Bare Trust vs Partnership vs Co-Ownership

Bare Trust

Partnership (General)

Limited Partnership

Co-Ownership / TIC

What are the four legal structures BC multiplex JVs actually use?

BC multiplex JVs use bare trust, general partnership, limited partnership, and co-ownership or tenancy in common. The right one depends on property transfer tax exposure, GST treatment, liability tolerance, and what the lender will accept for the specific deal.

How does a bare trust work for holding title in a multiplex JV?

In a bare trust, a trustee holds legal title while the beneficial owners direct the trustee, and beneficial owners are taxed directly with a JV election simplifying GST reporting. There is no property transfer tax on later transfers of the beneficial interest if the arrangement is properly documented, and it suits pre-construction holds and passive title nominees.

What liability does a general partner face in a BC multiplex JV?

In a general partnership, all general partners face unlimited joint and several liability, and the partnership is its own GST registrant with input tax credits flowing through to the partners. Lenders find general partnerships straightforward but usually require personal guarantees from all partners, which suits small active deals where everyone is aligned and comfortable with joint liability.

Why do limited partnerships suit passive capital partners in a multiplex JV?

In a limited partnership, limited partners are liable only up to their capital contribution while the general partner carries full liability, usually through a corporation. Lenders accept limited partnerships for larger deals, and CMHC is comfortable when the general partner is credible, which is why this structure fits passive capital partners and multi-investor capital stacks.

What is the property transfer tax risk in a co-ownership JV structure?

In a co-ownership or tenancy-in-common structure, each co-owner holds a fractional undivided interest on title and pays property transfer tax on acquisition, with partition risk if one owner forces a sale. It works for 2 to 3 owners, though lenders dislike the partition exposure that comes with this structure.

Which JV structure keeps each partner liable only for their own obligations?

Co-ownership, or tenancy in common, is the structure where each co-owner is liable only for their own obligations rather than sharing liability with the other owners. Each co-owner is also a separate GST registrant and needs their own elections, which fits family deals and simple two-party land contributions.

Do lenders treat a bare trust differently than a general partnership?

Yes. Lenders accept a bare trust but demand to see the trust document and the beneficial owner covenants before funding, while a general partnership is more straightforward to underwrite but usually requires personal guarantees from all partners. A limited partnership is accepted for larger deals, and CMHC is comfortable with it when the general partner is credible.

How should a JV choose between these four legal structures?

The choice should be confirmed by a tax advisor before incorporation and pre-screened by the lender before drafting begins, since each structure carries a different property transfer tax exposure, GST treatment, and liability profile. Picking a structure just because it worked for a friend or a different deal ignores that these factors change with every project.