Questions and Professional Answers

• Conversion from limited partnership to partnership

  When a limited partnership converts to a general partnership, is a new partnership agreement for the general partnership required? Or is an amendment to the limited partnership agreement sufficient? What is the correct procedure to document that the partnership is now a general partnership.thank you.

  • Re: Conversion from limited partnership to partnership

    the two entities are like apples and oranges. you should really start w/ a new agreement. further, the management and compliance relative to the two types of businesses are radically different.

    Daniel King
    Law Offices of Daniel King
    6320 Canoga Avenue, Suite 675
    Woodland Hills, CA 91367

  • Re: Conversion from limited partnership to partnership

    A new general partnership agreement and related documents are required for this to be 'legal'. The effect is that this is a 'new' entity that must be formed and organized correctly, and the old one must be wound down and dissolved properly, all to avoid problems with liability and taxes. You better understand the legal and tax issues before deciding to do this. Contact me if you would like to discuss facts and costs of doing this with counsel.

    Terry A. Nelson
    Nelson & Lawless
    2134 Main St., #130
    Huntington Beach, CA 92648

  • Re: Conversion from limited partnership to partnership

    Your question depends on the agreement that you have. Please contact my office at 714 363 0220 to set up an appointment. I would like to review your written documentation including any letters. We handle cases throughout California. We can review your documentation by fax and speak with you by phone.

    Larry Rothman
    Larry Rothman & Associates
    1 CITY BOULEVARD WEST, SUITE 850
    Orange, CA 92868

• How does a co-partnership agreement differ from a general partnership agreemnet?

  I am about to enter into a partnership with another person and have been offered a co-partnership agreement. I would like to know if a co-partnership is recognized in California, whether it is appropriate for individuals (as opposed to companies), and any important ways it differes from a general partnership. Thank youRichard

  • Re: How does a co-partnership agreement differ from a general partnership agreem

    According to Black's Law Dictionary, co-partnership is a synonym for partnership. A general partnership is the most common form of partnership. Other kinds of partnerships are limited partnerships and limited-liability partnerships.So, I would say that a co-partnership and a general partnership are the same thing, except that the term co-partnership could perhaps also be applied to a limited partnership or a limited liability partnership.Therefore, while the agreement you've been offered is probably just using an old-fashioned term, you should read and understand it carefully to see not only what kind of partnership is being created, but also what your rights, duties and obligations will be if you sign it. In any case of doubt, retain your own attorney.

    Bryan Whipple
    Bryan R. R. Whipple, Attorney at Law
    P O Box 318
    Tomales, CA 94971-0318

• Partnership Documentation

  I'm in a general partnership with 4 people (A B C & D are the partners). A and B are named in the partnership bank account and B and C each own a property under their individual name on behalf of the partnership. All expenses are paid by the partnership. 1) What documents should the partnership have so that if something happens to A and B, partners C and D can get access to the bank account?2) What documents should the partnership have so that the properties owned by B and C are known to be owned by the partnership?

  • Re: Partnership Documentation

    Well, I'll start by saying that I never approve clients entering into a general partnership -- there is too much [unlimited] risk and liability for the 24/7 actions of every partner. Corporate status is the only organization that I approve for conducting business. That being said, if you insist on taking those chances with your personal assets, you obviously need to sit down with counsel and document the partnership properly as it should have been done at formation. You'll need a thorough Partnership Agreement, Buy-Sell provisions, Hold Harmless provisions [for the little good they do!], Key Man provisions, bank authorizations, etc, etc. Thinking that you are saving money by 'doing it ourselves - we don't need no stinking lawyers', generally results in spending a fortune in legal fees in litigation that arises over disputes and problems later, that would have been avoided or controlled by proper documentation. Feel free to contact me if serious about doing this right with a corporation, or sorta right with cleaning up the partnership status.

    Terry A. Nelson
    Nelson & Lawless
    2134 Main St., #130
    Huntington Beach, CA 92648

  • Re: Partnership Documentation

    I agree with Mr. Nelson that the general partnership form of business organization is largely obsolete in the 21st Century; there are better alternatives for most purposes including the corporation and the LLC; both cost you a franchise tax, but that's cheaper than the cost of equivalent liability insurance. Changing forms of business organization with a mature business can, however, be a little complicated, especially if you have a strong partnership agreement in place and have loans or contracts in the partnership name that mightn't be assignable to a successor LLC.As to the bank account, the starting point would be to ask a senior officer of you bank what the bank's policy on changing partnership signature cards on death, resignation or removal of a partner is.As to the property, keep in mind that there is case law in California that property used in a partnership becomes partnership property even though legal or record title is held in the name of one or more individual partners. Continuing to hold it as is may have tax advantages - consult a tax advisor. To avoid possible future litigation over title, it would be best to have a signed memo of understanding between A, B, C and D as to the partnership's beneficial ownership of the properties; this could be an amendment to the existing Partnership Agreement - which I assume you have???The partnership also needs to keep good books and records, both as to its profits and losses and as to its assets, liabilities, and each partner's equity or capital position. The books and records should be consistent with the partnership's ownership of the real property, and not reflect something different. The books should be professionally prepared and inspected by each of you from time to time for neatness, completeness and accuracy.Then re-read Mr. Nelson's advice.

    Bryan Whipple
    Bryan R. R. Whipple, Attorney at Law
    P O Box 318
    Tomales, CA 94971-0318

• Partnership Law

  In California, if a business has entered into an oral partnership agreement and there is no written partnership agreement, is the Uniform Partnership Law applicable or is there any other law which would dictate how the partnership must operate legally?

  • Re: Partnership Law

    The Uniform Partnership Act of 1994 will apply to all California general partnerships formed on or after 1/1/1999 and certain earlier partnerships.The Act is codified in the Corporations Code, sections 16100 et seq.A partnership subject to the Act is formed (with minor exceptions) whenever two or more persons associate to carry on as coowners a business for profit, whether or not they intended a partnership to result. See section 16202, which also provides rules for determining whether a partnership is formed. In some cases, a partnership can be found from the conduct of the parties even though NO agreement was made, either written or oral.The Act is not the only body of law applicable to partnerships. "Unless displaced by particular provisions of this chapter, the principles of law and equity supplement this chapter." Act, section 16104. Thus, courts may also refer to the general principles of partnership law developed by historical decisions to the extent they do not conflict with the Act.

    Bryan Whipple
    Bryan R. R. Whipple, Attorney at Law
    P O Box 318
    Tomales, CA 94971-0318

  • Re: Partnership Law

    The Uniform Partnership Law governs, but there may well be other bodies of law which require compliance and effect the partnership business.A business should receive a regular legal check-up much like a patient receives a medical check-up. Prevention is always cheaper and less stressful than treatment of a problem after it occurs.I hope this helps. Let us know if we can be of further service to you and your partner.

    Mitchell Roth
    MW Roth, Professional Law Corporation
    13245 Riverside Dr. Suite 320
    Sherman Oaks, CA 91423

• Dissolution of General Partnership

  Is a general partnership dissolved upon filling the complaint pursuant to ss 5 of RUPA 801 and does the partnership only continue for the sole purpose of winding up the partnership. Also, is the partner dissolving the partnership entitled to legal costs? Thank you.

  • Re: Dissolution of General Partnership

    Dissolution events under the RUPA often depend upon the language of the partnership agreement. Many events that formerly triggered dissolution no longer do, at least not automatically.With respect to the provision you cite, which is codified as Corporations Code section 16801(5) in California, I would interpret the provision to mean that dissolution must await the judicial determination applied for, and does not occur upon the making of the application. However, I believe a judge could, upon a proper showing, rule that dissolution actually occurred at an earlier date due to facts showing some triggering event.Dissolution is the first step in a process that begins with an event causing dissolution and ordinarily ends with the winding up and termination of the partnership. The main legal impacts of a dissolution are upon the authority of partners to bind the partnership and their liability for subsequent partnership debts.A partnership continues after dissolution only for the purpose of winding up its business. The partnership is terminated when the winding up is complete. Corp. Code section 16802(a).For authority of the person winding up a dissolved partnership, see Corp. Code 16803(c).There is a form which may be filed with the Secretary of State (Form GP-4) which serves as notice of the dissolution and after 90 days relieves the (former) partners of new liability for partnership debts. See Corp. Code section 16805.It looks to me as though one could fairly infer from Corp. Code 16806(b) that legitimate expenses of winding up, probably including reasonable attorney fees, would be chargeable to the partnership and hence deductible from any distributions made to the (former) partners.

    Bryan Whipple
    Bryan R. R. Whipple, Attorney at Law
    P O Box 318
    Tomales, CA 94971-0318

• Can one owner keep a partnership name

  Two corp. own a partnership business, if one partner buys the other out must you dissolve the partnership.What happens if real estate mortgages are in the partnership name. Would the mortgage have to be rewritten. Thank you

  • Re: Can one owner keep a partnership name

    Changing the partnership does not change the contractsin this case the mortgages, signed during thepartnership. The mortgage can only be rewrittenif the mortgagor agrees.

    Randall Reder
    Randall O. Reder, P.A.
    1319 W. Fletcher Ave.
    Tampa, FL 33612-3310

  • Re: Can one owner keep a partnership name

    Assuming you are referring to a general and not a limited partnership:1. The only transferable interest of a partner in the partnership is the partner's share of the profits and losses of the partnership and the partner's right to receive distributions. Unless the partnership agreement otherwise provides, acquisition by one partner of the other partner's transferable interest in the partnership does not by itself cause or necessitate dissolution of the partnership. 2. Because a partnership is an entity distinct from its partners, and because partnership property is owned by the partnership as an entity, not by the partners as coowners, real estate mortgages in the name of the partnership would not necessarily have to be rewritten merely by virtue of a change in ownership of one of the partnership interests. However, you should be aware that a partner's dissociation does not, by itself, discharge the partner's liability for a partnership obligation incurred before dissociation. I hope this has answered your questions. Please let me know if I can be of any further assistance.

    Stephen Verbit
    Law Offices of Stephen Verbit
    235 North University Drive
    Pembroke Pines, FL 33024

• Partnerships

  I'm in the process of buying a business. It is a partnership now and will be when myself and one other person take over. The name of Partnership will remain the same. My question is do we transfer the partnership to us or do we set up a new partnership under the same name as the old?

  • Re: Partnerships

    Technically, what you are asking is: do we buy the assets of the partnership or the interest in the partnership owned by the current owners. The results vary in a number of respects.If you buy the assets, your purchase price automaticlly gives you a new basis to depreciate. Otherwise, a tax election may be necessary. If you buy the entity, you may take over licenses, etc., that won't require relicensing. However, in an entity purchase, you may find you are a sucessor to any liabilities of the entity, as well.There are a raft of legal liability and tax liability issues associated with the answer to this question.You should hire a competent lawyer and a good CPA to assist you in your contemplated transaction.

    Thomas Schober
    Schober Schober & Mitchell, S.C.
    16845 West Cleveland Avenue
    New Berlin, WI 53151-3532

• mismanaged partnership

  i am a 20% owner in a general partnership which owns real estate. I want to retire from the partnership but the partners claim they dont have the money to pay me out. they are bound by the partnership agreement to give me 20% of the value of the building minus any incumbancies. what do i do?

  • Re: mismanaged partnership

    It depends entirely on the provisions in your Agreement regarding transfer of ownership interests. Don't take any action without first having an attorney look at the Agreement.

    Marshall Isaacs
    Marshall R. Isaacs, Attorney At Law
    20 Vesey Street, Suite 503
    New York, NY 10007

  • Re: mismanaged partnership

    You have to follow the terms under the partnership agreement. That may mean formal notice and required steps to dissolve the partnership.If that does not work, you would have the right of Judicial Dissolution under the Article 6 of the NY Partnership law.If you want to discuss further feel free to telephone.Mike.

    Michael Markowitz
    Michael A. Markowitz, PC
    1553 Broadway
    Hewlett, NY 11557

  • Re: mismanaged partnership

    You definitely have certain options however exactly which ones would be best for you to exercise would depend on the terms of your partnership or operating agreement. We have substantial experience handling these types of cases, however, we would need some more information before making a complete and proper determination. You are welcome to contact us for a free consultation.Law Offices of STEVEN J. CZIK, P.C.101 Avenue of the Americas, 15th FloorNew York, New York 10013 212.413.4462czik@ovedlaw.comThe information provided by The Law Offices of Steven J. Czik (LOSJC) is for general educational purposes only. There is no attorney-client relationship established by this communication and no privilege attaches to such communication. LOSJC is not taking and will not take any action on your behalf and will not be considered your attorney until both you and LOSJC have signed a written retainer agreement. There are strict deadlines, called statutes of limitation, within which claims or lawsuits must be filed. Therefore, if you desire the services of an attorney and decide not to retain LOSJC on terms acceptable to LOSJC, you are advised to immediately seek the services of another attorney.

    Steven Czik
    Law Offices of STEVEN J. CZIK, P.C.
    101 Avenue of the Americas, 15th Floor
    New York, NY 10013

• Partnership Law

  We have three people on our partnership. One will soon be in legal trouble and we need to have him off the partnership. We do not have a partnership agreement. What do we do/ We are looking for the quickest and fastest legal way to eliminate him from all business paper work. Thanks

  • Re: Partnership Law

    two ways. Buy him out or any partner can disolve the partnership. just send a letter to the other partners then sell the assets and divide them up or the remaining partners can agree to continue the business by paying off the third.

    Ken Koury
    Kenneth P. Koury, Esq.
    22425 Ventura Blvd., #286
    Woodland Hills, CA 91364

• Tattoo partnership

  My brother was business partners with a man who is now plaintiff against me. Their partnership ended June 30, 1998. They also had received several eviction notices because they weren't paying the bills. I refused to enter into partnership with them. On July 30, 1999, I entered into partnership with my brother after his partnership had ended with the plaintiff. Now his ex-partner is suing me, claiming that I agreed to buy him out, which I did not.

  • Re: Tattoo partnership

    You haven't provided a lot of specifics, so I don't know what I can say other than suggesting you talk to a lawyer and show him the documents you have. They might actually say that you did buy out your brother's ex-partner, although you have better information than I do on this subject.If the former partner's suit is groundless, you may be able to get it dismissed early on. You could then go after him for malicious prosecution, but it doesn't sound like he has a lot of money to pay such a judgment.

    Edward Hoffman
    Law Offices of Edward A. Hoffman
    6171 West Century Boulevard, Suite 200
    Los Angeles, CA 90045

  • Re: Tattoo partnership

    As Mr. Hoffman said you haven't given enough informationto give a complete answer. Unless there is a writtenagreement that you would not become partners with yourbrother the man who is suing you has a groundless case.If you would like to discuss this case in more detailplease feel free to contact me at (805)546-9918 or youmay email me at slolaw@earthlink.net. The consultation is free so you have nothing to lose. I look forward to speakingwith you.

    John Hayes
    The John Hayes Law Offices
    P.O. Box 3003
    San Luis Obispo, CA 93403