Does a Joint Venture Need an LLC?

[Bryan O.]

I am getting ready to do joint venturing with others, but want to make sure I have everything in order first. I downloaded a number of JV templates from the Interwebs and it seems like they all specify a new entity. For example, "Company X will partner with Company Y into an agreement operating as Company Z". From what I have been reading it is not necessary to create a new entity. It does not make sense to me why you would write out a JV agreement that specifies a new entity with all of the responsibilities, divisions, management, etc. when you will specify all of those things in the OA for the new entity anyway. The JV agreement is redundant at that point. I must be missing some logic/connection but cannot figure out what it is.

How are people doing deals, especially smaller size ones, with a solid agreement without having to make new entities every time?

[Jessica Zolotorofe]

No, you don't NEED any LLC. You might want one for the same reasons an individual would, but you can always take title in your own names, as tenants in common. There are actually some benefits to that, including for 1031 purposes later, but as a general rule, I would think an LLC as opposed to a straight JV would be the better route to take. If you plan on holding and leasing the property, it also allows you to have one bank account to collect rent and pay expenses that way, which is much cleaner for accounting purposes. But no, there's no requirement that you have one. Same risks as if you went into a project alone and didn't use an LLC.