JOINT VENTURE STRUCTURES Commercial and industrial real estate properties may also be held through a joint venture structure. A joint venture is not a specific type of legal entity, but describes a relationship between two or more parties through which they can jointly own, develop and manage property. There are several alternative joint ownership legal structures, the most common being joint venture corporations, partnerships and co-ownerships or co-tenancies (which are described in the Types of Business Organizations chapter in this guide). A joint venture nominee corporation legally owns the assets of the venture. The parties hold shares in the corporation and usually enter into a shareholders’ agreement to govern their relationship. Joint venture corporations provide many of the same advantages as corporations in general, including limited liability, ease of administration and certainty of legal rights and obligations. A joint venture may also hold property through either a general or a limited partnership. A partnership, unlike a corporation, is not a separate legal entity and may enable the flowthrough of losses to the partners for tax purposes. Another advantage of a partnership structure is its flexibility because the partnership agreement can provide freely for the allocation of profits and losses between the partners and other aspects of their relationship. Another common structure for real estate joint ventures is a co-ownership or co-tenancy (for leased land). Each co-tenant or co-owner has an undivided ownership interest in the joint venture property. Co-tenants or co-owners typically enter into a co-ownership agreement that governs their relationship and the ability of each party to deal with its interest. Unlike a partnership, each co-tenant or co- owner has no right to act as an agent for any other co- tenant or co-owner and is not liable for the debts of other co-tenants or co-owners.
Commercial and industrial real estate properties may also be held through a joint venture structure, such as a joint venture corporation, a partnership or a co-ownership or co-tenancy.
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Doing Business in Canada
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