If you have commercial property that you’re going to sell, one of the people who may be interested is your business partner. Perhaps they want to keep the property for their own venture or to add it to their portfolio. Whatever the reason is, know that transferring property to your partner is one of the easier transfers to make. However, there is a potential for conflicts or disagreements.
If you’re going to sell your business property, it’s important to have a buy-sell agreement. This is an agreement that your attorney can draft for you. It covers issues like what happens if you want to transfer ownership of the business because of death or disability or how to handle one partner leaving the business.
After you have this in place, it’s time to work on selling your property. You will want to:
- Determine the value of the property
- Give your partner the first right of refusal when you’re ready to list the property
- Potentially ask your partner for a noncompete agreement if they are interested in using the property for their own business
Essentially, the goal you should have is to make sure that selling this property benefits you. You should know how much the property is worth and may be legally obligated to ask your partner if they want to buy. Usually, partners get a first right of refusal, which means that they can choose if they’d like to keep the business property or sell it off.
Finally, remember that selling a property that is set up for your business could mean that your partner could set up a competing business in that space. If you don’t want to have conflicts about the property, then it’s a good idea to have a noncompete as part of that property transfer.
Selling property to your business partner is usually a little easier than selling to a third party, but you still have to know your legal rights and responsibilities. Take time to set up the right buy-sell agreements and other legal documents, so that you’re protected when the sale is in process and once it’s completed.