Partition agreement in TX

[legallurker]

What is the name of your state (only U.S. law)? TX

Mods, not sure if this belongs here, in business law, real estate - please feel free to move as necessary.

My husband & I live in TX (community property state). I am employee of a mid-size company & he is employed by an LLC owned 50% between he & his business partner. Their business is currently experiencing some difficulties & I want to be sure that our personal assets are protected. Our checking & savings accounts are separated (for biz purposes as well as b/c of issues w/ his ex-wife ).

However, there is a potential business transaction b/t me & his business partner. A property previously listed in the name of the LLC has been moved to his partner's name & I will be buying it personally. There is also another property owned jointly between the LLC & several other investors, me being one of the other investors.

If there is a judgement against the LLC is there any way the creditor could come for my personal assets? We didn't have a pre-nup but I've heard of partition agreements in TX that could hold up in court. My objective isn't to protect my assets from my spouse, but to protect them against any outside creditors for the ultimate good of our marriage. Does anyone have any experience with this?

Just FYI, we are looking at mutliple real estate transactions in the future & we both have LLCs (for asset protection), but w/ the credit issues our nation is currently experiencing we've both been told by lenders that it's better to do everything in our personal names at the moment & just over-insure for asset protection purposes. I just want to make sure that our individual transactions, whether in our LLCs names or in our personal names, have minimal impact on our personal credit & that only the individual involved in the transaction can ultimately be negatively impacted because of it.

Thanks in advance for your help.

 

[JETX]

However, there is a potential business transaction b/t me & his business partner. A property previously listed in the name of the LLC has been moved to his partner's name & I will be buying it personally. There is also another property owned jointly between the LLC & several other investors, me being one of the other investors.

If there is a judgement against the LLC is there any way the creditor could come for my personal assets? We didn't have a pre-nup but I've heard of partition agreements in TX that could hold up in court. My objective isn't to protect my assets from my spouse, but to protect them against any outside creditors for the ultimate good of our marriage. Does anyone have any experience with this?

Just FYI, we are looking at mutliple real estate transactions in the future & we both have LLCs (for asset protection), but w/ the credit issues our nation is currently experiencing we've both been told by lenders that it's better to do everything in our personal names at the moment & just over-insure for asset protection purposes. I just want to make sure that our individual transactions, whether in our LLCs names or in our personal names, have minimal impact on our personal credit & that only the individual involved in the transaction can ultimately be negatively impacted because of it.

You are looking for SPECIFIC legal services for complex issues with numerous variables. All of that is beyond the scope of this 'free legal advice' forum. Get a local attorney who can evaluate ALL of the issues and advise you properly.

 

[LdiJ]

I agree that you ABSOLUTELY need to consult an attorney, but I will also give you a little bit of information about LLC's in general.

An LLC is similar to a corporation in that the members of the LLC are limited as to their liability for the entities debts. However, that is much murkier when the entity is closely held, as is the case here. Odds are that your husband and his partner have signed personal guarantees for at least some of those debts.

Also, the property that has been moved into the partner's name, and that you are considering buying is potentially VERY dangerous to you.

The property that you own in conjunction with the LLC is far less problematic, assuming that it was purchased that way from the get go.

Consult an attorney....don't rely on information from an internet message forum for these issues. They are too complex.

 

[legallurker]

Thank you both

I figured this was probably beyond the scope of this forum but thought it wouldn't hurt to ask. There are definitely many variables in play here & I haven't been able to find much information on partition agreements. Most info that pops up seems to be about how judges often over-rule them if they seem unfair to one spouse, etc., but in this case the intent is to best protect marital assets from each other's outside business activities if those outside businesses turn sour.

The lender was the one who suggested that the LLC-owned property be moved into the personal name of the other partner so that I could purchase it personally, but of course the lender has the LENDER's best interest at heart here. LdiJ, can you give any more specifics about how this could be dangerous for me? If not that's fine; just trying to get my head around the potential complications.

Thanks again to both of you for your assistance.

 

[LdiJ]

I figured this was probably beyond the scope of this forum but thought it wouldn't hurt to ask. There are definitely many variables in play here & I haven't been able to find much information on partition agreements. Most info that pops up seems to be about how judges often over-rule them if they seem unfair to one spouse, etc., but in this case the intent is to best protect marital assets from each other's outside business activities if those outside businesses turn sour.

The lender was the one who suggested that the LLC-owned property be moved into the personal name of the other partner so that I could purchase it personally, but of course the lender has the LENDER's best interest at heart here. LdiJ, can you give any more specifics about how this could be dangerous for me? If not that's fine; just trying to get my head around the potential complications.

Thanks again to both of you for your assistance.

Should the LLC need to file bankruptcy, that property is one of the assets of the LLC. Any equity in excess of the mortgage balance would belong to the LLC's creditors. The partner transferring it to his name is converting assets (illegal as heck) and you, as the wife of the other partner, purchasing the property, could be seriously dragged into that. Now, if you bought it directly from the LLC, at fair market value, and the cash for any equity went directly back into the LLC, that would be different.

Of course, the bank wants you to buy it so that they are paid in full and don't have to foreclose or have the trustee sell it in potential a fire sale, because the bank would be sol if that happened.

 

[legallurker]

Thanks, LdiJ

That information was helpful. There are a lot of details involved that I didn't post, but I know what needs to happen next. Thanks again for your assistance.