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I have an LLC partnership in Maryland and my...

Resolved • Response time 1 minute

22 Jan 2022

I have an LLC partnership in Maryland and my partner (50/50) just announced she wants to retire asap. Our lease runs thru April 30th and we have significant inventory (retail store). Looking for advice on how to proceed.
JA: Have you talked to a MD lawyer about this?
Customer: No
JA: What steps have you taken so far?
Customer: None, just in the discussion phase
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: I want to know if my partner is legally obligated to pay her 1/2 of the rent, etc. until the lease runs out and if she can ask me to pay her 1/2 of the inventory.
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22 Jan 2022

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Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

Hello! Thanks for using JustAnswer. My name is ***** ***** I am an attorney ready to answer your questions with top-quality service. Just a few quick things before we get started:

  • I’m sorry to hear you are having these problems with your legal issue. I know that can be frustrating. However, we can get this resolved quickly;
  • We are transitioning to a new system to better serve you, so there may be a slight delay in my responses. Your patience is greatly appreciated.

Does his retirement affect the ability of the LLC to pay the rent?

22 Jan 2022
Customer reply
22 Jan 2022
Well as long as I continue to run the business, no, but she wants to leave the lease agreement before it ends 4/30.
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

Understood! Is she going to sell you her share of the business?

22 Jan 2022
Customer reply
22 Jan 2022
She wants me to pay her for 1/2 the value of the inventory.
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

Understood! Is that what you are interested in doing? Is that feasible? Is she going to give up her share if you do?

22 Jan 2022
Customer reply
22 Jan 2022
of course have her name removed from the utilities, insurance, etc., which makes sense, but I think because she signed the lease she should be responsible for paying 1/2 until it renews.
22 Jan 2022
Customer reply
22 Jan 2022
she's definitely leaving and wants to get back as much as she can, which has put me in a hardship because I have to go find new fixtures, etc., because she wants to sell off as much as we can. I just assumed that at the end of the lease we dissolve the partnership, split whatever inventory remains and she does what she wants with her half, and I keep my half and go forward with keeping the shop open.
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

Understood! So you're just wondering what your rights are here, correct?

22 Jan 2022
Customer reply
22 Jan 2022
She wants to be finished with everything March 1st, two months before the lease ends.
22 Jan 2022
Customer reply
22 Jan 2022
Correct.
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

Got it! I believe I have everything I need, but was there anything else you’d like to add before I answered? If not, I can begin working on your answer.

22 Jan 2022
Customer reply
22 Jan 2022
It's not acrimonious - I wish her well, but at the same time, I want to do what's best for me. It's great she wants to retire, but I don't think I should be responsible for two more months of all the expenses (rent, utilities, etc.) because she wants to leave before the lease runs out.
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

No problem! I’ll certainly address that. Anything else you'd like to add you think is relevant before I answer?

22 Jan 2022
Customer reply
22 Jan 2022
my next question would be. What's next. Do I have to start a new LLC or can I continue with the one I have but just remove her as a partner?
22 Jan 2022
Customer reply
22 Jan 2022
Thank you
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

I'm so sorry to hear about your situation!

So there are a few things to consider:

1. You do not have to buy out your partner. Unless your operating agreement requires this, they are not entitled to half the value of the inventory. If it's not financially feasible, or if you do not want to do it, you are not required to do so;

2. The lease agreement is unaffected by your partner's decision to retire. The law does not rid them of the obligation if they choose not to work in the LLC anymore;

3. You have the right to negotiate buying out your partner, but it is not required for you to do so;

4. The partner still has a fiduciary duty to you and the business to act in the best interests of the business;

5. This means you could ask your partner if they can hold off on retiring, give you her share of the business at a discount in exchange for retiring, etc.

6. In the end, you aren't obligated to let this person out of the business just on their terms.

Please let me know if this has answered your question fully. I hope this information is helpful to you. If you need additional assistance or have follow-up questions, please reply to my message below, and I will respond as soon as I can.

22 Jan 2022
Customer reply
22 Jan 2022
Thank you. I appreciate it. I'll ponder and let you know.
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

Excellent! Did you have any other questions for me today?

22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

You JUST said you'd ponder. My bad! Thanks so much!

22 Jan 2022
Customer reply
22 Jan 2022
Just whether I can continue in the LLC or do I need to end the one I'm in with her and start a new one. I'm sure there's a Maryland form to remove a partner and submit it to the appropriate agency.
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle
Attorney

Oh no problem! No; you can continue with the same LLC even if you buy her out. You just use an amendment to your articles or organization listing you as the sole owner - https://dat.maryland.gov/SDAT%20Forms/llcamend.pdf

22 Jan 2022
Customer reply
22 Jan 2022
Thank you.
22 Jan 2022
Lawyer's response
22 Jan 2022
Legal Eagle
Legal Eagle

You bet! Thank you for trusting JustAnswer with your question. PLEASE USE YOUR MEMBERSHIP! On top of lawyers, you have access to thousands of experts including:

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Legal Eagle
Legal Eagle
Attorney
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22 Jan 2022
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