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Joint Ventures are a very popular topic with real estate investors, maybe the most popular topic. We all talk about them. Sooner or later most of us get involved in Joint Ventures.
In a nutshell, the basic Joint Venture is two people getting together to acquire a piece of real estate. The details of your Joint Venture are contained in a contract known as a Joint Venture Agreement or JVA. A good Joint Venture Agreement is very detailed and tailored to the circumstances and requirements of the participants in the JVA.
One major concern for all Joint Venture participants is, “how do we settle disputes”?
The JVA should deal with this topic in lots of detail.
The second most popular question in my real estate practice is, “should I incorporate”?
That question is front and centre in the minds of real estate investors. Answering this question takes a bit of research and is ever so much an individual decision. There just isn’t a ‘one-size-fits-all’ answer to the question, “should I incorporate”? Consult with accountants and lawyers familiar with real estate investing. If you are a Real Estate Investment Network (REIN) member, check the forums on Myreinspace. This question has been discussed many times in great detail.
So, the decision is made. You decide to incorporate with another person(s) so that there are two or more shareholders in your new Corporation. You want to do Joint Ventures within the Corporation. If it were just two of you without a Corporation you would enter into a detailed, written Joint Venture Agreement.
How do I do a Joint Venture within a Corporation?
The answer is: you need a Unanimous Shareholders Agreement, often referred to as a ‘USA’. Your corporate lawyer will almost always suggest that you enter into a USA as it sets out the rules of how the Corporation will operate, make decisions, and distribute profit! Tailor that USA to your own circumstances and requirements. And, again, pay particular attention to that important question, “how do we settle disputes”?
The time to talk about settling disputes
is when you don’t have any.
For an excellent discussion of strategies to settle disputes before resorting to that age-old solution, “Sue the bastards”, take a look at this article from Alberta Venture Magazine. Then, don’t delay. Get in touch with us at RMLO Law LLP, and book your appointment to discuss incorporation and the details of your Unanimous Shareholders Agreement.
Contact Barry McGuire now.
Alberta real estate needs an Alberta real estate lawyer.