GP/LP Structure Canada: Real Estate Partnership Guide

When you’re ready to take on bigger real estate projects, you’ll probably need other people’s money. But how do you protect those investors—and yourself? That’s where GPLP structures come in.

A General Partner/Limited Partner (GPLP) structure is a legal setup that lets you raise money from investors while protecting them from liability. It’s more complex than a simple joint venture, but for the right projects, it’s worth every penny.

What Makes a GPLP Different?

Think of it this way: You want to develop a property or buy an apartment building. You’ve got the skills and time, but you need cash. Your investors have money but don’t want to manage anything or risk more than their investment.

That’s the perfect GPLP scenario.

The General Partner (GP)

This is you—the person doing all the work. As the GP, you:

Make all the decisions
Handle day-to-day management
Take on all the liability
Do the actual work

You get control, but you also shoulder all the responsibility. If something goes wrong, it lands on you.

The Limited Partner (LP)

These are your investors. They:

Put in money
Get returns on their investment
Have limited liability (only risk what they invested)
Stay out of management decisions

They’re protected from lawsuits and problems beyond losing their investment. But they also can’t tell you how to run things.

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When Should You Set Up a GPLP?

Here’s the truth: GPLPs aren’t cheap to create. You’ll spend more on legal fees than you would for a basic Joint Venture or corporation. So when does it make sense?

Project Size Matters

Don’t bother with a GPLP for a small duplex where you’re raising $300,000. The legal costs won’t justify the structure.

GPLPs shine when you’re doing:

Development projects
Large apartment buildings
Commercial properties like hotels
Any project where you need significant capital and want to protect your investors

You’re Not Alone

The real trigger for a GPLP is when you’re bringing in multiple passive investors who aren’t involved in managing the property. If it’s just you and one partner both working on the deal, a joint venture agreement probably makes more sense.

The Financing Puzzle

Here’s where things get tricky. Many residential lenders have no idea what to do with a GPLP structure. They see it on an application and freeze up.

Residential Mortgages: Great Rates, Limited Options

Residential mortgages offer the best interest rates—at the time of writing, around 4.89%. But most residential lenders want to see individual people on the mortgage, not partnerships or corporations.

There’s a workaround: bare trust agreements. You can close the property in your personal name (which the lender likes), but have the beneficial ownership flow through to your GPLP. This gets you better rates while maintaining your structure.

Commercial Mortgages: Structure-Friendly

Commercial lenders welcome GPLPs with open arms. They understand these structures and have no problem with them. The trade-off? Slightly higher rates—at the time of writing, around 5.29%, about 0.40% more than residential.

The big difference in commercial lending: they care way more about the property than about you. If the property generates enough income to cover the mortgage payments, you’re probably getting approved.

One mortgage broker recently got approval for borrowers with no job at all, purely because the property’s rental income covered everything.

CMHC and Larger Projects

For bigger projects that qualify for CMHC Insurance, the news gets better. CMHC lenders typically recognize the GPLP structure without making each limited partner qualify individually. The partnership itself can guarantee the mortgage.

Common Mistakes That Kill Deals

Using the Wrong Lawyer

Not all lawyers understand real estate investing. Some will create documents so complicated and intimidating that potential investors run away. You need someone who balances legal protection with practical deal-making.

Limited Partnership agreements are naturally complex—they’re similar to wills in legal weight. But experienced real estate lawyers know how to make them investor-friendly without sacrificing protection.

Skipping Due Diligence on the GP

If you’re considering investing as a limited partner, dig deep on the general partner. Check their:

Track record with similar projects
References from past investors
Actual experience (not just enthusiasm)
Ability to complete what they start

Limited partners have almost no control. You’re trusting the GP completely, so make sure they deserve that trust.

Improper Documentation

Here’s a trap: If the general partner also owns units as a limited partner, those units lose their liability protection. The GP’s managerial role removes the limited liability shield from their LP units.

Get your documents done right the first time by someone who specializes in investment real estate structures.

What About Bare Trusts?

A bare trust is simply a contract that splits registered ownership from beneficial ownership. The person on title isn’t the actual owner—they’re holding it for someone else.

This shows up everywhere in real estate investing:

Joint ventures where one person holds title for the partnership
Someone holding property personally that’s actually owned by their corporation
GPLPs where a nominee corporation holds the asset for the limited partnership

From a financing perspective, bare trusts are incredibly useful. You can close properties in personal names (which most lenders prefer) while the beneficial ownership flows through to your desired structure. This opens up way more lenders and better pricing.

How Long Does Setup Take?

Don’t expect this to happen overnight. A realistic timeline for creating a GPLP structure is two and a half to three weeks. Then add another month for mortgage approval.

The LP agreement itself represents about 80% of the work. But you also need:

Subscription agreements for investors
Individual investor forms
The GP corporation created
Possibly a nominee/trust corporation
Shareholder agreements if multiple people own the GP

The biggest delay? Getting all the partners together. Even with electronic signing, coordinating three or four busy people takes time.

One solution: Have all partners sign a resolution at the start authorizing one person (usually the president) to sign everything. That way you’re not chasing people down for signatures at every step.

Can You Run Multiple Projects Through One GPLP?

Technically, yes. You can draft LP agreements with language allowing the GP to add additional projects. But should you?

It gets complicated fast. Your existing investors didn’t sign up for the new project’s risk profile. Adding a new property changes what they invested in, potentially dilutes their ownership, and might frustrate them.

Better approach: Present it to your existing investors. Give them options to invest in the new project or keep things separate. Let them decide.

Plus, your lenders for both properties would need to approve the arrangement. That adds another layer of complexity that might not be worth it.

Bottom Line: Is a GPLP Right for You?

If you’re doing a substantial project and raising significant capital from passive investors, a GPLP structure probably makes sense. It protects your investors, gives you control, and shows you’re running a professional operation.

But talk to professionals who specialize in investment real estate—both a lawyer and a mortgage broker. The structure you choose affects your financing options, which can make or break your deal.

Get it right from the start, and you’ll have a structure that lets you scale your real estate business without constantly reinventing the wheel.

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Frequently Asked Questions

What's the difference between a general partner and a limited partner?

The general partner does all the work, makes decisions, and takes on all liability for the project. Limited partners contribute money, get returns on their investment, and have limited liability—they only risk what they invested. LPs stay out of management decisions while GPs run everything.

How much does it cost to set up a GPLP structure?

GPLP structures are more expensive than simple joint ventures or basic corporations, but less expensive than multi-family trusts or REITs. The exact cost varies, but it's substantial enough that you need a sizeable project to justify the expense. Don't use a GPLP for small deals like a duplex—save it for larger projects like developments or apartment buildings.

Can I get a residential mortgage with a GPLP structure?

Most residential lenders don't understand or won't work with GPLP structures. However, you can use a bare trust agreement to close the property in your personal name (which gets you residential rates) while the beneficial ownership flows through to your GPLP. This strategy gives you access to better rates while maintaining your desired structure.

What's a bare trust and why would I need one?

A bare trust is a simple contract that separates who's on title from who actually owns the property. It's useful when you want property owned by your corporation or partnership but need it in a personal name for financing. The person on title holds it in trust for the real owner. This helps you access better mortgage rates while maintaining your investment structure.

Can I use a GPLP for a single-family home?

Technically yes, but it's usually not worth it. GPLPs make sense for larger projects where you're raising significant capital and need investor protection. A single-family home investment is better suited to a simple joint venture or holding in a corporation. Save the GPLP structure for bigger deals like apartment buildings, developments, or commercial properties.

How long does it take to set up a GPLP?

Expect two and a half to three weeks to create the GPLP structure itself, then add another month for mortgage approval. The process involves creating the LP agreement, subscription agreements, investor forms, the GP corporation, and potentially a nominee corporation. The biggest delays usually come from coordinating multiple partners for signatures and decisions.

What's better for my project: GPLP, joint venture, or corporation?

It depends on your financing options and project size. GPLPs offer the best investor protection but cost more to set up. Joint ventures are simplest and cheapest but offer less liability protection. Corporations fall somewhere in between. The ability to finance your project is usually the deciding factor—talk to a mortgage broker who specializes in investment properties before choosing.

Can commercial lenders finance any property type including single-family homes?

Yes, you can get commercial mortgages on single-family homes, not just multi-unit or commercial properties. The catch is the property must generate enough rental income to cover its debt payments. A $200,000 house might qualify, but a $1.5 million luxury home probably won't generate enough single-family rent to meet lender requirements.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

December 22, 2025