What is partnership deed?

Whether you have been in the real estate business for years or are a first-time investor, at some point you may want to bring an investor partner into your business. If you decide to get into a partnership, then you are required to make a partnership deed. So, what do you mean by partnership deed? Read below to find out.

A partnership deed is a document in which the respective obligations and rights of the partners are written. It may be oral or written. However, oral agreements do not have any value for tax purposes and this is why partnership agreements should be written.

The main advantage of a real estate partnership is that it allows all parties to pool their capital and resources, as well as split the expenses and operating costs of the business in the search of better real estate opportunities.

Now that you know what is meant by partnership deed, let's read about the details it includes.

• Business of the firm

• Duration of Partnership

• Ratio of sharing profits & losses

• Salary and commission details

• Details related to the capital contributed by each partner

• Policy regarding partner’s Drawings

• Admission, Death & Retirement of partner

• Duties & Obligations of partners

• Partner’s Loan

• A partnership deed clearly defines an individual partner’s roles.

• It helps avoid confusion regarding the profit and loss sharing ratio among partners.

• All types of disputes among the partners may get settled quickly with the help of a partnership deed.

• A partnership deed helps to avoid any misunderstanding among the partners as all the partnership terms and conditions are clearly mentioned in the deed.

• It regulates the liabilities, duties, and rights of every partner.

• It can also include clauses that clarify about the salary of every partner. Generally, salary is paid to working partners.

I hope you like my answer on what do you mean by partnership deed.

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