Company or partnership - what is the best for a group investment.

kateLaila

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4 family members want to club together to invest in something - probably property. What would be best - forming a partnership or setting up a company?
 
Property is best owned by individuals and not through companies.

However, it's crazy to be going into such a group investment. It sounds great now that you are all getting on well and making plans for a profitable investment. But there are so many disputes over jointly held property that it's just now worth the risk.

Brendan
 
Forming a company for a one-off investment or even a relatively low level of multiple investments would be far too expensive and involve so much red tape that it would not be worthwhile. A partnership is the better option. However as per the earlier response you should be fully aware of the potential downsides of any involvement in such a venture. There are numerous posts on this site of those who have invested jointly in property only to find themselves in serious difficulties when a dispute arises and one party wishes to exit the investment.
If you are serious about progressing with the arrangement get a solicitor to draw up a legal agreement which includes all potential scenarios such as exit arrangements etc. far better to this this on a professional basis as even in the closest of families/relationships issues can arise which if not anticipated can lead to difficulties and disagreement.
 
While I agree with the above being a crazy idea:
( as even in the closest of families/relationships issues will arise even if anticipated will lead to difficulties and disagreement),
in the absence of personal guarantees,
the risk sharing options in a normal Ltd Company are usually different than in a normal partnership agreement.
 
If setting up a partnership like this, or any, make sure you get a partnership agreement - very simple to do though you will need a solicitor - but it means everyone is on the same page, if the partnership is to break up for any reason it is all laid out there - if anything unforseen was to happen, such as a death and there is no agreement, the partnership reverts to partnership law which is over 100 years old. This can cause problems particularly if you had an uneven split of profit in the group ie 60/40 - it would automatically be 50/50
 
The ownership of property is not a partnership it is a co-ownership.

The property will be registered in the names of the owners as joint tenants or tenants in common that's what will dictate the division on death!

I'd agree that a co-ownership agreement is very important as pointed out.

I'd also agree with the posters who said joint ownership of property is a disaster waiting to happen.
 
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