[WSBARP] Q re Amendment provision

[Mark Higgins]

Jennifer--I am confused.  I think you are saying that this partnership
owns nothing--that the real estate is owned by three tenants in
common.  If the partnership owns nothing what is being bought and sold
under the buy-sell provisions in the partnership agreement?  Is the
agreement really an agreement among tenants in common?  I don't
usually think of a tenants in common agreement as being a partnership
agreement.  It might help your analysis if you work through these
issues.

Mark

On Wed, Feb 4, 2015 at 10:19 PM, Jennifer Y. Sohn <jennifer at sohn-law.com> wrote:
> I am helping a partnership with revising the buy-sell provisions of its
> partnership agreement. The partnership is owned by 3 partners – an s-corp
> who owns 70%, and 2 individuals, each owning 25% and 5%. They own a
> commercial real estate in CA as tenants-in-common, and have a partnership
> agreement to govern how they will manage their business relationship. The
> partnership agreement (which was drafted over 20 years ago) allows for any
> amendments to be made by partner owning 50% or more interest. We are now
> doing an amendment to the buy-sell provisions in the partnership agreement.
> The partners owning 95% want to leave the amendment provision the same
> (i.e., allowing partner with 50% or more interest to made amendments), and
> the 5% owner is insisting that amendment shouldn’t be allowed without a
> unanimous consent.
>
>
>
> The partnership agreement doesn’t have a governing law section, but the
> s-corp partner and the 25% guy are in WA, but the 5% partner and the
> commercial real estate that the partners own are in CA. The atty in CA who
> represents the 5% partner told me that, under CA statute, the amendment
> provision in the partnership agreement as written will not hold up in court.
> This is not true for WA – in WA, most of the default partnership rules can
> be contracted around.
>
>
>
> 1. I wanted to know whether that CA atty’s statement is true (i.e., a
> partnership agreement that allows for amendments with vote of partner owning
> more than 50% interest rather than by unanimous vote).
>
> 2.  And, for buy-sell agreements, do you always require unanimous consent to
> make amendments? Personally, I have seen plenty of partnership and LLC
> agreements that contain buy-sell provisions that do not require unanimous
> consent to amend.
>
> 3.  In this situation, if the 5% partner decides not to sign the amendment,
> can the amendment still be enforceable against him?
>
>
>
> If you have any insights on this, I would really appreciate it.
>
>
>
>
>
>
>
> Best regards,
>
>
>
> Jennifer Y. Sohn
>
> Attorney at Law
>
> (Licensed in CA and WA)
>
> Sohn Law PLLC
>
> 10900 NE 4th Street, Suite 1850
>
> Bellevue, WA 98004
>
> Tel: 206.617.7874
>
> Fax: 425.732.9748
>
> Email: jennifer at sohn-law.com
>
> http://www.sohn-law.com
>
>
>
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-- 
Mark T. Higgins
Mark T. Higgins, P.C.
P.O. Box 57
Darrington, WA 98241
206-491-2420