Q: A close friend and I are considering buying a home together.

Published Dec 7, 2021

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What should we look out for or do to make the agreement work for both of us?

A:These are the most important aspects required in a partnership agreement, whether business or personal:

• Outline your contributions:These can be monetary (cash investment), physical property (such as furniture and appliances) or even labour and time (home renovation). As far as possible, ascribe a value to your contributions and decide who pays which costs. Keep precise records of all payments. Remember, it’s an investment and should be treated as such. If there is an income stream, establish how this will be divided.

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• Decide how decisions will be made:Decision-making can slow processes down so decide upfront how decisions will be made, especially if no consensus can be reached. Consider what would happen if there was a breach of trust or a conflict of interest.

• Decide how conflicts will be resolved:Disputes aren’t always avoidable and, if left unresolved, can have serious consequences for your business or your relationships. To protect these relationships, ensure the partnership agreement includes a section on dispute resolution.

• Apportion the assets:Determine how you will distribute your capital gains and/or profits and how you will deal with losses and additional cash-flow requirements. What will happen to shares in the event of a death?

– Cobus Odendaal, chief executive of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg

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