QUESTION
Help us understand "...they shall each acquire a portion of the Partnership interest in proportion to their interests in Partnership capital..."
Asked on May 06th, 2014 on Contracts - Colorado
More details to this question:
We are one of ten Partners who own a condo together outright. All Partners own at least one share which translates to 8.33%. Some Partners own 1 1/2 shares and one owns 2 shares. We have a paragraph in our Partnership Agreement that must be followed if a Partner wants to sell their share(s). The current situation is that we made a deal to buy another Partner's 1 1/2 shares. As required by our Agreement, we informed the other Partners. At that time, a third Partner voiced a desire to buy the 1/2 share, leaving us with just one full share. Line 5 of our Partnership Agreement (below) addresses this scenario but we are having trouble interpreting it. Can you please help us make sense of it? Paragraph 14: TRANSFER OF PARTNERSHIP INTERESTS Line 5: "If more than one Partner desires to purchase the Partnership interest, they shall each acquire a portion of the Partnership interest in proportion to their interests in Partnership capital unless otherwise agreed by the acquiring Partners. "
1 ANSWER
The parties to the agreement are the best ones to interpret it, but it doesn't seem all that complicated to me. To me it means that if more than one partner wants to buy a partnership interest that another partner is selling, they can agree on the portion each will buy (here, it looks like you've agreed that you'll buy 1 share and the other partner will buy 1/2 share) or, if they can't agree, than they will each be able to buy proportional with their interests in partnership capital (I assume that, in your partnership, each partner's capital account is proportional with his/her/its partnership interest.) In other words, if one partner who owns one share and one partner who owns 1.5 shares each want to buy the partnership interest being sold, and the can't agree on how they will divide it, the partner who owns 1.5 shares will be able to buy 60% of the interest, and the partner who owns 1 share will be able to buy 40%. If they each owned 1 share, they could each buy half. If one partner owned 3 shares and the other owned 1 share, the 3 share partner could buy 75% of the interest, and the 1 share owner 25%.
Answered on May 07th, 2014 at 3:35 PM