A formal real estate fund is composed of several documents, but the Subscription Agreement is the most vital “signing” document. It is the contract where the investor legally commits their capital and swears they meet the “Accredited Investor” criteria.
Below is a professional draft for a Subscription Agreement.
[FUND NAME], LP
SUBSCRIPTION AGREEMENT
TO: [Fund Name] GP, LLC (the “General Partner”)
FROM: The undersigned prospective investor (the “Subscriber”)
1. Subscription
The Subscriber hereby irrevocably subscribes for a Limited Partnership Interest in [FUND NAME], LP (the “Fund”) in the aggregate amount of $__________________ (the “Investment Amount”). The Subscriber understands that this subscription is subject to acceptance by the General Partner, which may reject this subscription in whole or in part for any reason.
2. Adoption of Partnership Agreement
By executing this Agreement, the Subscriber agrees to be bound by all the terms and conditions of the Limited Partnership Agreement (LPA) of the Fund, dated as of [Date], as amended from time to time, as if the Subscriber were an original signatory thereto.
3. Representations and Warranties of Subscriber
The Subscriber represents and warrants to the General Partner and the Fund as follows:
- Accredited Investor Status: The Subscriber is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933. (Initial here: ________)
- High Risk / Loss of Capital: The Subscriber recognizes that an investment in the Fund involves a high degree of risk and that the Subscriber may lose their entire investment.
- Illiquidity: The Subscriber acknowledges that there is no public market for the Interests and that transferability is strictly limited by the LPA.
- Independent Advice: The Subscriber has consulted with their own legal, tax, and financial advisors regarding the suitability of this investment.
4. Indemnification
The Subscriber agrees to indemnify and hold harmless the Fund, the General Partner, and their respective affiliates from any loss, liability, or expense (including reasonable attorneys’ fees) arising out of any false representation made by the Subscriber in this Agreement.
5. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of [e.g., Delaware].
SIGNATURE PAGE
INVESTOR NAME: ________________________________________
(Entity Name or Individual)
BY: ____________________________________ DATE: ____________
(Signature)
TITLE: _________________________________
(If signing for an entity)
ACCEPTED BY GENERAL PARTNER:
BY: ____________________________________ DATE: ____________
(Authorized Signatory for [GP Entity Name])
How to use this draft:
- The “Accredited” Addendum: You must attach the “Accredited Investor Questionnaire” (the checklist I created for you earlier) to this document.
- State-Specific Clauses: If you are in a state like California or New York, there may be “Blue Sky” legends (specific warning text) that must appear in bold on the first page.
- Legal Review: Warning: This draft is for educational purposes. Securities laws are strict; you should have a securities attorney review this before sending it to a real investor to ensure it complies with Reg D Rule 506(b) or 506(c).
Would you like me to help you draft the “Capital Call” notice—the document you send when it’s actually time for the investors to wire the money?