Partnership Property

Question 1

What are the partner’s rights to property?

Answer 1

A partner only has property rights in his interest in the PS and his right to participate in the management.

He is not a co-owner in PS property and has no interest in PS property that is transferable.

Question 2

What is PS property?

Answer 2

1. Property originally brought in - All property originally brought into the PS stock on account of the PS is PS property. Any property brought into the business at its formation is the capital of the PS.s
2. Property subsequently acquired - All property subsequently acquired by purchase or otherwise on account of the PS is property of the PS.
3. Property purchased with PS funds - Property purchased with PS assets belongs to the PS or of one or more partners with an indication of the person’s capacity as a partner or of the existence of a PS. Factors considered are:
   a. the terms of the PS agreement or any other relevant agreement;
   b. the PS’s records;
   c. the payment of taxes, repair bills, or insurance premiums;
   d. the conduct of the partners;
   e. whether the property was used or improved by the business; and
   f. how title to the proper was held.
4. Real property - Any estate in real property may be acquired in the PS name. However, title does not need to be taken in the PS name.

Question 3

What is real property conveyed by a PS?

Answer 3

Title in the Name of the PS

Any partner may convey title by a conveyance executed in the PS name. A statement of PS authority may grant and limit this authority.

Title in the Name of Partner(s)

The partners in whose name the title stands may convey title to the property.

Title in Name of third Persons

The property may be transferred by an instrument of transfer executed by the persons in whose name the property is held.

Partners’ Interest Held by Third Person

if a person hols all of the partners’ interests in the PS, all of teh PS property vests in that person. The person may execute a document in the name of the PS to evidence vesting of the property in him, and he may file or record the document.

Question 4

How can a PS recover PS property that was improperly conveyed?

Answer 4

A PS may recover its property from a transferee only if it proves that execution of the instrument of initial transfer did not bind the PS, and:

1. as to a subsequent transferee who gave value for property transferred in the name of the PS or partners name, the PS proves that the subsequent transferee knew or had received notification that the person who executed the instrument of initial transfer lacked authority to bind the PS; or
2. as to a transferee who gave value for property transferred by a third person, the PS proves that the transferee knew or had received notification that the proper was PS property, and that the person who executed the instrument of initial transfer lacked authority to bind the PS.

A PS may not recover PS property from a subsequent transferee if it is not entitled to recover from any earlier transferee of the property.