Business partner separation
Not sure where to start with this. I'm a part of an LLC with one other person currently. We are trying to separate from each other. I'd like to leave the LLC and am more than fine with him taking it over....with that intention out there. All the properties we have accumulated together 6ish, are all under hard money loans that I am the guarantor on. There was a suggestion of subject-two for those properties. Looking for guidance on what the best path for this separation could be. Thank you in advance
Instead of Subject To; I would look to sell the properties or have your partner purchase (in another LLC) and finance them without you being a co-signor. If I am breaking off a partnership, I am looking to be 100% done with it. Those hard money loans are not long-term, and if not managed correctly, you could get into trouble when the term comes up, and the properties are not ready for sale or refinancing.
@Charles Carillo The original plan was to sell everything, the properties where the renovations are completed, they are being refinanced currently. Business partner doesn't have the credit to transfer things to him. He wants an agreement for division like last week. I'd like it done sooner than later but don't think it'll be an overnight thing seeing as we have to split payout profits. I don't feel comfortable putting the properties in someone elses name while the mortgages are still tied to me.
@Jenna Bamlet I would opt to list everything and sell them. Possibly your partner can find another partner to purchase them all from you. I just wouldn't change ownership without the properties being under someone else's name.
I would suggest you sell them if your partner can not refinance them. You will be on the hook for the payments since you guaranteed the loans whether you did subject to or changed the terms of the operating agreement.
Subject to does not get you off the hook for the personal guarantee. Tell your partner, I know you want this seperation ASAP but unfortunately its not that simple. In order for me to exit the personal guarantees must be removed. The options are:
1. You refinance the properties into your name to remove the guarantee.
2. We sell the properties.
The transaction cannot be finalized until these guarantees are removed. If you speak with them make sure to let them know this is non-negotiable. Had someone recently ask for my help becuase they were in same situation, they left the guarantees in place, the other party went on got MORE loans on the assets and they could not sell, hard money loan came to maturity and started foreclosure. Now persons personal properties are at risk...
- Chris Seveney
@Jenna Bamlet What are the provisions in your Operating Agreement? If absent an OA, is the LLC formed in NC? If that's the case, would want to look at statutes and how similar cases have been treated in NC. May want to seek guidance from a business litigation attorney.
Main LLC out of FL. I have shifted thoughts around this since leaving the country has changed. Plan to keep the properties as Airbnb's. I appreciate all of the insight and knowledge to this matter with minimal information towards this. You guys are awesome!
@Jenna Bamlet Replied to your message in case that helps :)