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Understanding real estate joint ventures

On Behalf of | Aug 15, 2023 | Contract Disputes

Many people are familiar with the real estate purchase process, either because they bought a home or a business. There is another type of real estate arrangement that they may be less familiar with, however, called a real estate joint venture.

A real estate joint venture happens when two or more business parties invest or develop real estate together. It may allow the parties to purchase property that would otherwise be unaffordable if they purchased it individually.

Joint venture disputes

Unfortunately, disputes can arise with a joint venture. Often, the parties must make major decisions about financing, development or other project details.

There can be disputes if one party does not meet their obligations, such as providing their part of the funding or not completing the project on time.

If the parties both put money into the property, there can be disagreements about how to distribute funds if it is sold. There can also be common misunderstandings and miscommunication between the parties about their goals.

Parties can avoid or limit disputes by addressing some of these items up front in a clear, well-written joint venture agreement. They may want to include topics such as profit sharing, risk responsibility and whether the parties will try to resolve their issues first through mediation or arbitration.

It’s also important to decide ahead of time which party will be responsible for paying property debt and taxes, or if both will and how they will address ending the joint venture.

There is assistance available for those who need help with a real estate joint venture.