You find a deal on some land, you execute a purchase agreement.
You have an investor that will fund the deal 50/50.
Who takes title?
Do you sign a JV agreement?
How does that work as far as contracts, etc?
Thank you in advance.
Brian
@ri-guy I’ve talked to several different funders about these things over the past few months, and I’ve found that not a single one of them does everything the exact same way.
I will say that most funders insist that they hold title (assuming they’re funding 100% of the deal, which is usually the case), but it doesn’t necessarily have to be this way.
For example, if I’m funding a deal and I trust the operator implicitly, and especially if they’re doing a lot of work to the property (like subdividing or getting an easement), it could be in my best interests to let them hold title, mostly for the sake of ease on my part. If the titled owner has to be actively involved in the day-to-day, it could much easier to let the active operator hold title so I don’t have to slow down the process… but again, I would only do this if I really trusted the operator. It’s not something I would do for someone I don’t know extremely well.
You could sign a JV Agreement or a Partnership Agreement, which lays out all the terms of who gets what, what the timelines are, and who has which responsibilities. This is what I’ve seen most funders do. I have yet to see two funders who have theirs written up exactly the same way, but they’re usually addressing all the same issues through this kind of document.
Can you clarify your question about contracts? Which contract? What about them?
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What does your contract say with the funder? That’s how you get paid.
If the contract doesn’t make this abundantly clear, you’ll want to sort this out with them before you get too far along. That document is what has the final say on what both of your rights are in the deal.
Whatever it says, be sure to read it very carefully and if anything looks out of order, bring this up with them BEFORE you go down this road.
Also, think about what might be involved if you ever have to sue them for breaching the contract. If you don’t actually have the financial means or the appetite to hire an attorney and go after them, then it might not even matter what it says, because you’re defenseless in either case.
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