The terms that decide most disputes
Joint ventures are usually set up as an LLC or partnership with an operating agreement that divides economics and control. Distribution terms, often called the waterfall, decide who gets paid first and how profits are split once returns pass agreed thresholds. Capital call provisions say what happens if one partner does not fund its share, sometimes diluting that partner's interest or converting the other's contribution into a loan. Major decision lists give the capital partner a veto over things like sales, refinancing, and budgets, while the operating partner usually manages day to day. Removal rights let the investor replace the manager for cause, and what counts as cause is often the heart of a dispute.
Deadlock, exits, and guarantees
Many agreements include a buy-sell mechanism that lets one partner name a price at which the other must either buy or sell, along with rights to force a sale after a set period. These tools can end a deadlock but can also be used tactically against a partner who lacks the cash to respond. Lenders frequently require the sponsor to sign guarantees that apply if certain bad acts occur, so a dispute between partners can affect who is personally exposed on the loan. Raising money from passive investors can also raise securities law questions that should be addressed before money comes in.
Preparing for the conversation
Gather the operating agreement and every amendment, the loan documents and guarantees, budgets, capital call notices, financial reports, and correspondence between the partners. Note any notice or cure periods running under the agreement. Reading the agreement against what is actually happening shows which tools each side can realistically use. We then talk through whether negotiated restructuring, a buyout, or a formal proceeding fits your position and the property.
