Real Estate Investments with Partners and Disputes

It is common for family members, significant others, husbands and wives, friends or business associates to invest in a home together. The financial benefits of sharing investment costs allow for a larger down payment and larger purchase price. You should consider the financial strength of your partner and their trustworthiness. Disputes can arise between partners so careful consideration should be made before entering into a real estate investment partnership. Common issues that cause disputes include:

• Payment structures and distributions including profits and losses
• Property maintenance including, taxes, insurance and repairs
• Responsibilities of partners
• Defaults
• When to sell
• Rent Increases
• Tax issues
• Decision making process
• Termination
• Death, incapacity or divorce

Protecting Interests in Joint Real Estate Investments

The best way to protect your partnership interests is to have a partnership agreement. Depending on the type of entity you choose, an attorney can prepare the appropriate agreement. For instance, you may want to form a general partnership, joint venture, limited liability company or real estate investment trust. The agreement should set forth the responsibilities of the partners, funding, distributions, maintenance costs, and allow for either partner to terminate the agreement as well contain a provision for death, incapacity or divorce, if applicable. The agreement sets forth each partner's rights, responsibilities and legal obligations and eliminates misunderstandings.

Resolving Disputes Between Partners

If a dispute arises between the partners, it can be resolved quicker by referring to the partnership agreement. The partners should try and resolve the dispute in a friendly manner first. Sometimes this may involve asking a third party such as a friend or family member to help. Another way to resolve the dispute is for one partner to sell their interests to the other partner and dissolve the partnership. If the parties are unable to come to a resolution, they may need to hire an attorney or settle their dispute in accordance with the dispute resolution method set forth in the agreement. Common dispute resolution methods include mediation, arbitration or filing a lawsuit in court.

Hire an Attorney to Help

An attorney will be able to help you resolve an investment partnership dispute by reviewing the partnership agreement and advising you of your legal obligations and responsibilities. The attorney can prepare a letter or memo to the other partner or their attorney as well as prepare any legal documents to resolve the matter. Sometimes disputes must be decided in a court of law. The attorney can file legal documents with the court, defend and represent you and your interests in an investment partnership dispute matter.