The Recourse Of Buying An LLP
The reason I am buying the company is for the assets it owns, namely the real estate, and the company has 10 years of seasoning, showing a well established presence.
I am buying the LLP (not LLC) and was wondering what recourse anyone would have against me. Such as old tenants, Venders that havent been paid etc etc.
On the surface there are no bad debts, lawsuits etc, and the current tenant is being evicted to make way for the new company being operated there. But am curious if there are any legal actions that can be taken against me as the new owner from any shady past that I may not know about.
Thanks,
Kyle
According to this article: http://www.johntreed.com/dueonsale.html (posted previously on this board), you could be triggering the due on sale clauses on any mortgages they LLP owns. Whether or not they actually find out or care is a big unknown, but they are supposed to find out, and ought to care.
AndrewKT,
Glad to meet you.
I went up to Mr. Reed's site I looked everywhere and could not find where he graduated from law school, maybe I missed it and you can show me where he is an attorney.
Then again maybe you are an attorney and you can cite some cases to look at.
Or I have a better idea, how about an attorney who is an investor also, now that makes some sense.
http://www.legalwiz.com/dueonsale.htm
John $Cash$ Locke
The property is free and clear of any mortgages, except what I have agreed to with the seller. I am agreeing to a 6.5 million first to be refinanced in a short time. So the mortgage concerns are unfounded. I was waondering what the recourse could be on any past screw ups by the seller, that have not surfaced yet. I do not anticipate any, but wanted to know the Legal ramifications.
Thanks
Kyle
Quote:
On 2004-06-16 19:30, JohnLocke wrote:
Glad to meet you.
<snipped a lot of stuff that would just cause flames and in present knowledge is not applicable>
Glad to meet you as well. I have enjoyed reading your posts.
I am not a lawyer. I do not know if Mr. Reed is a lawyer. If the section of legal codes he quoted are correct, then it is my completely uneducated opinion that it's fishy at the least. But, that discussion should take place in anoher thread.
We now return you to the regularly scheduled thread, already in progress...
As with any transaction that size have a giid atty go over the deal.
As for flow thru liability, and you planing on continuing to operate the LLP or liqudate it, and run in some other structure.
If you continue operating as the LLP (who are the other partners?), then you're basically steping into the shoes of the former owner. You'ld be subject to previous, current and furture claims.
Where as if you liquidate and buy the assets of the llp, rather than the llp, you break the chain and not be responsible for previous liabilities of the llp.
If some one has a slip and fall, the day after you "close", the would/could sue new-co.
Kyle,
Since you are buying the company rather than the real estate any claim by a prior tenant, etc. could come back to the company. But the claim could probably not go through the company to you personally.
If you had transfered title then the claim would only be against the prior owner.
LLP is made up of one or more Gen. Partners (GPs) and some Ltd..Ps.
Unlike an LLC, in a LLP, the GP can be liable personally, (just as ALL the partners in a G P'ship are ALL totally liable for any liability of the GPship), so the GP is generally an LLC or Corp itself, so no individual GP gets stuck for personal liability.
So if you can, you might want to sell, assign or convey your GP interest over to an LLC or Corp so it, not you personally would be the liable party, should somebody sue the LLP or get a J against the LLP.
Study the LLP docs to see if the GP can legally become a LLC or Corp, then, if so, take immediate steps to do so.
Thanks John, and commercialking, thats exactly what I was worried about. Not being familiar with the LLP versus LLC option. For a company this size I think I will go with a c-corp so a sale of the company will go smoother, or turn the company public with a stock offering.
The tenant that is in there now I am evicting, so before the final paperwork is drawn up I will start the switch. The only problem I am worried about is that I will lose the seasoning by turning the company over. It will be harder to refinance with no seasoning, but cheaper than fighting a lawsuit I guess.
Thanks,
Kyle [ Edited by KyleGatton on Date 07/03/2004 ]