day banking and business affairs for the property)?
- If there is a finder’s fee, all the details around how much will be paid and when?
- Who is responsible for the Property Management?
- What fee will be paid for property management?
- How often do all the venturers receive reports (about the property and/or the finances)?
- What will the venturers do with surplus cashflow?
- When exactly does the JV end? Do the venturers want a clause in the contract regarding renewal?
- What if one Venturer wants out early?
- What is the plan to appraise the property at that time?
- First right of refusal?
- Buy/Sell provisions (eg. can 1 party bring in a new venture to buy out the one that wants to leave early?)
- Can 1 party force the sale of the property before the end of the agreement?
- What is the plan at the end of the JV Agreement?
- Sell the property?
- One partner buys the other out?
- Continue with a new agreement for a new fixed time period?
- Refinance the property to pull out some equity?
- What if one venture dies before the Agreement reaches its completion date?
- What if there is a sudden cash call for an unexpected expense that is not covered by insurance (eg roof/furnace repair or replacement).
As you can see, the Joint Venture Agreement is a little like a prenuptial agreement. As many decisions as possible are made before entering into the investment together.
