Should my partner pay rent?

Question

Im 30% owner of a 5 unit commercial building. My partner has a business within the building. Should he pay rent or no? Considering theres no cash flow if he doesnt pay. How do i benefit?

Jerry W. · Answer

@Carl Thomas, I had a company I was part owner in have an owner live in a house the company owned.  We gave him a good price, but he still paid rent.  What does your agreement say about this?  If it is only a 5 unit he is in effect taking 20% of the income if he doesn't pay rent.

Naveen Desai · Answer

@Carl Thomas,

I lived in a property that myself and 2 others bought and held in an LLC, I paid rent  ( could be less than market value), but still my living expense had to be accounted for. In any case, the profit from the property holdings annually when distributed to all partners, I would get my share back.  So I got my share back and also lived in less than market value is still a double win for me, and fair for my partners with the arrangement we had.

Hope that helps.

Joel Owens · Answer

Typically the business pays rent. You want to show income if you ever sell plus the rent paid is usually a deduction for the business owner on their books.

If you are not going to be happy with the investment arrangement then maybe you do not do the deal or renegotiate it.

No legal advice given

Carl Thomas · Answer

any answers