Partnership Property

Question 1

What is “partnership capital”?

Answer 1

“partnership capital” = property or money contributed by each partner for the purpose of carrying on the partnership’s business

Question 2

What is “partnership property”?

Answer 2

“Partnership property” = everything that the partnership owns, including both capital and property subsequently acquired in partnership transactions

Question 3

In general, what issues arise with regards to partnership property?

Answer 3

It’s not always clear whether property is partnership property or the individual property of a partner.

The method of determination depends on whether property is titled property or untitled property.

For titled property –> RUPA applies

For untitled property –> common law applies

Question 4

With regards to determining the ownership of titled property under RUPA, what are the three relevant categories?

Answer 4

1. Property Deemed to be partnership property;
2. Property Presumed to be partnership property
3. Property presumed to be partner’s separate property

Question 5

With regards to titled property, when is property DEEMED to be partnership property?

Answer 5

Under RUPA –> titled property is DEEMED to be partnership property if:

1. it is TITLED in the partnership’s name; OR
2. it is titled in the name of one or more partners and the INSTRUMENT TRANSFERRING TITLE notes the titleholder’s capacity as partner, or the existence of the partnership.

Question 6

With regards to titled property, when is property PRESUMED to be partnership property?

Answer 6

Under RUPA –> titled property is rebuttably PRESUMED to be partnership property if it was PURCHASED WITH PARTNERSHIP FUNDS, regardless of in whose name title is held.

“partnership funds” –> includes not only partnership’s cash, but also partnership’s credit.

Question 7

With regards to titled property, when is property PRESUMED to be partner’s SEPARATE property?

Answer 7

Under RUPA –> titled property is rebuttably presumed to be separate property if:

1. property is held in name of one or more partners;
2. the instrument transferring titled DOES NOT INDICATE the person’s capacity as a partner or mention existence of a partnership; AND
3. partnership funds were NOT used to acquire the property

THIS IS TRUE even if property is used for partnership purposes.

Question 8

What is the rule re: untitled property (6) ?

Answer 8

If the property is untitled, courts will consider the following criteria under common law:

1. Acquisition of property with PARTNERSHIP FUNDS;
2. USE OF PROPERTY by partnership in conducting partnership’s business;
   3 Entry of property as PARTNERSHIP ASSET in the partnership books;
3. A CLOSE RELATIONSHIP btwn property and business operations of the partnership.
4. IMPROVEMENT of property with partnership funds; and
5. MAINTENANCE of property with partnership funds

Question 9

In General, what are the rights of a partner in partnership property?

Answer 9

• A partner is NOT A CO-OWNER of partnership property
• THUS –> he has no transferable interest in partnership property

NOTE –> a partner has NO RIGHT to use partnership property other than for the benefit of the partnership

Question 10

Does partner have a transferable interest in partnership property?

Answer 10

No

Question 11

Does partner have right to use partnership property?

Answer 11

No. Partner has NO RIGHT to use partnership property other than for the benefit of the partnership.