Question

Premature Partnership Withdrawal

Asked 2 May 2011 · 1 answer

The question

I am in Illinois...

A friend of mine formed a group of 7 investors in order to buy a hotel property. I am one of them, who committed to invest 10%. I signed a commitment letter accordingly and paid a deposit ($13,000) to serve as escrow. We had two meetings so far. As I was told initially, this is a heavily family run business where my friend takes full control of the business (check signing etc.) and his wife will be office manager and his brother-in-law will be site manager and his nephews will also be working as well as living in the hotel. I knew all this but based on the proposals I have seen in the meetings, I thought I should stay away from this partnership. It appeared to me that there is lot of room for undue favors to his family members. I have not signed any legal attorney-prepared document yet. I recently expressed my intent to withdraw from the partnership. The purchase has not taken place yet. And I do not know if it will take place for sure. My friend tells me that I have to pay my share of attorney fee and also the application fee paid to the hotel franchise company. We have not formed a company yet as far as I know. And I have not seen any purchase contract if there is one. Following is what I signed in the commitment letter:

“XXXX (my friend) is to provide receipts and invoices as relevant towards the expenses incurred in the process. In case we decide not to complete the purchase, in such a case all left over amounts will be refunded back as per the percentage contributions above. I understand that I may not receive all my moneys back. We will make the decision on proceeding or exiting from the deal together in the period (30 days from the date of the signing of the contract) when the escrow amount is fully refundable. XXXX has full authority to make any decisions related to the purchase and is responsible to discuss the progress with us in the process”

I want to know what expenses am I responsible for?

From the LawyerCentral forum archive. Originally posted 2 May 2011 on a legal forum that has closed. Names and contact details were removed. See the original (Internet Archive).

1 answer

Visitor answer 12 June 2011

I am not a licensed attorney in Illinois and this

message is not legal advice nor is it intended to be.

You should consult a licensed Illinois attorney

regarding your situation.

With that said, your share of expenses can be whatever

you and your partners decide to be. Typically expenses

and profits are shared ratably, meaning if you invested

10%, then you should share 10% of the profits and

expenses. However, as I previously stated, your

partnership agreement will dictate the allocation of

expenses.

This is a common situation when friends come together

for an investment. Your best bet is to work something

out with your friend/partner. Since you do not have a

partnership agreement, if you are not able resolve this

amicably then you will need to contact an Illinois

attorney.

Best of luck,

Eric

(removed)

Add your answer

Answers are reviewed before they appear. They are general information from visitors, not legal advice, and do not create a lawyer-client relationship. Do not include private details.

Need a lawyer for this?

See attorneys near you who handle questions like this one.

Ask a lawyer

← All questions