Can a business partner sell property without your consent?

If your business partner tries to sell commercial property without your approval, you may have immediate legal concerns. Whether a partner has authority to transfer the property depends on how title is held, who owns it and what the governing agreements provide.

Who holds title to the property?

The deed and title records are the starting point for ownership. You and your partner may own the property personally, the partnership may hold title, or a separate entity such as an LLC may own it. Being a partner does not always mean you personally own the real estate.

If a partnership owns the property, California law also considers a partner’s authority to act for the partnership and whether the transaction falls within the ordinary course of business.

Can one partner transfer property alone?

No single rule applies to every business partnership. A partner’s authority can depend on the nature of the transaction, the partnership’s business and the governing agreement. An LLC or corporation may have different rules.

California law allows a partnership to identify partners authorized to transfer real property through a recorded statement of partnership authority. California partnership law addresses this authority.

What remedies exist if a sale is pending?

Timing matters when a transaction is already underway. In some circumstances, a party may seek an injunction to prevent a transfer. Partition may also be available when individual co-owners hold qualifying interests. Different rules apply when a partnership or LLC owns the property.

Steps to protect your ownership interest

If you learn that a partner may be trying to sell the property, take these steps:

• Check the deed and title records to confirm who owns the property
• Review the partnership or operating agreement for transfer restrictions
• Look for any recorded statement of partnership authority
• Preserve emails, messages and other communications about the sale
• Note any buyer or closing information if a transaction is underway

Prompt legal advice may help protect your rights if a closing date is already set.

Obtain legal guidance before closing

A partner’s ability to sell depends on ownership, title and authority, not simply the business relationship. A California business attorney can review the documents, assess what authority may exist and advise you about potential remedies if a partner is attempting an unauthorized sale.