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What is Partnership Deed
Partnership Deed is also called a Joint Deed. A partnership deed is a document that contains the terms of joint ownership. This document is used to hold real estate, businesses, and other property jointly. The partnership deed sets out the responsibilities of the partners in their joint venture and how they share any profits or losses that may occur. It also sets out how any remaining debts will be paid at the end of the venture.
In the case of a default of one of the partners, for example by not paying money owed to another partner or if one partner damages property belonging to another partner, the partnership deed will provide what action is to be taken. For example, what percentage of any debts owed will be paid by each partner and what percentage will be paid by the defaulting partner. A partnership deed can also include whether the partners’ shares in any profits or losses can be changed and how this change will occur.
A partnership deed only applies to the property involved in the partnership. It does not apply to things such as debts, credit cards, bank accounts and other assets that are outside of the property included in the partnership.
The only requirement to create a partnership deed is both partners signing it. This document can also be created by a lawyer on behalf of one or more of the partners depending on the requirements of the situation being considered for a particular piece of property or venture.
Contents of Partnership deed
Partnership deed / joint deed should contain following points
A Statement that the parties are entering into an agreement to form a partnership, to create a joint venture or to share profits/assets/debts for a specified duration.
The names of all the partners. Details of their addresses. If any person is acting on behalf of another person, names of both should be mentioned. If any agent is acting on behalf of an agent, his details need to be mentioned also.
Date from which the partnership deed will come into existence. Date to which the deed will be valid as a document indicating a partnership/joint venture/shareholder status or as a document indicating a shareholder status for a period to be decided by the partners/joint venturers. In the case of a trust deed, the trust document would be filed along with the partnership deed.
Whether or not any partner will have a right to share in profits & losses to be shared. How much percentage each partner will have.
Name of the property involved in the partnership. The share of each partner in that property should be mentioned. Details of any debts. How they will be paid back to the partners. Details of the total amount to be paid back by each partner. If any of the partners is unable to pay their share, these details should also be mentioned.
Any other details necessary for the partnership deed to be effective or valid as a document that lays out or maintains a joint venture or shareholder status. Any other details necessary to define the roles and responsibilities of the partners. Whether or not the partnership deed can be changed. If yes, details of how this change will be effected. Whether it is possible to increase the number of partners in future. Details of how new partners will join in later on. Whether or not any partner will have a right to leave the partnership at any point in time. Whether or not the partners will be entitled to share any profits or losses with each other in future.
Whether or not the partnership has a right to make any changes to the partnership deed. Whether the partnership can make changes unilaterally without consulting all its partners. Whether the partnership is incorporated, whether it is a public limited company, private limited company etc.
Any other necessary details that are required for establishing ownership over properties and assets.
Partnership Deed Format
Partnership deed format is important because it determines what kinds of information must be included in the document. It also determines how the document must be drafted. For example, some documents include a legal description of a property while others do not. This means that they must be drafted very differently so as to provide all the details necessary for a future buyer to determine if a property fits with what is outlined in a previously executed partnership deed.