Chapter 2: Property Rights of a Partner

Question 1

What are the three property rights of a partner?

Answer 1

1. His rights in specific partnership property
2. His interest in the partnership
3. His rights to participate in the management

Question 2

The partner’s contribution is owned by the partnership the moment it is delivered, but the partners have co-ownership over these properties

Answer 2

Rights in specific partnership property

Question 3

A partner has the right to participate in the management of the partnership, unless the partnership agreement states otherwise

Answer 3

Rights to participate in the management

Question 4

The transfer of rights or property

Answer 4

Assignment

Question 5

What is a partner’s right to use partnership assets?

Answer 5

Every partner has the right to use the partnership’s assets (like equipment or vehicles), but only for activities that benefit the partnership. Personal use requires permission from the other partners.

Question 6

Can partners use partnership assets for personal use?

Answer 6

Personal use requires permission from the other partners.

Question 7

Can a partner assign their interest in specific partnership property?

Answer 7

No, a partner cannot transfer or sell their interest in specific partnership property unless all partners collectively agree to assign their rights in that property.

Question 8

Can personal creditors of the partners claim a partnership property to settle their debts?

Answer 8

Specific partnership property is protected from the personal creditors of a partner; they cannot claim it to settle the partner’s personal debts. The property can only be used to pay debts owed by the partnership itself.

Question 9

Can the partners personal property also be used to settle the partnership debts?

Answer 9

If the partnership owes money, the specific partnership property can be used to settle those debts, and individual partners cannot claim personal exemptions from such obligations if the partnership’s property is not sufficient to settle those debts.

Question 10

Can a partner avail themselves personal exemption rights to protect specific partnership assets from being used to settle the partnership’s debts?

Answer 10

A partner cannot avail themselves of exemption laws concerning specific partnership property; for instance, creditors can claim assets like buildings or equipment owned by the partnership.

Question 11

Is a partner’s interest in specific partnership property subject to legal claims for family support?

Answer 11

No, a partner’s interest in specific partnership property cannot be claimed for legal support obligations, such as alimony or child support. The property remains off-limits for those claims.

Question 12

The remaining assets of the partnership after all the debts and liabilities have been paid.

Answer 12

Surplus

Question 13

Revenue minus expenses

Answer 13

Profit

Question 14

What are the limitations on a partner’s rights in specific partnership property?

Answer 14

A partner’s right in specific partnership property cannot be assigned, cannot be attached, and is not subject to legal support.

Question 15

What rights does a partner have regarding their interest in the partnership?

Answer 15

A partner’s interest in the partnership can be assigned to another person, attached by creditors, and is subject to legal support claims.

Question 16

The voluntary transfer of a right or of property

Answer 16

Conveyance

Question 17

What is the primary effect of a partner conveying his whole interest in the partnership?

Answer 17

The primary effect is that it does not dissolve the partnership by itself, and the assignee is not entitled to interfere in the management or administration of the partnership business.

Question 18

What is the general rule regarding the existence of a partnership after a partner conveys their interest?

Answer 18

The partnership continues to exist, the business goes on as usual with the remaining partners.

Question 19

Under what circumstance can a partnership be dissolved after a partner’s conveyance of interest?

Answer 19

The partnership can be dissolved if the remaining partners decide they do not want to continue the business without the transferring partner.

Question 20

What are the actions that the assignee cannot take concerning the partnership business?

Answer 20

• The assignee cannot interfere in the management of the partnership business
• Cannot require information or accounting of partnership transactions
• Cannot inspect the partnership books.

Question 21

Whom the right is legally transferred

Answer 21

Assignee

Question 22

The one who transferred the rights to another person

Answer 22

Assignor

Question 23

What are rights of the assignee?

Answer 23

• Receive the profits to which the assigning partner would otherwise be entitled
• In case of fraud, the assignee may avail himself of the usual remedies provided by law
• In case of dissolution, to receive the assignor’s interest
• May require an account from the date only of the last account ageed by all the partners

Question 24

Allows a judgment creditor (a person or entity that has won a court judgment against a partner for a debt) to secure payment of the debt from the partner’s interest in the partnership.

Answer 24

Charging Order

Question 25

What happens if a court grants a charging order against a debtor-partner?

Answer 25

If granted, the charging order directs that any income or distributions that would typically go to the debtor-partner are instead used to pay off the judgment debt.

Question 26

A person or entity that has won a court judgment against a partner for a debt

Answer 26

Judgement Creditor

Question 27

An amount of money that a court has ordered a person or entity to pay to another party as a result of a legal judgment.

Answer 27

Judgement Debt

Question 28

How do preferred rights of partnership creditors impact a charging order?

Answer 28

The charging order is subject to the preferred rights of partnership creditors. If the partnership itself has outstanding debts, the partnership’s creditors have a legal right to be paid first from the partnership’s assets and profits before any funds are used to satisfy the charging order.

Question 29

A legal process used by a creditor to take possession of property from a debtor who has failed to meet their debt obligations.

Answer 29

Foreclosure

Question 30

Can a debtor-partner redeem their interest charged before foreclosure, and how?

Answer 30

Yes, a debtor-partner can redeem their interest charged at any time before foreclosure by paying off the debt, allowing them to regain full control of their share in the partnership.

Question 31

What are the options available for partners to purchase the charged interest after foreclosure?

Answer 31

After foreclosure, when a partner’s interest in the partnership is sold to pay off a debt, the remaining partners have a couple of options to buy that interest. They can use their own separate, personal money to make the purchase, or they can use the partnership’s money. However, if they choose to use partnership funds, all partners whose shares were not affected by the foreclosure must agree to it.

Question 32

The extinguishment of the charge or attachment on the partner’s interest in the profits.

Answer 32

Redemption

Question 33

Right of a partner under exemption laws

Answer 33

• A partner has some protection under exemption laws for their overall interest in the partnership. This protection means that a partner’s personal share in the partnership might be shielded from creditors to some extent.
• However, exemption laws do not apply to specific partnership assets like equipment or buildings. Partners cannot protect these assets from creditors.