Limited Partnership Legal Structure

[Andrey Goretoy]

I have a silent investor offering $200k in funding. He is not interested in day to day operations (too busy with other prospects) and does not want the headache of paperwork. We are going to form a Limited Partnership. I would like to leverage the money to the max but understand that banks do not really provide loans to LLC's or LPs directly. My name will be on the mortgage note for obtaining the property for a good rate (do not want to go commercial loan route). I have enough for 20% down from my personal funds an the Silent Partner will reimburse me for the down payment afterwards. How do I make sure the Limited Partnership has the ownership of the property legally. My name will be as the primary owner but how do we make sure LP (and investor) have legal rights / ownership of the property as well. Is there a clause I need to put in partnership agreement? Or is there a legal method. I know moving the Mortgage after acquisition could result in the lender recalling the loan. I do not mind keeping in my name but would like the Silent Partner structured to where he legally owns a portion as well.

[Andrey Goretoy]

@Jim Owens and @Susan Elliott hey guys sorry just getting around seeing this.  I did not end up going through with the deal due to differences in future strategy.  However, I reached out to another member here on BP @Jarrett Duncan, which had a similar situation.  these are his words...

"I've used the LP structure on 2 of my properties now, and have structured it similarly to how you mentioned above. I put the mortgage and title in my name, then form a seperate LP outlining the business structure between my partner and I. My partner prefers this as he doesn't want to go through the financing paperwork/requirements. I then take out umbrella liability for $1M on top of my landlord policy.

It doesn't make sense to me to transfer the title into the LP name for a couple reasons. One, it won't provide me any additional liability protection then holding it in my individual name as I am still just as liable being the GP. Second, the title transfer fees in my state (FL) would cost close to $2k. My partner and I have a strong relationship so he doesn't require his name be on the title, and actually prefers it's not for liability purposes.

This is the best way I've found to structure it for our purposes. If your partner wants his name on title, you might be best doing it in an LLC so you both have liability protection. From everything I've read, most lenders won't call the loan due for transferring title to the LLC, but you'll still incur the transfer fees mentioned above. Or, find a lender that will let you close directly into a LLC (some will under an ARM)."

Hope this helps.