Legal Question in Civil Litigation in Illinois

Hello. Here's my question and I hope you can help. Back in 2005 I entered into a partnership with two other individuals to purchase a house and rehab it for sale, otherwise known as a flip. Partner (A) was to purchase the house, partner (B) was to supply the funding for materials and sub-contractors and partner (C) was to perform project managment, supply tools and the knowledge to get the work done. I was partner (C). I cashed two checks into my account that I received from partner (B), one in the amount of $10,000.00 and the second in the amount of $7,500.00. I used that entire amount plus some of my own money to purchase materials for the project. In 2007 the project was completed and the house placed on the market. It never sold and eventually I cut my losses and washed my hands of the project. Keep in mind nothing was on paper. (stupid on my part, I know). Partner (B) harrassed partner (A) for his money and received most of it, but he's coming after me for the balance. He handed me a letter from an attorney claiming that partner (B) loaned me (partner C) the sum of $17,500.00 as a personal loan and that partner (A) paid him $10,000.00 on my behalf. So he's coming after me for the remaining $7,500.00. What do I do? That money is in The house which Partner (A) still owns and is collecting rent on. Partner (B) told me that the only reason he's suing me is that I cashed the checks and that's the only paper trail he has. I never signed any papers when he gave me the checks. All I did was cash them and use them to buy materials for the project. I still have most of the receipts. Any help would be greatly appreciated. Thank You.


Asked on 4/27/10, 7:31 pm

2 Answers from Attorneys
Stephen Messutta

If what you're saying is that you had a general partnership to buy, fix up and sell real estate and can prove the general terms and conditions of the partnership, you would normally be responsible for 1/3 of partnership liabilities absent any agreement for a different sharing arrangement. If you can prove the partnership then you should also be entitled to an accounting for 1/3 of the net rental income. If you can prove the partnership you may also be entitled to a "partition" of the real estate so that you own 1/3rd interest. But yes partners are responsible for their respective share of partnership debts in a general partnership. The $17,500.00 needs to be figured in and if Partner "B" is saying you weren't a partner but only a contractor, but if that's his contention, then you may have mechanic lien rights. But the better theory may be that there was a partnership and your responsibility was contribution of work effort, you apparently fulfilled your obligations as the property became rentable as a result, and the others were responsible for cash contributions. All that does is keeps you in the deal. So part of the question is what do you want to happen? You really need an attorney to help you deal with this.

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Answered on 5/03/10, 11:28 am
Mark Hartzer

I would only add that if you have actually been 'served' with suit papers, you need to get an attorney IMMEDIATELY. Do not wait. An Answer will need to be filed on your behalf. Otherwise, I concur with Mr. Messutta's advice.

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Answered on 5/08/10, 6:39 am


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