Joint venture exit strategy

Hi all I have a little problem I would like some advice on.
I went into a joint venture with a friend 5 years ago to buy 2 properties where I put in the deposit and costs of $100,000 and they took on the debt getting finance for the properties.
So the issue is now we are needing to sell but will only get what we paid for it which means I could potentially get back only $40,000 to $50,000 due to buying and selling associated costs. I am wondering how are these costs usually dealt with in a joint venture? Do I lose that money because I put in the money or is it shared?
Thank you

 

You went into a joint venture without agreeing as to how the money would be shared?

 

We without thinking about only talked about breaking even or gaining a profit in which I would have got all deposits and costs back first and then profit split 50/50
I was just wondering how most JV's are set up in relation to a loss and what happens to the deposit and costs situation?

 

what was your legal share in the property ? 50/50?

If so, seems logical that you share the losses 50/50

 

Sounds like you are not a legal owner and no written agreement?
Did you lend the money to the owner?

 

Ye

We had no written agreement and I just put in the equity as buying costs and the deposits

 

was there a verbal agreement where you lent him the money?
How were you going to account for him being taxed with the profit share?

 

Who has receiving rent and paying interest and other costs? Whose tax return has the income been declared on during this time?

 

Perhaps you are just a lender here and therefore not subject to splitting the costs and can recover your entire $100k once the properties are sold?

did you have a joint venture agreement? Did you have a loan agreement?

Is your name on the title or mortgage? If not, sounds like you are more like an unsecured creditor.. do you have a caveat on the properties?

 

Yes I was just putting the money in my name is not on the mortgage I was the silent partner. We were splitting the interest costs and all other associated costs such as rates, water etc

 

did you deduct those interest and other costs in your tax return? Against what income? Is your name on the title (eg is your name on the council rates bill?)

 

The problem is I put in the deposit and buying costs and if we sell for what we paid for it I will lose that and then we will be up for the selling costs as well

 

No name was not on the title at all

 

Was the agreement to split proceeds after your deposit was recouped?

 

What was the original goal when you entered this agreement and why are you needing to sell now?

 

Yes any profits would have been split 50/50

 

are you saying he won't give your deposit back or it will all be eaten up and he won't give you half of that back?

 

We wanted to hold for 5 years and make a profit at the end of it. Our situations job wise and life wise have changed so we need to sell

 

Yeh it will be eaten up and I wont be getting anything back

 

Well you should ask him for half back if that was the agreement.
Perhaps you could talk to a lawyer about putting a caveat on the property so it can't be sold. You provided the deposit so would likely have an equitable interest. He would be stuck paying the loan on his own.