Starting a property business up with someone else? Here’s how to protect yourself legally

Julie Brownlee, Fsp Invest, 22 May. 2015

Tags: property business, investing in property, property company, starting a property business, property investing,



If you’re a serious property investor, managing and investing in properties as an individual may prove to not be the most efficient way to go about it.

One option you have is to start up a property business, such as a close corporation (CC). By doing this, it also makes it easier to manage if you’re investing in property with other people.

So if you do decide to open a CC along with someone else, how can you protect yourself from any legal wrangles?

Read on to find out…



Starting up your own property business


If you decide that starting up a property business is the best option for you and your long-term goals, it’s very easy to do through a CC.

Within a couple of weeks you can register your company and start trading.

If you want to know how to start a CC for your property business, read this article.

When you register a company as a CC, there’s no formal agreement between the company owners.

So if you plan to have a partner or two involved with you, or others who want a share in the business as they’re investing into it, before any cash changes hands you need a formal agreement.


What to include in a contract for your property business


It’s a good idea to employ the help of an attorney to draw up a contract. Your attorney can help you include all the necessary details, but you must include the following aspects:

  • The name of the company (as registered) and the type of business the CC is involved in.
  • The term of the contract. This must include a start date and end date if applicable.
  • How much money each business owner is contributing into the company.
  • How company owners will share any profits or losses.
  • Details of the salaries and other drawings of the owners.
  • Detail who is responsible for what duties within the company and any restrictions on any of the business owners.
  • The banking arrangements for the CC. For instance, is it through an individual’s name and will you set up an account for the CC?
  • You need to detail termination of the contract, such as if someone wants out of the contract.
    
So there you have it. How to protect yourself legally when you start a property business up with someone else.

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