All Forum Posts by: Philip Small

Philip: big disclaimer - I do not live in Mass or know anything specifically about Mass law.  OK?  However, i am doing something very similar here in California.  I bought a property.  After closing, a couple of partners want in on the deal.  We are contemplating either adding them to the deed (and incurring those closing costs) or separately entering into a joint venture agreement  whereby they will gain a contractual right to 50% of the profits from the project in exchange for paying 50% of the costs, etc.  As we intend to hold short term, the tax implications are minimal as this will be ordinary income for all involved.  On our deal, we are all old professionals who know how to manage risk, etc.  

If this is your first (or second or even third) deal, I would encourage you to seek professional advice.  However, get educated first.  If you know what you want, the legal bill will be modest.  I would look for real estate joint venture agreements online that meet with the kinds of basic terms you are looking for and then get a local lawyer to help you customize the document to your particular needs.  That seems to be the best use of your resources.  Be skeptical if anyone tells you you have to incur the hefty fees and record-keeping costs of forming multiple entities for a two party deal.   

Typically, assuming an even 50/50 split, you would take ownership of the property as tenants in common.  Then, you would enter into a contract setting forth terms - who manages what? how are expenses to be paid? what happens to the cash? etc.  

Thanks for the response! I will look into this. Can this be entered into after the property is purchased in one of the individual's names? Should we set down with a lawyer to set this up or are the types of contracts you can find online sufficient?