Q: A woman in Texas co-purchased a horse several years ago with a man. The hope was to train the horse and eventually sell it for a profit. There was no written agreement. After purchasing half the horse, the man showed no interest in the horse, paid for little of its care and did nothing to help lease/market the horse. The woman attempted to buy the man's half of the horse so she could have full ownership, but he refused.
Recently, the woman has found a potential buyer who would like to do a lease-to-purchase on the horse. The man who still owns half the horse, does not want the horse to be leased or sold for unknown reasons and will not give the woman permission to enter the deal. The woman wants to know, given the fact that he's shown no interest in the horse and there was no written agreement, if she has the right to go ahead and sell the horse anyway. If not, what should she do?
A: Under the law the man and woman are either: 1) Tenants in common/co-owners of the horse; or 2) Partners on the horse In this situation it is likely they would be viewed as a partnership since they intended to go into the ownership of the horse for profit and to split profits on the horse. If it does happen they are co-tenants, each has an "undivided" 1/2 interest, so the analysis will not differ greatly from the partnership scenario.
Let's assume we're dealing with a partnership. In the absence of a partnership agreement, the rules governing this arrangement default to Chapter 152 of the Texas Business Organizations Code, which addresses partnerships. In order for the partnership to sell 100% of the horse, a "majority-in-interest" must agree. Majority in interest is defined as, "more than 50%", thus, the woman must have the man's consent to sell or lease the horse if she only owns 50%. The woman is free to sell her 50% partnership without the man's consent.
To be able to sell the horse, the woman needs to bring an action against the man under the Remedies Section (152.211) of the Business Organizations Code, arguing that the man is harming the partnership by his actions, breaching his fiduciary duties, and breaching the partnership agreement. She should ask the judge to allow her to buy the man out and sell the horse. She should also ask the court to award her money damages for the man's 50% share of partnership obligations that she has been paying for him.
Recently, the woman has found a potential buyer who would like to do a lease-to-purchase on the horse. The man who still owns half the horse, does not want the horse to be leased or sold for unknown reasons and will not give the woman permission to enter the deal. The woman wants to know, given the fact that he's shown no interest in the horse and there was no written agreement, if she has the right to go ahead and sell the horse anyway. If not, what should she do?
A: Under the law the man and woman are either: 1) Tenants in common/co-owners of the horse; or 2) Partners on the horse In this situation it is likely they would be viewed as a partnership since they intended to go into the ownership of the horse for profit and to split profits on the horse. If it does happen they are co-tenants, each has an "undivided" 1/2 interest, so the analysis will not differ greatly from the partnership scenario.
Let's assume we're dealing with a partnership. In the absence of a partnership agreement, the rules governing this arrangement default to Chapter 152 of the Texas Business Organizations Code, which addresses partnerships. In order for the partnership to sell 100% of the horse, a "majority-in-interest" must agree. Majority in interest is defined as, "more than 50%", thus, the woman must have the man's consent to sell or lease the horse if she only owns 50%. The woman is free to sell her 50% partnership without the man's consent.
To be able to sell the horse, the woman needs to bring an action against the man under the Remedies Section (152.211) of the Business Organizations Code, arguing that the man is harming the partnership by his actions, breaching his fiduciary duties, and breaching the partnership agreement. She should ask the judge to allow her to buy the man out and sell the horse. She should also ask the court to award her money damages for the man's 50% share of partnership obligations that she has been paying for him.
