How to Protect Yourself in a Joint Venture Deal

How to Protect Yourself in a Joint Venture Deal

Whenever you going into a JV deal, you’ll almost always be inside an LLC where you’ll be a partial owner of that company. A lot of times you’re protected because the property’s going to be owned by a limited liability company. So if anybody were to sue you or your partner, they can’t get to the ultimate asset.

Imagine this realistic approach which you and your friend own this company together to buy a house. But your friend gets sued, and therefore there’s now a charging order against the LLC. If you don’t know what a charging order is, look at one of the other videos that’s linked to this regarding that. If there’s any money distributed from the LLC it has to be used to pay off the creditors to the extent that your friend has an interest in the LLC. This would significantly hurt your friend. Now he has to pay back those creditors that he might not want to. But, you can’t get any money out.

This is not the case if you guys both enter into it with your personal LLC’s that you used as investment vehicles. Use your own LLC to become members of the LLC used for the J D agreement. This will allow you to distribute money that you can now control without having to pay off those creditors. This means you don’t have to hurt your friend or your business partner. Just keeps everything nice, smooth and amiable.

My name is Scott Smith. I’m an asset protection attorney, I’m a real estate investor and I’m here to help you. Click here to set up a consultation today.

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

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