THE PARTNERS of a real estate joint venture generally seek to balance their desire to maintain an unfettered right to transfer their joint venture interests with their desire not to saddle the venture with troublesome or undercapitalized partners.[1]� A prior article examined the extent to which certain mechanisms commonly employed by joint venture partners to exit real estate joint ventures – rights of first refusal, rights of first offer, drag along rights and tag along rights – achieve this balance.[2]� This article examines other exit mechanisms used in real estate joint venture agreements. In particular, this article analyzes exit mechanisms that enable partners to “cash out” of a joint venture without the negotiation of a third party sale.

The “put” and “call” provision is one example of this type of exit mechanism. A put right provides a partner (the “selling partner”) with the right to sell its interest in the joint venture to the other partner. In a put and call provision, the put right is coupled with a call right which entitles the other partner to acquire the selling partner’s interest at a price equal to or greater than the price at which the put may be exercised. A put right may be present in a joint venture agreement without a corresponding call right, but often the call right is the quid pro quo necessary for the selling partner to obtain the put.

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