Free Assignment of Partnership Interest

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Assignment of Partnership Interest

QGFullPartnership


Full Partner Rights
Economic Rights


Full partnership rights may require consent from remaining partners as they give the new partner the right to participate in business operations and management. Economic rights refer to the old partner’s financial interest or share of profits. If the remaining partners don’t accept the new partner, you can still assign economic rights without full partnership rights.



Your Assignment of Partnership Interest

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ASSIGNMENT of PARTNERSHIP INTEREST

THIS ASSIGNMENT (the "Assignment") made and entered into this 19th day of October, 2018

AMONGST:

______________________________ of ______________________________
(the "Assignor")

OF THE FIRST PART

- AND-

______________________________ of ______________________________
(the "Assignee")

OF THE SECOND PART



- AND-

_________________________ of _________________________
(the "Remaining Partner")

OF THE THIRD PART

  1. BACKGROUND
  2. The Assignor is the holder of a partnership interest (the "Interest") in ______________________________ (the "Partnership"), a partnership previously established on the 19th day of October, 2018, for the purpose of ____________________________________________________ and formed in accordance with an agreement (the "Partnership Agreement").
  3. The Assignor desires to assign the Interest to the Assignee and the Assignee desires to acquire the Interest from the Assignor.
  4. The Assignee will acquire all rights in the Partnership previously afforded to the Assignor including the status as Partner. The Remaining Partner has agreed and gives consent to such assignment according to the terms and conditions of this Assignment.

IN CONSIDERATION OF and as a condition of the parties entering into this Assignment and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the parties to this Assignment agree as follows:

  1. Sale and Purchase
  2. By this Assignment the Assignor withdraws from the Partnership and to the fullest extent permitted by the Partnership Agreement, assigns all its rights, interests, title and benefits in the Partnership to the Assignee. The Assignee will become a partner in the Partnership taking the place of the Assignor in the Partnership with all the rights and obligations previously afforded to the Assignor. The Assignee, as a Partner in the Partnership, will be bound by the terms and conditions of the Partnership Agreement as amended. On assignment of the Interest to the Assignee, the Assignor will cease to be a Partner in the Partnership.
  3. Consideration
  4. As full consideration for the assignment of the Interest the Assignee has submitted and the Assignor has accepted the following consideration: _______________________________________________
  5. Closing
  6. The closing of the purchase and sale of the Interest (the "Closing") will take place on the 19th day of October, 2018 (the "Closing Date") at the offices of the Assignor or at such other time and place as the Assignor and Assignee mutually agree.
  7. Representations and Warranties of the Assignor
  8. The Assignor warrants that the Assignor has a general partnership interest in the Partnership and that the Assignor has the legal right to execute and perform an assignment of the Interest exclusive of the Assignor's status as Partner.
  9. The Assignor warrants that the Interest is free and clear of all liens, encumbrances, restrictions and claims.
  10. The Assignor warrants that on completion of this Assignment the Assignor will retain no residual interest or interests in the Partnership.
  11. The Assignor warrants that the Assignor is not in any way in default of any of the expressed or implied terms and conditions of the Partnership Agreement. The Assignor also warrants that this Assignment is in full compliance with all terms and conditions of the Partnership Agreement.
  12. The Assignor warrants that the Assignor is not bound by any other contractual agreement or legal requirement that would be violated by this Assignment.
  13. The Assignor warrants that it has provided the Assignee with the most current copy of the Partnership Agreement inclusive of all amendments.
  14. The Assignor warrants that no other consent is required from any third party or government entity authorizing this Assignment except for those consents of the Remaining Partner contained in this Assignment.
  15. Assignee's Obligations
  16. On Closing of this Assignment, the Assignee will observe and perform any and all terms and conditions of the Partnership Agreement, relating to the newly acquired rights, that were previously binding on the Assignor.
  17. Transitional Rights and Obligations
  18. To the full extent permitted by the Partnership Agreement, all income, rights, benefits, obligations and liabilities of the Interest will belong to the Assignor before the Closing and will transfer to the Assignee after the Closing.
  19. Consent of Remaining Partners
  20. The Remaining Partner consents to the terms and conditions of this Assignment with the intent that the Assignee will become a Partner in the Partnership with all of the rights, benefits, obligations and liabilities previously afforded to the Assignor under the Partnership Agreement as amended.
  21. Governing Law
  22. The Assignor and the Assignee submit to the jurisdiction of the courts of the Commonwealth of Virginia for the enforcement of this Assignment or any arbitration award or decision arising from this Assignment. This Assignment will be enforced or construed according to the laws of the Commonwealth of Virginia.
  23. Miscellaneous
  24. Time is of the essence in this Assignment.
  25. This Assignment may be executed in counterpart. Facsimile signatures are binding and are considered to be original signatures.
  26. All warrants and representations of the Assignor and the Assignee connected with this Assignment will survive the Closing.
  27. This Assignment will not be assigned either in whole or in part by any party to this Assignment without the written consent of the other party.
  28. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Assignment. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.
  29. If any term, covenant, condition or provision of this Assignment is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Assignment will in no way be affected, impaired or invalidated as a result.
  30. This Assignment contains the entire agreement between the parties. All negotiations and understandings have been included in this Assignment. Statements or representations which may have been made by any party to this Assignment in the negotiation stages of this Assignment may in some way be inconsistent with this final written Assignment. All such statements are declared to be of no value in this Assignment. Only the written terms of this Assignment will bind the parties.
  31. This Assignment and the terms and conditions contained in this Assignment apply to and are binding upon the Assignor, the Assignee, the Remaining Partner and their respective successors, assigns, executors, administrators, beneficiaries, and representatives.
  32. Any notices or delivery required here will be deemed completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the parties at the addresses contained in this Assignment or as the parties may later designate in writing.
  33. All of the rights, remedies and benefits provided by this Assignment will be cumulative and will not be exclusive of any other such rights, remedies and benefits allowed by law.

IN WITNESS WHEREOF the Assignor, the Assignee and the Remaining Partner have duly affixed their signatures under hand and seal on this 19th day of October, 2018.


_____________________________
Witness


_____________________________
______________________________


_____________________________
Witness


_____________________________
______________________________

_____________________________
Witness


_____________________________
_________________________

Assignment of Partnership Interest

What is an Assignment of Partnership Interest?

An Assignment of Partnership Interest occurs when a partner sells their stake in a partnership to a third party. The assignment document records the details of the transfer to the new partner. The new partner will receive the benefits and obligations (including profits and losses) of the business partnership in exchange for compensation to the previous partner.

What is a partnership?

A partnership is a type of business organization where two or more individuals or business entities operate a business with the goal of making a profit.

Each partner typically has rights and obligations enforced by a Partnership Agreement including liabilities and rights to profits of the business.

Who are the parties in an Assignment of Partnership Interest?

There are two parties in the assignment of interest: assignor and assignee.

The assignor is the business partner who is transferring their rights in the partnership in exchange for compensation.

The assignee is a new partner who purchases the previous partner's interest in the partnership.

Do other partners have a say in who buys the interest in a partnership?

If there is a Partnership Agreement in place the answer is most likely, yes. A Partnership Agreement governing the activities of the partnership and conduct of the partners will often place some restrictions on the nature of the interest which may be acquired.

For example, the transferring partner might be limited to transferring only their economic interests and rights which would prevent the recipient of transferred interest from becoming a full partner (with voting rights and managerial input) by assignment alone. Full admission to the partnership would be decided by the remaining partners based on the terms of the Partnership Agreement.

The category of assignee is something else the partnership might have good reason for restricting. For example, federal tax audit rules introduced in 2018 mean that partnerships will be treated as taxable entities if one or more of the partners is itself a partnership, a trust, or an LLC. To avoid such tax consequences, and preserve individual tax treatment for the partners, the partnership agreement might prohibit assignments of partnership interest may be sold to any such business entity.

How is an Assignment of Partnership Interest created?

To create an Assignment of Partnership Interest, there should be a drafted document that records the transfer of rights and benefits from one partner to another and the exchange of compensation.

The partnership interest document should include:

  • Type of interest: either full partnership interest or limited to the economic rights in distribution
  • Partnership information: partnership name (e.g. Smith and Associates), establishment date, and purpose
  • Assignor details: name, address, and type of party (individual or business entity) of the partner transferring rights and benefits to a new partner
  • Assignee details: name, address, and type of party of the new partner receiving rights and benefits of the assignor
  • Remaining partner details (if applicable): name, address, and type of party of other partners still part of the partnership
  • Consideration details: a description of the price and agreed value to be exchanged for interest in the partnership (e.g. a monetary value or shares in stock)
  • Signing details: witness signatures (if applicable), party signatures, and the signing date

Related Documents:

  • Joint Venture Agreement: an agreement between two or more parties who agree to combine resources for a specific time frame as a business arrangement for completing a particular project or goal
  • LLC Operating Agreement: an internal management document that details the rights and responsibilities and other operational details for members running a limited liability company
  • Notice of Withdrawal from Partnership: a notice served by a partner intending to leave a partnership or served by a partnership removing a partner for any given reason
  • Partnership Agreement: a document that governs the management of a partnership and details the rights and obligations of partners
  • Partnership Amendment: a form used to make changes to the terms of an existing Partnership Agreement
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