What to do about a business partner who has defaulted on payments?
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What to do about a business partner who has defaulted on payments?
A few years ago, my I purchased a vacation home with a friend. We formed a LLC prior to purchasing the home and divided the warrants up 50/50. A few months ago he stopped making payment to the business fund that covers the mortgage and bills. We are in the process of putting the home up for sale, but there are still outstanding bills that I have now having to cover, what actions to I have to get him to pay? Can I put a lien on his other business to cover this issue?
Asked on July 19, 2011 under Business Law, Oregon
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Hopefully you have an "operating agreement" regarding your limited liability company concerning the home you bought with a friend where the home is an asset of it. If so, then this agreement hopefully spells out what to do when one member of the limited liability company fails in making required contributions.
In all likelihood, since the home is for sale and you want it to be sold, you cover the shortfall of the outstanding bills that your friend is obligated for on the home and then submit a claim to escrow for repayment of what you paid beyond your share with accrued interest. If there is not enough sales proceeds to cover what you paid, you will probably have to get him pay voluntarily in installments, and if not, file a legal action against him.
Good luck.
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