Legal Question in Business Law in California
We have a partnership in California. This was an oral agreement and nothing in writing except both names on the leases. I have wanted out of partnership for a while, but partner doesn't want to either sell his portion or buy mine. I've now found a buyer for my 50 percent share and my partner says he doesn't want to be a partner with new person. Can I go ahead and sell anyway or do I have to have his permission. thanks so much.
3 Answers from Attorneys
First, I'm going to assume that this is indeed a partnership. As you seem to know, partnerships including partnerships to own and operate real estate can be formed by oral agreement. However, you do not seem to understand the law regarding the power and right of a partner to withdraw (dissociate) from a partnership, nor the consequences for the partnership and its remaining partner(s). Further, you need to understand that admission of a new partner requires the consent of all partners. What you need to do is dissociate from the partnership by formal statutory notice to your partner, after which he/shemust follow statutory winding up procedures which may involve either buying you out at fair value and continuing the business, or liquidating the business and paying you your half. This can change the partner's willingness to accept a referral of a buyer. You need to read California's Revised Uniform Partnership Act ("RUPA") which covers all of this in language that the average business person without a law degree can probably follow reasonably well after two or three readings. In any event, you cannot "go ahead and sell anyway" because as a partner you have nothing to sell and you cannot replace yourself as a partner, but you can force a somewhat equivalent thing to happen by dissociating and demanding a cash-out from the remaining partner under the RUPA. You don't need permission to force a buy-out of your interest.
I agree with Mr. Whipple. You can't force your partner to accept a replacement partner of your choosing. Situations like yours come up all the time for partners who didn't bother to have a lawyer draft their partnership agreement. Dealing with your current needs will require a lawyer and is likely to cost far more than it would have cost to hire a lawyer in the first place.
You an force a dissolution and winding up of a partnership, but you cannot sell your share.
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