[CLC-Discussion] 2 questions

Tue May 31 09:36:08 PDT 2016

Andrea, typically the profits and losses of a JV are allocated among the JV members based upon their ownership interest as stated in the JV Agmt. If there are 2 JV members and each has a 50% ownership interest in the JV, then unless the JV Agmt provides otherwise, they will each receive 50% of the Profits (or be responsible for paying 50% of the Losses). To the extent there is a capital call and capital needs to be paid in, each of those 2 JV members would be liable for 50% of the capital call. In addition, all JV decisions would have to be mutually agreed upon by both JV members (unless the JV Agmt provided otherwise).

The allocation of ownership interest doesn’t have to be 50%-50%. It can be any combination the parties want that adds up to 100% (e.g., 75/25, 60/40, etc.). If ownership is not 50%-50%, then one party will be the majority member and one the minority member. Since ownership interest also typically corresponds to voting interests,  that means the majority member will have control over the JV (again unless the JV Agmt provides otherwise).

For your father/son arrangement, perhaps they may want to base their respective ownership interest on how much of the total contract price/work each will be handling with their company. For example, if the total contract price will be $500K, with the son’s company handling $100K of the total work and the father’s company handling $400K of the total work, then they might consider a JV where the father has 80% and the son 20%. Also, the parties can agree to one percentage allocation for voting (i.e., JV control) and a different allocation for sharing profits and losses  and another allocation for capital calls.

Hope this helps.

Best regards,
George

[Carlton Fields, P.A.]
George J. Meyer
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From: clc-discussion-bounces at lists.flabarrpptl.org [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Andrea Fair
Sent: Tuesday, May 31, 2016 11:54 AM
To: clc-discussion at lists.flabarrpptl.org
Subject: [CLC-Discussion] 2 questions

Hello everyone!  I hope you all enjoyed the long weekend.

I have 2 questions:

1.       I have a father/son construction business relationship that is in need of some kind of operating agreement or joint venture agreement.  Essentially, the son used to work for the father, who is a GC (primarily high-end custom homes).  The son has now branched off and started his own remodeling company because his father was not interested in doing any remodeling.  However, they plan to continue working together periodically.  I know they could hire each other as a subcontractor but I think there will be occasions when they want to work together in a joint venture type of arrangement and split the profits.  I was wondering if anyone had some ideas or contract language that would help me draft some kind of formula for who does what and how they will split the profits.  They most certainly will not keep track of their time so that is not an option.

2.       My second question is not specific to construction law.  Does anyone have a list of the counties or judges who are now requiring written responses to motions and ruling on motions without a hearing (strictly based on the written submissions)?

Thank you in advance for any assistance you can give.

Andrea

Andrea M. Fair
Board Certified Construction Attorney
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