Legal Question in Business Law in California

Re: partner buy out

You should have a written purchase agreement. He (your "partner") should probably have a promissory note evidencing the promise to pay along with interest rate, if any. HE may want a "security interest" in the property owned by the business.

BTW: you said that this is a "corporation" but that he is your "partner". These are two different types of entities. If you have a family that is not friendly or who may become adversarial you should start using the correct terminology and make clear to all that this is a corporation.

Everything regarding the transaction and the corporation should be documented and documented consistent with a corporation. Past acts taken by both you and your "partner" should probably have minutes drawn up and approved by both of you.

In short you should make sure that you are operating correctly.

J. Caleb Donner

LEGAL WARRIORS (R)

805-494-6557

Re: partner buy out

This really isn't something that you should do on a form. There are a number of things to consider, too numerous to mention here.

If you are willing to pay $6000 per month for the business, it should be worth it to you to pay a few hundred dollars to an attorney to draw it up properly.

Re: partner buy out

This is a complicated matter with tax and legal implications. An S corporations means an accounting election, but it is still a corporation. If in California, you will need at least resolutions in the corporation, a buy-sell agreement, transfer forms with the Commissioner of Corporations, possible tax election forms, tax clearnace forms, etc. There is no simple way to do this. But I sense some urgency over your partner's health - and what you need is a binding contract signed by him to sell his stock to you; and then the other things can be done later. There is no substitute for competent legal advice here. Too many things can go wrong. Act now if you need to get this done, before there is a quesiton of whether your partner is incapable legally to sign a contract. Contact me off line if you think I can help.