Legal Question in Real Estate Law in Minnesota

Re: selling land held in partnership

Yes.

Re: selling land held in partnership

Minnesota has adopted the Revised Uniform Partnership Act (RUPA) along with California and a majority of the other states. Nevertheless, it's still a possibility that its law differs from California's, so an answer from an attorney licensed in Minnesota would be preferable to mine. Since none has been posted yet, let me tell you what the rules are under California law......

First, the partnership agreement can modify most of the rules set forth in the statutes, so you need to find and interpret the agreement, if there is one.....and the agreement need not be in writing, but it must be unanimous to be effective.

If there is no agreement, or if it doesn't modify the statutory RUPA plan, differences arising as to a matter in the ordinary course of business of a partnership may be decided by a majority of the partners. However, an act outside the ordinary course of business of a partnership and an amendment to the partnership agreement may be undertaken only with the consent of all of the partners. Sale of farm land would be "outside the ordinary course of business" unless a primary business of the partnership was buying and selling farms (as opposed to, e.g., operating a farming business). Therefore, so long as the partnership is intact, I would say one partner probably cannot prevent or force the sale of land the partnership owns, whether the land was inherited by the partnership or otherwise acquired.

However, the analysis diesn't end there. Any partner may withdraw from the partnership at any time. The withdrawal may be "rightful" or "wrongful," (which may have collateral consequences for the withdrawing partner), but nevertheless, the partner can withdraw. This forces the remaining partners to elect either to (1) terminate, dissolve and wind up the partnership, which would doubtless force the sale of the land as part of the winding up process; or (2) continue the partnership, but buy out the interest of the withdrawing partner at appraised value (or agreed value) of the withdrawn partner's stake. This option might also force sale of some or all of the land, in order to raise cash to pay off the withdrawn partner, but it might not if the partnership can borrow, find someone else to buy in, sell other assets, etc.

This is a rough and quick outline, and there are many other aspects to consider, including what the partnership agreement (if any) says, what the partners can agree on privately, tax issues, whether the withdrawal is rightful or wrongful, value of the land in question relative to other assets of the partnership, whether the land sale is or isn't ordinary course of business, and variations in Minnesota law from California's.

Re: selling land held in partnership

I should probably add that my previous answer deals with rights among the partners. If one partner were to sell the land to a third party under circumstances where the third party buyer reasonably thought the partner making the sale was authorized by the partnership to make the sale, a court would probably uphold the sale. The partner who acted without proper authority would be answerable to his co-partners, but the deal with the third party would stick. Apparent authority commits the partnership as to outsiders dealing with it in good faith, but does not make the deal OK as to relationships within the partnership.