Posted by John Merchant on August 14, 2003 at 15:38:10:
JV? If a partnership, both would have equal & total liability. As a matter of fact & law, each partner would be named in any lawsuit, as a J against the P itself would be worthless.
Only way to limit all owners liability would be to put the property into a corp or LLC, then operate it in & from that corp or LLC. The liability would then be limited to the assets of the entity itself.
Problem with LLC or corp is frequently IT, in its own name, cannot borrow money…unless each shareholder signs for personal liability on that loan…but this is done all the time. And since, generally, the lender requires the RE to stay insured, at the borrower’s cost, there’s insurance coverage to protect the RE itself and the ownership interests of the shareholders.
One big reason LLP’s are popular is that entity limits the liability of the LPs, and the only one with liability is the Gen. P, and the LLP itself of course.
The GP should be well selected because he/she/it can be liable.
Suggest you talk to a good business lawyer re incorporating, then taking on your project as a corp or LLC.