Real estate “partnerships” come in all shapes and sizes. Some are true “partnerships” others are “limited partnerships.” Still others are in the form of a Limited Liability Company (LLC) or a corporation. Or a trust. Which type of entity to use is most always driven by tax considerations – but that doesn’t take into account the potential liability differences a non-involved “general partner” of a “general partnership” has, as compared to a “limited partner” of a “limited partnership” – or a “member” of a LLC.
And what happens if your partner is convicted as a pedophile? Or a tax fraud? Can you End. That. Partnership.? Now!? Sure. But you might have to sell the property the partnership owns in order to do it. UNLESS, (there is always an ‘unless’ – have you noticed that? ) the Partnership Agreement (or LLC Operating Agreement, or corporate Shareholder Agreement) has what are known as “Buy-Sell provisions” – provisions which allow one partner (or member or shareholder) to force the buy-out of another. This generally happens when the to-be-bought-out partner doesn’t want to be bought out. Or when some partners simply want to ‘be done’ with another. It is, generally, a process fraught with anxiety and ill-will. (Mostly because the Partnership Agreement didn’t contain such “pre-nup” kinds of clauses in the first place.)
Litigating these kinds of claims can be time consuming (like most pieces of litigation) and aggravating. Yet, that’s what we do.