Syndication Partnership Contract

[Fahad Siddiqui]

Hi Everyone,

I recently started syndicating deals with a group of investors on a single property. We are buying distressed properties for the purpose of fix and flip. We are looking for a guideline basis template of a Syndication Partnership Contract where the following is defined at the minimum;

The Partnership: (names of parties involved) 

Contributions: (the parties name and what they are contributing to the project) 

Profits/Splits: When and if the rehab project is complete and profits are made they will be distributed at an X percentage to each X member (listed out per partner) 

Accounting/Taxes: Each member assumes capital gains tax and will be provided a W-9 from the contractor and must submit their own taxes. 

Property Maintenance and Unforeseen Costs: Monthly holding costs consists of all utilities costs such as electricity bill, natural gas, water, and garbage/sewer/recycling.

Disclaimer: All parties assume loss on their own behalf, no parties are responsible for any other parties loss. No profits are guaranteed. Each party has agreed to preform their own research per signing this contract and project kickoff. 

From the requirements this definitely seems like a custom-made contract. If any members have a similar contract that we can use as a baseline we would gladly appreciate the help. 

Thanks in advance! 

[Spencer Gray]

Everything you described should be laid out in your operating agreement(s) which will be detailed  in your Private Placement Memorandum (PPM). Your passive investors will apply to participate via your Subscription Documents which essentially qualifies your investors and adheres members to the entity. 

If you haven't already you should definitely get in touch with a good lawyer to make sure you are filing under the right SEC exemption and are doing everything correctly. They will also draft all of these documents with the terms of your deal. Working with an attorney isn't an option with syndication. I know attorneys who are now syndicators and they still use other lawyers.

Have you already been syndicating deals but haven't been using operating agreements/PPMs? 

I would make sure that syndication is the best route for your deals as it can be prohibitively expensive for deals under a certain size.

(Obviously this isn't legal advice)