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Legal Considerations When Entering Partnership in a Construction Company

Construction is a booming industry in California. There are many opportunities for businesses. You may be considering expanding your efforts in the industry by purchasing a construction company or entering a partnership. Before you enter partnership in a construction company in California, there are key things that you should know. In this article, our Fremont business lawyer for construction companies highlights the most important legal considerations to keep in mind.

Determine the Specific Legal Entity for Your Business

Any entrepreneur who is forming a business in construction in California must ensure that they have the right legal structure (entity) in place for their specific situation. Notably, general partnerships (GPs) in California can be established without formal state registration. A written agreement is strongly recommended for general partnerships. However, GPs do not offer liability protection and may not be the best option for a construction business. A construction company in California may also be set up as a limited liability company (LLC), S-corporation, or c-corporation.

Essential Considerations for Your Construction Partnership

Are you preparing to form a construction partnership in California? A proactive approach is essential as there are several legal considerations that need to be addressed for partnership businesses in the construction industry, including: 

  • Partnership agreement/joint venture agreement: A well-crafted partnership or joint venture agreement sets clear expectations for all parties involved in the business or business project.
  • Contributions/equity: Each partner’s contribution to the partnership, whether in the form of capital, resources, or expertise, must be clearly documented and agreed upon.
  • Roles/responsibilities: Defining roles and responsibilities is vital to ensure that all aspects of every project are covered. It is crucial that each partner knows their duties.
  • Legal and regulatory compliance: Partners must be aware of and comply with all local, state, and federal rules, including obtaining required licenses and any necessary permits. Notably, you need a CSLB Contractor’s License to start a construction company in California.
  • Insurance coverage: Securing comprehensive insurance coverage is crucial for mitigating risks associated with construction.
  • Dispute resolution: Construction partnerships can run into issues. Establishing a method for dispute resolution can save partners a lot of time, money, and headaches.

Be Ready to Seek Professional Legal Guidance and Support

Setting up a construction company in California is not easy. It is normal to have a ton of questions about how your business should be formed and what steps must be taken to protect your financial interests and satisfy all legal requirements. A California business lawyer with experience working with companies in the construction industry can help you navigate complex legal considerations.

Get Help From a Fremont, CA Business Law Attorney for Construction Companies Today

Lynnette Ariathurai is an experienced California business lawyer with the skills and experience to represent companies in the construction industry. If you have any questions about the legal considerations when entering partnership in a construction business, please do not hesitate to contact Lynnette for a confidential consultation. She represents businesses across the Bay Area.

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