Free Assignment of Partnership Interest

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Assignment of Partnership Interest

Signing Details


Signing Details





Frequently Asked Questions
Do I need a witness?It is not required that you have someone witness the signing of your Assignment of Partnership Interest for it to be legally valid. But it is still a good idea in case the execution of your document is ever challenged.

A witness should be a neutral third party who has no personal or business relationship with any of your Partners.


Your Assignment of Partnership Interest

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ASSIGNMENT of PARTNERSHIP INTEREST

THIS ASSIGNMENT (the "Assignment") made and entered into this ________ day of ________________, ________

BETWEEN:

______________________________ of ______________________________
(the "Assignor")

OF THE FIRST PART

- AND-

______________________________ of ______________________________
(the "Assignee")

OF THE SECOND PART

  1. BACKGROUND
  2. The Assignor is the holder of a partnership interest (the "Interest") in ______________________________ (the "Partnership"), a partnership previously established on the 22nd day of November, 2019, 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 Interest is limited to rights in distribution and will not include the transfer of status of partner in the Partnership to the Assignee.

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 be entitled to share in profits and losses and to receive such allocation of income, gain, loss, deduction or credit or similar item of the Partnership to which the Assignor was entitled. The Assignee will not be entitled to the voting or managerial rights or status as partner previously afforded to the Assignor. On assignment of the Interest to the Assignee, the Assignor will cease to be a partner in the Partnership except where permitted by the Partnership Agreement.
  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 22nd day of November, 2019 (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.
  9. The Assignor warrants that the Interest is free and clear of all liens, encumbrances, restrictions and claims.
  10. 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.
  11. The Assignor warrants that the Assignor is not bound by any other contractual agreement or legal requirement that would be violated by this Assignment.
  12. The Assignor warrants that it has provided the Assignee with the most current copy of the Partnership Agreement inclusive of all amendments.
  13. The Assignor warrants that no other consent is required from any third party or government entity authorizing this Assignment.
  14. Assignee's Obligations
  15. 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.
  16. Transitional Rights and Obligations
  17. 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.
  18. Governing Law and Jurisdiction
  19. This Assignment will be construed in accordance with, and exclusively governed by the laws of the Commonwealth of Virginia.
  20. 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.
  21. Miscellaneous
  22. Time is of the essence in this Assignment.
  23. This Assignment may be executed in counterpart. Facsimile signatures are binding and are considered to be original signatures.
  24. All warrants and representations of the Assignor and the Assignee connected with this Assignment will survive the Closing.
  25. 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.
  26. 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.
  27. 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.
  28. 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.
  29. This Assignment and the terms and conditions contained in this Assignment apply to and are binding upon the Assignor, the Assignee and their respective successors, assigns, executors, administrators, beneficiaries, and representatives.
  30. 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.
  31. 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 have duly affixed their signatures under hand and seal on this ________ day of ________________, ________.

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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