Maybe you are just starting out in the real estate business, or perhaps your business is booming and you have decided to take on a partner to shoulder the load. There are many good reasons to form a business partnership that can benefit all parties as well as the company.
But when joining a business partnership, it is vital to enter into a legally binding partnership agreement.
What’s wrong with a handshake deal?
Long ago, deals were often sealed with just a handshake. But these are different times, and verbal agreements and handshake deals are at a distinct disadvantage if challenged in court.
Courts look at the evidence brought out in trial. Without a legitimate document describing your partnership agreement and all it entails, you could lose your argument in court.
It should cover all bases
An air-tight real estate partnership agreement can get granular about details, like the division of labor and who deals with which aspects of the company. Failing that, the partners can get so occupied with avoiding stepping on each other’s toes that the business suffers.
Most business partners are more comfortable when everyone knows the roles they are slated to play. Then they can excel while still staying in their own lanes of expertise.
Partnership agreements include business succession plans
None of us has a lease on life, which is why it is paramount for business partners to have a plan in place for the business if one of the partners dies or gets divorced. California business owners are subject to the laws of community property, so your business plan should address your concerns for the company going forward.
Not sure what you need?
That’s OK, too. Now is a good time to learn more about the rights and responsibilities of business partners under the laws of the state of California.