Legal question about establishing partnership.

[Nolan Gottlieb]

I'm about to buy a deal that I've got UC. There are three of us in a unofficial partnership working together. One guy is finding deals and developing relationships, one guy is our contractor, and the last guy is our capital. What do we need to do in order to establishes how everyone gets paid once a deal sells? Do we need an LLC which establishes all three of us as part owners or should all three of us be on the title even though only one is putting up cash to buy the deal? How do folks normally establish how a payout will occur with investors? Example...an investor has agreed to loan $100K with 12% interest...surely that isn't done on a handshake deal. Is there a legal document that establishes stuff like this?

[Charlie MacPherson]

@Nolan Gottlieb You need an attorney first and foremost. You don't necessarily need an LLC. A partnership agreement could work too - but you all need representation.

When you write your agreement, EVERYTHING should be in it.  Responsibilities down to the letter.  Who does what in minute detail. How income and expenses are handled and how you should each get to verify those numbers.  Who is on the bank account (should be everybody) and has access to it.  What happens if you actually lose money on the deal.

I'm speaking from experience when I tell you this.  Everything looks rosy right now, but when timelines get crunched, money runs short and you find nasty surprises in your project, it can get ugly and you're going to need that contract to fall back on.

Seriously, your next call should be to your attorney.