Subsection (d) is new. The UPA does not have a provision dealing with the situation in which all of the partners’ interests in the partnership are held by one person, such as a surviving partner or a purchaser of all the other partners’ interests. Subsection (d) allows for clear record title, even though the partnership no longer exists as a technical matter. When a partnership becomes a sole proprietorship by reason of the dissociation of all but one of the partners, title vests in the remaining “partner,” although there is no “transfer” of the property. The remaining “partner” may execute a deed or other transfer of record in the name of the non-existent partnership to evidence vesting of the property in that person’s individual capacity. (emphasis added)

Two thoughts. First, As I argued in The Entity-Aggregate Dispute: functionalism and Conceptualism in Partnership Law, 42 ARK. L. REV. 395 (1989), when a partner stopped being a partner, the partner lost all UPA 25 rights in specific partnership property. The remaining partner(s) were then the only holders of the UPA 25 rights, but by operation of law,rathert than by transfer. On death of a partner, that is the express result under 25(e).

Second, the “vests” language generally means successsion by operation of law, rather than by transfer, as in a merger. Of course, RUPA’s
entity focus would obscure that, save for 302(d).

Gary

Two thoughts:

(1) A parallel issue exists under the Delaware LLC Act. The Act defines an LLC as follows:

“Limited liability company” and “domestic limited liability company” means a limited liability company formed under the laws of the State of Delaware and having 1 or more members.

Del. Code Ann., tit. 6, § 18-101(6).

However, with regard to dissolution, the Act provides, in pertinent part, that dissolution occurs:

(4) At any time there are no members; provided, that the limited liability company is not dissolved and is not required to be wound up if:

a. Unless otherwise provided in a limited liability company agreement, within 90 days or such other period as is provided for in the limited liability company agreement after the occurrence of the event that terminated the continued membership of the last remaining member, the personal representative of the last remaining member agrees in writing to continue the limited liability company and to the admission of the personal representative of such member or its nominee or designee to the limited liability company as a member, effective as of the occurrence of the event that terminated the continued membership of the last remaining member; provided, that a limited liability company agreement may provide that the personal representative of the last remaining member shall be obligated to agree in writing to continue the limited liability company and to the admission of the personal representative of such member or its nominee or designee to the limited liability company as a member, effective as of the occurrence of the event that terminated the continued membership of the last remaining member, or

b. A member is admitted to the limited liability company in the manner provided for in the limited liability company agreement, effective as of the occurrence of the event that terminated the continued membership of the last remaining member, within 90 days or such other period as is provided for in the limited liability company agreement after the occurrence of the event that terminated the continued membership of the last remaining member, pursuant to a provision of the limited liability company agreement that specifically provides for the admission of a member to the limited liability company after there is no longer a remaining member of the limited liability company

Del. Code Ann., tit. 6, § 18-801(a)(4) (emphasis added).

(2) Query the effect of RUPA § 302(d): “If a person holds all of the partners’ interests in the partnership, all of the partnership property vests in that person. The person may execute a document in the name of the partnership to evidence vesting of the property in that person and may file or record the document.” This provision implies that the partnership is at least in dissolution, with the vesting of partnership property occurring as part of winding up.

Regards,

Dan

My October post reporting on the oral argument of Junior’s appeal (http://tinyurl.com/27aw2zw) highlighted some of the facts surrounding the negotiation and consummation of the January 2009 letter agreement, of which the option agreement was only one part, and likely not even the most important or urgent part. Both sides were represented by counsel, Junior’s a commercial litigator from a large Wall Street firm, Senior’s an estate planning lawyer from a small upstate NY firm. Senior’s lawyer initially proposed language that would have required a specified business appraiser to determine the fair market value of Junior’s shares. Literally on the eve of an execution deadline imposed by Discovery Channel, Junior’s lawyer struck the appraisal provision, and the two lawyers subsequently came up with the valuation-procedure-to-be-agreed language that eventually unraveled the option agreement. If one assumes that Senior was the proponent of the option agreement, the questions that come to mind are, whether Junior’s lawyer outmaneuvered Senior’s lawyer; whether Senior’s lawyer understood the risk associated with the substitute language; or whether both sides came up with an uncertain compromise on the point under pressure of completing their multi-faceted agreement before Discovery Channel pulled the plug.

Peter Mahler