At its most basic level a real estate joint venture is simply a business arrangement.    Real estate joint ventures don’t last forever and like all good contracts, a joint venture agreement covers things like how and when the partnership may dissolve and should include things like what happens in the event of a disability or death of a partner.

When the person qualifying for the mortgage dies, their beneficiaries would inherit their interest in the property.     A surviving spouse may be less interested in continuing the arrangement.   As is often the case there is a desperate need for money when a spouse dies.

In addition, he or she may not have the income to support a mortgage qualification.     Equity can be trapped in the property if the plan was to refinance once renovations are complete or at a key benchmark time e.g.) mortgage renewal.    Without a surviving spouse, the situation may be even more problematic … think minor children.

The bank will not automatically renew a mortgage when the mortgage qualifier has passed.    If the property is held in the name of a corporation, things may be easier, with a new signing officer … but typically there was a personal guarantee based on the income of the original mortgage qualifier who passed away.

When considering the death of the working partner it may seem a bit easier.    You may just be able to hire a property manager.    But if you are required to buy out the estate of your working partner, where will the funds come from if you do not want to sell the property?  Consider for example a property that has huge potential down the road (new transportation hub, garden suite potential etc.).

Buying out the estate of either partner is problematic.   There are many additional costs to consider.    It may be a really bad time to sell.   And then you have additional costs like vacancies, real estate fees, tenant compensation and mortgage penalties.

Real estate joint venture partnerships have been very lucrative for both the working partner and the money partner.   And as a result, in many situations a partnership exists on 3 or more properties compounding the problem.


The solution is simple and pennies on the dollar.

Manny and Wanda have decided to enter into a joint venture real estate opportunity.     They have found a single-family home in a great neighbourhood that you can add an additional dwelling unit to and has the potential for a garden suite in the future.  Manny, aged 50, is the money partner.   He has little time to manage a property let alone handle tenants.     He has a job that pays him very well but is very demanding.   And what little time remains he wants to spend with his family.

Wanda, who is 45, is the working partner.  She no longer qualifies for mortgages based on her existing portfolio of income properties – the bank has said she is maxed out.   She has expertise in duplex conversions, building code, and the areas bylaws.    She knows about leases, tenant rights etc.   And she has indicated that once garden suites open up … this lot has huge potential.

The property they buy is $700K.     The mortgage is $560K.   And they have a renovation budget for the basement apartment of $100K.   The expectation is that after the renovation, the property will be worth $1M.    They will be able to increase the mortgage to $800K based on Manny’s income and use that additional money towards the garden suite in the future.  Although the Joint Venture agreement is for 5 years, they both agree that the 10-year term insurance makes the most sense, allowing them to extend their partnership for an additional 5-year term.


  • If Manny were to die, Wanda can’t qualify for the $560K mortgage.    In addition she would have to pay out Manny’s contributions of $140K down payment and his contribution of $100K of renovation money.   Wanda may want to own $800K of insurance on Manny.
  • $800K of Term 10 on a male aged 50 is approximately $1,100 a year.
  • If Wanda were to die, Manny would have to pay around 10% rents to hire a property manager ($4,000 x 5 years = $20,000), as well as payout Wanda’s estate $100K for her portion of the profits thus far.   The equity in the property is expected to grow over time as well.    Manny may want to own $200K of life insurance on Wanda.
  • $200k of term 10 on a female aged 45 is approximately $200 a year. 

The cost of the insurance premiums is considered an expense against income.   It can also be owned by the corporation if the property is owned in a corp.


Owning life insurance on your joint venture partner gives you the peace of mind that if something were to happen, you can buy out the partnership.   It gives you the money you need at the time of death to fund your partners heirs their share of the equity in property at the time they need it.