Property business pre-nups can stop family feudsMake Text Bigger
Money and blood often don’t mix – which is why so many families go to war over their ‘fair share’ of cash.
With so many wealthy business people and celebrities drawing up marriage pre-nups, perhaps the time has come for property business partners to consider the same deal.
Most property partnerships start on good terms and work towards a common goal of generating profits and cash – but some turn sour and the partners regret they have no exit strategy.
A loose, verbal agreement really does not go far enough for a property business that can soon chalk up an asset base of £1 million or more.
Many business partners may happily work together without disagreement for years, but if they do not plan for the death of a partner, divorce or other unforeseen circumstances like serious illness, then dividing the spoils can trigger serious arguments.
Misunderstanding and distrust in a property business can soon arise because two or more partners think they have an agreement, but their interpretations of the actual terms and conditions are often very different.
A good business pre-nup will go along way to avoiding family feuds.
Some of the points to consider when drawing up an agreement
- Voting on key issues
- Who is responsible for keeping records, licences and insurances up to date
- How much each partner should contribute to costs
- What happens if the property partnership breaks up
- What happens on the death of a partner
- Giving a buy-out option to the other partner(s) if someone decides to leave the business
It’s important to remember that jointly owning property does not mean the business is a partnership in the same way as lawyers work in a practise, so the arrangement is more of a joint venture than a formal enterprise governed by the Partnership Act.
If in doubt about how to write a property business pre-nup, consider calling in a lawyer.
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