When you are drafting your own real estate partnership agreement, you might have looked at examples of real estate partnership contracts to see what needs to be included. There are many kinds of real estate partnership contracts that you might need to write, and you will need to be sure that you write the correct real estate partnership agreement template for your situation. You could need a rental property partnership agreement or a co-ownership agreement real estate template for different kinds of real estate agreements that you enter into.
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Real Estate Partnership Agreement Templates
What is a Real Estate Partnership Agreement?
Real estate partnership agreements help with the task of buying or managing real estate. These documents are not meant for any other kind of real estate process and only govern the purchase and management of these kinds of assets. You will want to make sure that you always have the details of this kind of relationship documented in writing so that there is no confusion between you and your partner about the nature of your relationship or the details of the management processes that are necessary to the relationship.
The ground rules of the partnership can be entirely unique to your situation. You do not need to follow any set guidelines for your arrangement with the other parties involved in the agreement. The only stipulation that you need to follow when drafting this agreement is that the details be discussed clearly in the partnership agreement. This is a legally binding document that offers guidance when there is confusion in the future about which partner should take which actions or which partner will cover which expenses.
There are three types of these kinds of agreements:
- General Partnership Agreements
- Limited Partnership Agreements
- Limited Liability Agreements
These documents are not required by law, but they are very helpful when you enter into a relationship with another partner or investor that has to do with real estate. Business goals and opinions about the management of property can often lead to disputes between parties, even when those parties are family or close friends. When there is a legal document that covers the details of the relationship and the expectations of each party that is involved in maintaining it, there is far less chance of strife and disagreement between the parties involved in the partnership.
How Do You Set Up a Real Estate Partnership?
There are some details that should always be included in your real estate partnership agreement. These details are necessary to help define the terms of the relationship and ensure that all of the parties involved are required to execute their portion of the agreement. Make sure that all of this information is contained within the real estate partnership agreement to be sure that you will have the best relationship with your real estate partners throughout the duration of your partnership with them.
- Names of the Partners. All of the partners need to be named in the real estate partnership agreement with their full legal names. If a business is an owner, the legal business name of the entity must be included as an owner. Make sure that the names and addresses of the parties involved are also included in this section of the document to prevent confusion about who the named parties are. Anyone with interest in the management or the purchase of the property will need to be named here in this section.
- Partner Investment and Equity. When partners are involved in the ownership of an asset, you need to be sure that the partner investments are listed clearly in this section of the contract. The equity and the amount of money put up to invest in the property needs to be clearly stated per partner. If a partner wants to leave the partnership or should pass away, you need to know what their part of the ownership split is so that legal arrangements can be made to either buy them out or to sell their shares to a new partner. This is one of the most essential parts of the agreement document, and you need to be sure that you document this information accurately.
- Where You Do Business/Address of the Property. If the property in question is a business property, you will need to list the physical location as well as the region where the company does business. This information can impact taxes as well as other considerations to do with the management of the business. If the property is a rental or is another kind of real estate, you might just need to list the physical address of the property in this section of the real estate partnership agreement.
- The Length of the Partnership. This is not always applicable, but some partnership agreements are set up to end at a set date. You will need to document when the partnership is to end so that the party that is no longer involved in ownership or management of the property is released from this obligation at the end of the contract. This might be necessary if there is a partnership that is completed when the property has been purchased by one of the partners or in other situations where someone only wishes to be involved in the partnership for a limited time for other reasons.
- The Purpose of the Partnership. There are many reasons that you might want to set up a real estate partnership agreement. You might need investors, or you might both want to manage the property for financial reasons or income. There are also properties that are managed in this way due to mutual ownership by various family members. No matter the reason that the partnership is being set up, there needs to be documentation of this aspect of the partnership to eliminate confusion if one of the partners should decide that they are not being represented correctly in the relationship. This section of the contract can help to define the responsibilities of each party to the partnership as well.
- Profits and Losses. When the property in question is a business asset or earns rental income, profits and losses need to be defined in this section. You will need to explain how the profits and the losses are divided between the partners in detail in this section of the real estate purchase agreement. Profits and losses can be the cause of most of the strife in relation to these kinds of business agreements, and you cannot afford to leave this information to guesswork for a whole variety of reasons. Make sure that you are clear about the limitations and divisions within your partnership with regard to the profits and losses within the partnership.
- Buyouts or Sales. If someone involved in the partnership should want to sell their shares, or if they pass away, you need to have a stated process included in the real estate partnership agreement that explains how this process will be handled. You might want to prevent other partners from buying out this partner, or maybe you want to be sure that their shares will not pass to family members or a surviving spouse. There are many ways that this part of the process of real estate management can be handled, and you will need to be detailed in your treatment of this future possibility. While you might not plan on anyone wanting to leave the partnership, you should not leave this difficult part of the partnership process to chance if this situation should come to pass.
- Bylaws or Legal Disclosures. Any legal disclosures or information that needs to be disclosed to the partners involved in a real estate agreement need to be added to the real estate partnership agreement. You might need to explain limitations with regard to the state or location that the asset is operated in, or you could want to place legal limitations on all the partners for specific reasons that are unique to your arrangement.
This is a segment of the contract that might need to be looked at by a legal expert if you are not sure about the legal information that needs to be included in the document. There are many kinds of legal disclosure or agreement that might need to be built into the real estate partnership agreement, and you should not leave them out just because you are not sure what should be placed in this section of the contract. Make sure that you get the help that you need with the legal part of the contract so that your agreement protects your rights along with the rights of the other partners involved in the arrangement correctly.
Rental Property Partnership Agreements
How Do You Protect Yourself in a Real Estate Partnership?
There are two fundamental ways to protect our real estate partnership:
- Carefully drafted legal agreements
- Signatures on these legal documents
The most fundamental protection that you have in a real estate partnership is conveyed by signature on the real estate partnership agreement document. This signature means that the contract is legally binding and that you and your partners all agree to follow the guidelines of the contract in detail. Without signatures, your agreement is not legally binding and does not have to be followed by those partners who did not sign the document.
The other way to be sure that your document protects your interests is to be certain that the right legal information is included in the document itself. The bylaws, legal limitations, and other laws that you want to be sure are followed by all the partners in the agreement must be included in your real estate partnership documents if you wish for them to be honored by all the partners involved in the purchase and management processes. These legal processes and regulations can protect the partnership from issues that might lead to its dissolution, and they can also prevent issues of disagreement between the parties involved in the real estate itself.
No legal document is binding if it is not signed by all the involved parties, and you will always need to be sure that any agreement document that you create will be signed by everyone involved in the partnership. This is the most fundamental way to protect the interests of everyone involved in the arrangement, and you cannot neglect this critical step if you want your document to be valid and binding upon all the parties that have an interest in the real estate asset in question.
Real Estate Partnership Contracts
Real Estate Partnership Agreements Are Critical
You will need to be sure that you do not neglect to write up a real estate partnership agreement for your real estate partnership relationship. When this document is not in place, it can be difficult for the partners to agree on the right way to manage a property, and strife and conflict can ensue. Partnerships are best protected when they are defined correctly in a document that also details the way that all the partners will need to behave to manage and share the asset fairly.
Since real estate often appreciates in value or can generate income. The partnership agreement will also make sure that all the parties are treated fairly when it comes to profits and losses or sales of the property or shares of the property. The more detail that is included in your real estate partnership agreement, the better you and your partners will get along, and the more effective your management of this asset will be. Partnership agreements always make the relationships between partners much easier to manage, and you and your partners will have a strong supporting document that details your partnership clearly if confusion or conflict arises.
