§5.6 - Special Situations for Vesting and Conveyancing

• Jurisdiction: Washington

§5.6 SPECIAL SITUATIONS FOR VESTING AND CONVEYANCING

Special considerations apply when determining whether title to property vests in situations involving general partnerships, joint ventures, unincorporated associations, joint tenancies, and those in representative capacities such as attorneys in fact.

(1) General partnerships

Unlike limited partnerships, limited liability companies, and corporations, which derive their existence and powers from statute, general partnerships require no particular formalities to come into existence. Thus, determining if real property is vested in a general partnership, and if so, how such property may be conveyed by the partnership, requires more analysis than for other forms of artificial entities.

Real property is properly vested in the name of the partnership if the deed designates either the partnership, in its own name, as grantee, or one or more of the partners, as grantee(s), and also identifies the partnership by name. Vesting title in the partnership, however, requires that the partnership validly exist at the time of the grant.

A partnership has the right to acquire, hold, and transfer property in its own name. When dealing with the partnership, third parties may rely on the apparent authority of any partner to bind the partnership in the usual and ordinary course of its business, unless the partner had no authority to act, and the third party knew that the partner lacked authority. If the transfer is not in the ordinary course of business, then it must be authorized by all of the partners. RCW 25.05.100(1).

Whether a partner is acting within the scope of apparent authority is a question of fact. Cummings v. Nordmark, 73 Wn.2d 322, 438 P.2d 605 (1968). Apparent authority is presumed for all transactions falling within the partnership's ordinary course of business. If no apparent authority exists, then the partnership is not bound by the action of the partner. Swanson v. Webb Tractor & Equip. Co., 24 Wn.2d 631, 167 P.2d 146 (1946). Under these circumstances a partnership may unwind a previous transfer of partnership property and recover the property from the transferee. See RCW 25.05.100; RCW 25.05.105(2)(a)-(b).

If partnership property is held in the name of one or more persons but not the partnership, then it may be transferred by deed executed by the person or persons in whose name the property is held.

Determining partnership existence can sometimes be problematic. Existence may be predicated on an agreement, either written or oral, or may simply be implied from the conduct of the parties. RCW 25.05.005(7). No filing of any kind with the state or any county is required. Neither the state nor any county will issue a certificate of existence or good standing. In fact, all that is necessary to form a partnership is an intention of two or more persons to enter into a business relationship for a common venture in which profits are to be shared. In re Thornton's Estate, 81 Wn.2d 72, 499 P.2d 864 (1972).

Whether the parties intended to form a general partnership is a question of fact, to be determined from all of the facts and circumstances and the acts and conduct of the parties. The general rule is that a partnership results when two or more persons carry on as co-owners of a for-profit business, regardless of the intent of the parties. RCW 25.05.055(1). Co-ownership relationships, like tenancy in common or the sharing of gross returns, taken alone, will not evidence a partnership. RCW 25.05.055(3)(a)-(b). Conversely, the sharing of profits, unless constituting a payment to a protected category such as rent, creates a rebuttable presumption that a partnership exists. RCW 25.05.055(3)(c)(i)-(vi).

Practice Tip: When entering into a real property transaction with a general partnership,

...