Sale of partnership property by sole surviving partner
kamal
(Querist) 19 October 2011
This query is : Resolved
My question is regarding the legality of the sale of a property owned by a partnership firm.
Can a property bought as a firm, on the death of one of the partners, be sold by the sole surviving partner?
According to the partnership deed, on death the heirs of the deceased partners jointly and severally becomes partners of the firm to the extent of the share of the deceased in the firm.
Thanks
R.Ramachandran
(Expert) 19 October 2011
Dear Mr. Kamal,
Since, for obvious reasons, you will not be able to bring out the complete terms and conditions of the partnership, as also the property details etc., in this Forum, it would be advisable for you to approach a local lawyer, show the documents i.e. partnership deed and also the property deed, discuss the issue and take his considered opinion, before proceeding further.
Our answers based on your criptic and selective terms posted here may not fetch you the correct answers.
Raj Kumar Makkad
(Expert) 19 October 2011
Based upon little information provided by you, it is clear that legal heirs of deceased partner shall become partners to the firm so there is no question of sale of property of firm by a single partner. Thus such sale is illegal.
prabhakar singh
(Expert) 19 October 2011
Dear Mr. Kamal!
1]as per law any property owned in firm name is not the property of firm but of those partners who have constituted the firm in proportion of their respective p/l sharing agreed.
2]If on the death of a partner ,there survives only one partner ,the partnership comes to an end and stands dissolved ipso facto[s42(c)partnership act],obviously we can not even dream of a partnership unless
there are at least two.
So the sole partner can not sale any property alone without accounting for to the share of deceased in the property to his heirs.
If the partnership deed provides for admission of heirs of a deceased partner ,it can be redone by a fresh deed after accounting and by drawing a fresh deed.That is simply the choice of heirs subject to agreement of all as these are things of mutuality.
kamal
(Querist) 20 October 2011
Hi,
Thanks for your replies.
On the one hand It is quite clear by virtue of the partnership deed that the partnership continues and the share of the deceased partner passes on to the legal heirs and according to the law the partnership ends with the demise of any partner.
It is very confusing, Bank has given the loan clearance on the basis of getting the NOC/indemnity bond from Legal heirs of the deceased partner but haven't given any clarification on who would be the executant (transferor) of the sale deed i.e. as a firm or an individual.
Even if the Legal heirs agree to the sale of the property, who would sign this sale deed. All of them, as partners?
So what does one do when dealing with the property of this firm?
1) Get the property title cleared as a individual or
2) Revive the partnership, so the firm can sell the property.
3) Can the partnership still be revived even though the partner deceased few years ago.
4) What would it take to get the property transferred to surviving partner as an individual?
Let me also state that the property in the records of the Cooperative Society is still as a firm, even though they are aware that the partner deceased few years ago.
Please suggest.
Thanks
