Best Partnership Vehicle?
Could someone explain the difference between a general partnership, a joint venture, and a tenants-in-common arrangement?
I'm thinking of a situation where I would partner with someone to rehab a house, with a roughly 50-50 profit split.
Any such arrangement would be on a deal by deal basis. I know there have to be all sorts of clauses added to specify who does what, etc., but I'm not clear as to the pros and cons of the various legal arrangements.
I have seen examples of partnership and jv papers, and they seem to me to be virtually identical. I think I read somewhere that a jv is typically done for a specific project, and dissolves at the end of the project, or when certain conditions are met. But I can't see why a gp couldn't be set up the same way. Also, I read that a jv offers better protection to the venturers than a gp does, and there are fewer tax requirements. Jay DeCima recommends a tenants-in-common arrangement, which sounds alot like a joint venture. However, in his sample partnership papers, called a 'Co-ownership Agreement', he specifically states that the arrangement is not a partnership or joint venture.
I would much appreciate a clear exposition of the relative merits of these three vehicles for owning real estate.
Bob
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