CA commercial real estate limited partnership: Can distributions be cut off while the bldg. is being retrofit?
My father died recently leaving a 4% limited partnership to my mom in a commercial property inCA. The company wants to spend $1M to retrofit the property to earthquake code plus pay alot for earthquake insurance. All distributions will cease until further notice. Can they do this ? The distributions were to go until 2047.
I work with a 50-year veteran as a commercial loan correspondent and have enough knowledge on commercial real estate. I'll do my best to answer; but will invite some associates to contribute some info for your reference.
1.) Determine who is on title of the property. Who owns it?
2.) Determine who is under the existing loan. Who is/are the guarantor(s) of this loan?
3.) Who is paying for the loan? The Company or your Dad/Mom?
The way I see it, if the Company's the entity responsible for the mortgage and the improvement expenses will be shouldered by it, the officers sees the reasonable logic of holding off all distributions until the major expense is done and properly accounted for.
Make sure to determine what the Company's position is – are they tenants of the subject property?
Please provide more info if you can. I'll invite an associate to help out.
I work with a 50-year veteran as a commercial loan correspondent and have enough knowledge on commercial real estate. I'll do my best to answer; but will invite some associates to contribute some info for your reference.
1.) Determine who is on title of the property. Who owns it?
2.) Determine who is under the existing loan. Who is/are the guarantor(s) of this loan?
3.) Who is paying for the loan? The Company or your Dad/Mom?
The way I see it, if the Company's the entity responsible for the mortgage and the improvement expenses will be shouldered by it, the officers sees the reasonable logic of holding off all distributions until the major expense is done and properly accounted for.
Make sure to determine what the Company's position is – are they tenants of the subject property?
Please provide more info if you can. I'll invite an associate to help out.
References :
You will have to look at the terms of the limited partnership. If the terms of the partnership allows such stoppage then so be it. If not your mother can oppose, if she is allowed to.
Some limited partnership agreements allow those holding 10% or more the privilege of voting on expenditures, unless there are provisions otherwise stated.
You might ask the General Partner your rights under this limited partnership. Failing to get an answer to your liking you might engage a real estate attorney that is versed in limited partnerships.
The only alternative if your mother is allowed to sell her interest, she might approach the general partner concerning this if she is not pleased with the way the partnership is going.
Normally businessmen make limited partnerships with those they know, so I am almost sure that your mother or perhaps you will recognize some of the partners of the limited partnership, you might inquire of them a few of the things you are allowed or not allowed under this agreement.
I hope this has been of some use to you, good luck.
"FIGHT ON"
References :