| There are many reasons to enter into a joint | | | | before a successful venture can be executed. One |
| venture. Getting a joint venture agreement can be | | | | of the reasons to enter into a joint venture is to |
| very important. Many people try to save money by | | | | lighten the load of responsibility. It is a lot to handle |
| skipping this important step. But, before you do, | | | | and if all parties involved do not completely |
| consider these reasons why you should get a legally | | | | understand a single part of it, then it can only lead to |
| binding agreement. | | | | problems. Do your research, try to anticipate |
| You are entering into a joint venture for a reason. | | | | problems that may arise, and make sure that all |
| You are spreading out the cost of the project, | | | | parties are thoroughly educated before you decide |
| sharing responsibilities and risks, and dividing the | | | | to begin. |
| profits. The joint venture agreement is the structure | | | | All objectives need to be outlined in the joint venture. |
| on which you will build your business plan. Everything | | | | The contributions made by each party should be |
| needs to be outlined, reviewed and agreed upon | | | | determined. Financial responsibility needs to be |
| before you start or the whole project could be a | | | | concisely written. Who will do what type of work |
| disaster. | | | | needs to be clearly determined. You need to agree |
| Here are some common things that people hear | | | | upon how you will settle disputes. Additionally, you |
| when they are in a joint venture without a joint | | | | should decide under what circumstances the joint |
| venture agreement: | | | | venture will be terminated and who is liable for what |
| “You didn’t tell me that before.” | | | | costs in that event. |
| “I’m not responsible for that cost because | | | | Going through this process together will help you to |
| you are the one that was supposed to have this | | | | realize different expectations, attitudes, strengths |
| figured out.” | | | | and weaknesses, and management styles. Tackling |
| “I’m doing a lot more work than you | | | | these important issues will help you to determine if |
| are.” | | | | the joint venture is a profitable idea or not. You will |
| “I should get a larger share of the profits | | | | most likely need many meetings before an |
| because I contributed more assets and expertise | | | | agreement is met. Be patient and be sure that the |
| than you did.” | | | | agreement is profitable and manageable for |
| “My profit margin should go up because the value | | | | everyone. |
| of the land I provided went up significantly.” | | | | If you are unsure as to whether or not you want to |
| “Your company contributed more, so you should | | | | enter into a joint venture agreement, consider all of |
| be the one to go down when the bad press | | | | the arguments and time-consuming altercations that |
| hits.” | | | | can be avoided by simply talking about it and putting |
| “If you want to do things that way, then you | | | | it down in a legally binding document before you |
| can pay for it yourself.” | | | | begin. A real estate investment consultant can assist |
| A thorough development of the ideas is necessary | | | | you in developing your joint venture agreement. |