[BUYING AND SELLING REAL ESTATE IN MICHIGAN]
283
5. Although not required by statute, it is strongly recommended that partnerships have a Partnership Agreement. A Partnership Agreement sets forth the duties and obligations of the partners towards one another and to the partnership. Absent a Partnership Agreement, the MUPA creates default rules governing the relationship between partners. For example, absent an agreement to the contrary, the MUPA provides that partners will share equally in the partnership’s profits and losses, and that all partners have equal rights in the management of the partnership. MCL 449.18 (a); MCL 448.18(e). 6. Absent a Partnership Agreement to the contrary, partnership interests are generally transferable. However, the transfer of an ownership interest in a partnership only transfers the right to receive distributions, and not any other rights of ownership (including the right to participate in management). MCL 449.27. 7. The withdrawal of a partner dissolves the partnership. MCL 449.29 8. Advantages 1. A partnership is a pass-through entity. The partnership passes through its profits and losses to the partners and there is no entity level income tax. 2. Partnerships can be informal, depending on the partnership agreement (or lack thereof).
9. Disadvantages 1. Partnerships are not limited liability entities (like an LLC or a corporation). The partners of a partnership are jointly and severally liable for partnership liabilities. MCL 449.15. Conveyancing issues: (i) Any partner of a partnership may generally convey title to partnership real estate ( i.e., title to the real estate is in the partnership’s name). A purchaser may rely on a deed signed by any partner, so long as the partner who executed the deed is carrying on in the usual way of business of the partnership, unless (i) the conveying partner lacks the authority to make the conveyance, and (ii) the purchaser has actual knowledge of the fact that the conveying partner lacks such authority. MCL 449.9. (ii) If the title to real estate is in the name of multiple partners in their individual capacities, all such partners must sign the deed. 2. Fiduciary Duty. Partners have a
duty to render true and full information to the partnership. MCL 449.20.
B. LPs 1. A LP is a statutory entity governed by the Michigan Revised Uniform
Limited Partnership Act (“MRULPA”), MCL 449.1101 et seq . The MUPA also applies to LPs, except to the
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter