N IMPORTANT consideration in forming any real estate joint venture is the ability of the joint venture partners[1]� to exit their respective investments. The identity of the joint venture participants and what each contributes to the joint venture are critical to its success. As a result, many joint venture agreements limit or prohibit transfers of interests by partners, and where transfers are permitted, a non-exiting partner will often seek to control the identity of any new co-venturer, particularly in a situation where the exiting partner has any consent or veto rights over management decisions.
Even with free transferability of interests, the potential difficulty of locating a transferee who will be willing to live within an existing joint venture structure complicates a partner’s ability to exit a joint venture (or may, at the very least, result in a discounted price for the joint venture interest). While the unilateral ability to cause a sale of the property will eliminate this complication, joint venture agreements commonly place restrictions on the ability of one partner to cause a sale of the assets of the joint venture.
