What Is a Real Estate Joint Venture in Ontario and How Is It Structured?
A real estate joint venture is an arrangement where two or more people or companies pool money, skills or credit to buy or develop property together. In Ontario it can be set up as co-ownership, a partnership or a corporation, and the right choice depends on how much risk each investor will accept.
Owning property together as joint tenants or tenants in common does not by itself create a partnership, even if the owners share profits. A partnership exists where persons carry on a business in common with a view to profit. In a general partnership, every partner is an agent of the firm and can bind it, and every partner is jointly liable for all the firm's debts and obligations. That joint liability rule is subject to the separate rules for limited liability partnerships.
If land is granted to two or more people, they are treated as tenants in common unless the document clearly shows joint tenancy, even if they are spouses, but this presumption does not apply to executors or trustees. Anyone with an interest in land may apply for partition or sale, but jointly held land that passed by will or intestacy cannot be partitioned until one year after the death. A lawyer can review your agreement.
Key takeaways
- Owning property together as joint tenants or tenants in common does not by itself create a partnership, even if you share profits.
- In a general partnership every partner can bind the firm and is jointly liable for its debts, subject to the separate rules for limited liability partnerships.
- Co-owners are treated as tenants in common unless the document clearly shows joint tenancy, even if they are spouses, but this presumption does not apply to executors or trustees.
- Anyone with an interest in land may apply for partition or sale, so the exit terms in your agreement matter.