I am in a partnership with other parties holding properties. There is no partnership agreement except any desiccion made we all have to agree on.

The other partners now want to have majority rules because i dont agree. Can they do that and what are my legal recourses?

Asked on June 13, 2009 under Real Estate Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

When you say "no partnership agreement except any decision made we all have to agree on," do you mean that there is a written agrement--even something fairly informal, like a memo or letter that you have all signed--saying that any decision has to be unanimous?

If so--if there's something in writing requiring unanamity--then no, you partners cannot change that without your consent, since changing the rules for making decisions would itself require unanimous agreement.

However, if there is no written agreement, then the normal rule in a partnership is that the partners holding a majority of the interest, or a majority of the partners if each has equal interests, can make decisions. So without a piece of writing to the contrary, your partners can make decisions on a 2 out of 3 basis.

If that's the case, you might want to discuss an arrangement under which your interest would be bought out, since being in a business or investing relationship where you effectively don't have a voice would be awkward at best for you, and puts you in danger of having your economic interests trampled; but on the other hand, your partners cannot go out of their way to destroy the value of your investment (though they can make reasonable business decisions you disagree with), which means that you may have an implicit veto in some cases over their actions if you're willing to take it to the mat and threaten to sue if necessary.

Therefore, if you can't work out an arrangement which satisfies all of you, you should look for a way to dissolve the partnership. In the future, this is why you should have a partnership agreement drawn up that spells out both how decisions are made and the rights of a partner to be bought out if he/she disagrees with the others.


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