Money & Risk: Profit Split, Liability, and Bonding the JV
# Money & Risk: Profit Split, Liability, and Bonding the JV
This is where partners get hurt if they didn't plan. Understand the money and the risk before you sign.
## Profit and loss
- Profit and loss are usually shared by **participation percentage** (e.g., 65/35), unless it's a **divided JV** where each partner keeps the result of their own scope.
- **Cash calls:** if the job runs short of cash, the agreement says how partners chip in — usually by their percentage. Know your exposure.
- A dedicated **JV bank account** keeps the money clean and auditable.
## Joint and several liability — the big one
To the **owner**, JV partners are almost always **jointly and severally liable**. In plain English: **the owner can hold *either* partner responsible for the *entire* project.** If your partner fails, the owner can come after you for 100% — even if your "share" was 30%.
That's why:
- You choose your partner as carefully as you'd choose a spouse.
- The JV agreement includes **indemnification** between partners (so if one causes the loss, they owe the other) — but indemnity is only as good as that partner's solvency.
## Bonding the JV
- Sureties bond the **JV as a whole**, evaluating the partners' **combined** financials, experience, and capacity — that's how the team bonds a job bigger than either could alone.
- The surety almost always requires **both partners (and often their owners personally) to sign joint indemnity** for the bond. You're backing the whole bond, not just your share.
## Insurance
The JV typically carries its own project insurance (or is named on a wrap-up/OCIP). Confirm coverage limits, who pays premiums, and that each partner is properly insured for its own work.
## The honest bottom line
A JV multiplies your upside **and** your exposure. The structure, the agreement, and — above all — the **partner you choose** determine whether it's a launchpad or a liability.
**Takeaway:** Remember joint-and-several liability: choose your partner like your business depends on it, because it does.
> Educational only — not legal, bonding, or accounting advice. Loop in your attorney, surety/agent, and CPA early.
