Chicago Real Estate Joint Venture Agreements: How an Attorney Can Help
Forming a joint venture can aid small businesses in entering new markets or pool resources with a partner to achieve business goals that neither company can accomplish alone. Other benefits to a joint venture include tax advantages, management flexibility, flexibility in acquiring partnership interest, and the absence of corporate formalities. All joint ventures should be administrated by a written joint venture agreement that protects all partners involved in the process.
Getting The Help You Need
Chicago Real estate joint venture agreements can be complicated
There are templates that exist to get you started in the right direction, but when you have clear and direct objectives in regards to what you want to accomplish in the joint venture, a templated agreement is not going to provide you with the specialized provisions that you might seek to be included in the agreement.
Hiring an attorney can assist you with many aspects of setting up a joint venture properly. One asset that an experienced attorney can provide is attracting investors when you might need additional capital to for the project to succeed. Due to changes in banking guidelines, bank financing of commercial real estate ventures has become more difficult and requires the owner/developer to raise more equity than they did in the past.
Do Not Give Up Control
Joint venture agreements can be complex and mysterious. If you are the owner/developer, you want to make sure that you receive a market rate “promotion” while keeping the greatest flexibility possible to retain control over your project.
If you are the equity member or partner, you want to make sure that your investment and return will be properly protected through involvement in major decisions and by ensuring the owner/developer will receive no more than market fees. Hiring an attorney experienced in the setup and negotiation of an LLC and other joint venture agreements is vital in order to guarantee that your interests are well-protected.
Understand Your Needs and Set Boundaries
When engaging in a real estate joint venture agreements, it is important to discuss with your attorney your specific objectives with the project and how their expertise will assist in meeting those objectives. This might require specific language be included in the joint venue agreement that sets up your investment in the project differently than other shareholders that are involved.
Structuring, drafting and negotiating real estate joint venture agreements that will ensure that you have the ability to capitalize on the investment that you make in the project, while protecting the objectives of the other shareholders, is something for which counsel can provide their expertise. An experienced attorney can assist shareholders in structuring the ownership entity, provide guidance on the relevant tax implications, and negotiate and draft all related documents, including LLC and partnership agreements.
A contractual joint venture may encompass requirements contracts, joint product development agreements, long-term management arrangements, licensing arrangements and other contractual mechanisms that allow two separate businesses to create a relationship that is stronger than a typical vendor/purchaser relationship. The setup of this relationship can be complex, and could have many dynamic pieces to it.
In many instances, setting the boundaries in a joint venture pre-formation can provide solutions to unexpected disputes that might arise later on in the project. Discussing any concerns with an attorney will give you the ability to get sound advice from a lawyer who is experienced in making Chicago real estate joint ventures work.
Specific things that effective counsel can assist with include:
- Pre-formation issues
- Financial obligations and capital requirements
- Cash distribution provisions
- Business Asset Sharing and Transfers
- Decision making (governance and control)
- Default remedies
- Securities offering matters
- Transfer restrictions and exit mechanisms
- Antitrust matters
- Governing law selection
- Administrative responsibilities
- Allocations of profits and losses
- Ownership percentages
This list does not encompass all of the assistance that counsel can give an investor or vendor in regards to setting up a real estate joint venture agreement. But it is a starting point for services that can be provided to businesses interested in taking a leap of faith into a major capital investment. In addition to those services, counsel can provide the negotiating skill to work out real estate joint venture agreements on you or your business’s terms. Effective counsel is an appropriate and wise investment in the setup of a comprehensive real estate joint venture agreement.
The attorneys at www.chicagorealestatelawfirm.com have extensive expertise in setting up joint ventures and developing Chicago real estate joint venture agreements. Contact us today to discuss how our expertise can help your investment grow.