Legal Question in Business Law in New Jersey
i am a partner in an llc that bought and or built homes to rent. i told my partner that i didn't want to continue doing it anymore and we decided to just manage the properties we have until they sell. because i have decided that i didn't want to pursue that business anymore my partner has stopped contributing towards any money shortfalls including some bills that we had with vendors that couldn't be paid at the time we stopped. i am solely working out plans with these vendors and i am paying all shortfalls including bank notes. what legal position do i have? our operating agreement states that in a sale of our properties that our capital accounts should zero out. i have been keeping at tab on all monies that i have laid out but will i have the opportunity to recoup the unfair difference in what i contributed?
3 Answers from Attorneys
Any attorney will need to examine the entire LLC operating agreement in order to advise you. Consult with an attorney in your area for specifics.
Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise
Franchise Attorney
It may be unwise for you to be putting additional money into the LLC. Depending on how the Operating Agreement is drafted, it may be difficult for you to receive credit for the money if and when there is a dissolution. Additionally, there is frequently a question of whether such funds are contributions to capital or loans. I think that you should discuss your situation with a business lawyer who can review the LLC documents and your financial condition and advise you based on that knowledge. � My firm handles matters of this type. If I can be of further help to you, call or email. � See also: http://info.corbettlaw.net/lawguru.htm
I agree with the other authors, likewise not having seen the operating agreement. Usually advances by one partner to meet partnership obligations have a priority to be repaid upon dissolution, but this depends upon what what your agreement provides.
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