Partnership Property Issues

Question 1

Partnership Capital

Answer 1

The property or money contributed by each partner for the purpose of carrying on the partnership’s business.

Question 2

Partnership Property

Answer 2

• Everything the partnership owns.
• Includes both capital and property subsequently acquired in partnership transactions.

Question 3

Titled Property

Answer 3

Titled property is partnership property if:
* it is acquired in the partnership’s name; or
* where it is apparent from the document that the partner was acting for a partnership.

Question 4

Property Presumed to be Partnership Property

Answer 4

Under RUPA, property is rebuttably presumed to be partnership property if it was purchased with partnership funds.

Question 5

Property Presumed to be Partner’s Separate Property

Answer 5

Under RUPA, property is rebuttably presumed to be a partner’s separate property if:
1. it’s held in the name of one or more partners;
2. the title transferring document gives no sign that partner(s) were acting for a partnership; AND
3. partnership funds were not used to acquire.

Question 6

Common Law Criteria For Untitled Property

Answer 6

Courts will look at the following factors for determining if property is partnership property in cases where the property is untitled.

• Acquisition of the property with partnership funds;
• Use of property by the partnership in conducting its business;
• Entry of the property into the partnership’s books;
• Close relationship between property and partnership business operations;
• Improvement of property with partnership funds
• Maintenance of property with partnership funds

Question 7

Rights in Partnership Property

Answer 7

• The partnership’s rights in partnership property are unrestricted.
• A partner is NOT a co-owner of partnership property.
• A partner has NO transferrable interest in partnership property.
• A partner can only use the partnership property for partnership purposes.

Question 8

Partnership Interest

Answer 8

• A partner’s owernship interest = his/her partnership interest;
• Partnership interest = maangement rights + financial rights
• Partnership interest is personal property of the partner;
• A partner cannot unilaterally transfer his management rights to a transferee.
• A partner CAN unilaterally transfer his financial rights to a transferee.
• A transferee who has financial rights is not a partner.
• A transferee with financial rights has the right to receive profit distribution from the partnership.
• A partner who has transfered financial rights still retains management rights

Question 9

Partnership Management Rights

Answer 9

• Cannot be unilaterally transferred by a partner.
• To transfer these rights, a unanimous vote of all the partners is required and the transferee becomes the new partner. The transferor is no longer a partner.
• Management rights = right to participate in the management of the business, to obtain information about the partnership.

Question 10

Partnership Financial Rights

Answer 10

• Financial Rights = partner’s right to receive his share of any profit distributions made by the partnership.
• A partner can unilaterally transfer financial rights.
• A transferee who receives financial rights has the right to receive profit distributions from the partnership.