What to address in an investment partnership agreement

A business partnership could last a lifetime or may only last for a few months before things turn sour. Whether you have spent decades running a business together and now have differing opinions about its future or you have just started the business and don’t work well together, you may need to buy out your business partner. Buying your partner out allows you to keep the company operating despite the conflict between you and the other owner. They receive a fair value for their share of the business, and you get to continue running the company. Buying out a partner can be a complex process, but taking the right steps will increase your chances of success. Step one: Go over your partnership agreement Discussing what will happen to the business or the circumstances in which one partner can buy out the other is a common inclusion in partnership agreements. The longer it has been since you signed your contract with your business partner, the more likely it is that you may have forgotten important details within it. Going over your partnership agreement will help ensure that you meet all of the criteria in your contract for a buyout. Step two: Put an appropriate price on the business Once you know what obligations you have to your partner under your contract with them, you can then start to address the practical details of a buyout. You obviously can’t offer a fair price for an asset if you don’t know its current worth. A thorough business valuation looking at your current assets and liabilities can help you determine what a reasonable offer for your partner’s share of the business would be. Step three: Find a way to make your offer attractive to your partner The longer you have done business with someone, the better you understand their personal preferences and negotiating style. You can use that information to help you make your bio offer as attractive as possible to your partner. Including the right terms can help you successfully negotiate a buyout without permanently damaging your relationship with your partner. Thinking ahead can help you take the right steps when partnership disputes make you decide to buy out your partner to assume sole control over your shared business.

Last month, Gov. Gavin Newsom signed two bills into law that are aimed at providing more housing in some areas in a state where demand often exceeds supply – by as much as 3.5 million units according to some estimates. Both laws, which will increase housing density in some areas, have their critics. However, Senate Bill (SB) 9 has been the more controversial of the two. (The other allows more density of housing near mass transit hubs.) What does SB 9 do? Under the new law, which takes effect Jan. 1, 2022, lots in some areas that are zoned for single standalone homes can have up to four units of housing. There are some limits, though. For example, current tenants cannot be required to move, and the owner must continue to reside on the property for at least three years. Gov. Newsom and those in favor of the law tout it as a step toward making more affordable housing available for Californians and decreasing the racial wealth gap in the state. However, a recent study by the University of California Berkeley found that it won’t affect most single-family-zoned lots in the state. Cities speak out about the loss of local authority Not surprisingly, a number of cities as well as the League of California Cities have objected to the authority the law takes away from them. The League’s executive director said that it “undermines the ability of local governments to responsibly plan for the types of housing that communities need, circumvents the local government review process, and silences community voices.” She also points out that although proponents of the law talk about it creating more affordable housing, it says nothing about pricing limits for any new units created. Because of pressure from city governments, provisions were added to SB 9 to allow them to prevent construction if it would endanger public health or safety or if it’s being done simply to help speculators. What does the new law mean for you? The new law will no doubt affect real estate investors, developers, builders and other stakeholders. Experienced guidance can help you prevent any legal issues on your projects.

You want to go into business by investing in real estate projects. Perhaps you’re looking to buy empty lots or old buildings and then develop them. You know there is a lot of money to be made, but you also need money to start the project, so you begin by looking for investors who share your vision. Once you find one, how should you proceed? Do you need to use a contract, or is it enough if the two of you simply agree to work toward the same goal? A contract is crucial It really is important to have an official contract. Remember that you have a lot on the line — not just the money you have invested, but the future of your business as a whole. You don’t want to leave anything up to chance. A contract lets you define things like: What your roles with the development will be How ownership will be divided How you can resolve any disputes that may arise How and when someone can leave the partnership How potential earnings will be divided Exactly who will be involved in the project How to break the partnership if things do not go well What sort of return the investors can expect You can also use the contract to make sure that you both have the same vision. Are you looking to own the development, running it and leasing out space, or are you just trying to develop it and then flip the property for a profit? You need to have the same focus, and you need to know what legal steps to take to protect yourself and your investment if a dispute does arise.