[WSBARP] Q re Amendment provision

Fri Feb 6 11:24:55 PST 2015

Seems to me like the amendment procedure clause should be effective.
that is why you should ask for the lawyer to send you his contrary
authority.  I am guessing it doesn't exist.

On Fri, Feb 6, 2015 at 10:50 AM, Jennifer Y. Sohn <jennifer at sohn-law.com> wrote:
> Thanks Mark, I agree with you that if the amendment affects all parties equally and does not work to disadvantage 1 minority owner, I don't see why it needs to always be done through unanimous vote.  For example, if the owners owning 95% of the property decide that they need to sell (for whatever reason), then they want to be able have the 5% agree whether he likes it or not. Their ability to sell the real estate will be significantly affected if the 5% guy refuses not to sell together. I was just wondering if this sort of agreement (the ability of the majority to make decisions that affect all parties equally, even if the 5% minority owner objects) is ineffective under some statute.
>
> -----Original Message-----
> From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Mark Higgins
> Sent: Friday, February 6, 2015 9:36 AM
> To: WSBA Real Property Listserv
> Subject: Re: [WSBARP] Q re Amendment provision
>
> Jennifer--you might ask the Cal lawyer for his authority because I haven't heard of any such thing.  My basic understanding is people can agree to whatever they want so long as it does not run afoul of various policy matters.  Thus, three tenants in common should be able to agree on procedures to amend their agreement.  One thing they may not do, for policy reasons, is to use amendment power to steal some money from the other guy.  For example, amending the agreement so that one guy's share of rent drops to 0% and his former share now goes to the other two--that would be an amendment which would be thrown out by the court.
>
> On Thu, Feb 5, 2015 at 2:25 PM, Jennifer Y. Sohn <jennifer at sohn-law.com> wrote:
>> You are right. It is just an agreement among the tenants in common. It shouldn't even be called a partnership agreement. They want to accomplish 2 goals: (1) to ensure that the current guys get to deal amongst themselves first a third party gets involved, and (2) to create a market for their partial interests in real property in the event any one of them needs/wants to sell. I believe these are buy-sell concepts. If we don't call it a partnership agreement and call it an agreement among tenants in common, does that change your analysis?
>>
>> Thanks for any insight.
>>
>> Best,
>>
>> Jennifer
>>
>> -----Original Message-----
>> From: wsbarp-bounces at lists.wsbarppt.com
>> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Mark Higgins
>> Sent: Thursday, February 5, 2015 9:19 AM
>> To: WSBA Real Property Listserv
>> Subject: Re: [WSBARP] Q re Amendment provision
>>
>> 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
>>
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>
>
> --
> Mark T. Higgins
> Mark T. Higgins, P.C.
> P.O. Box 57
> Darrington, WA 98241
> 206-491-2420
>
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-- 
Mark T. Higgins
Mark T. Higgins, P.C.
P.O. Box 57
Darrington, WA 98241
206-491-2420