ENFORCING A SETTLEMENT: What are the Assets?

Summary:

The attorneys for our client wanted to determine the assets of this real estate partnership, as well as the assets of the original two partners who had personally guaranteed the payments of a percentage of the clean-up and remediation costs on a contaminated site. Like many real estate partnerships, the original partnership was formed only for the purchase of the original contaminated site. The two partners in this partnership, however, were involved in multiple other real property partnerships, some together and some separately, and determining their assets became a major undertaking.



The Story:

One of the two partners in the real estate partnership was now deceased and a trust run by his heirs had taken his place as the other partner in the partnership.  Both partners were active real estate investors who had interests in many other companies that owned real properties. These were private companies, mostly LLCs, so we first had to identify all the companies each partner was involved in currently. Then we had to find out what properties each entity owned. Then we had to try to determine the percentage each of our two subjects owned of each entity so we could determine their portion of the property owned by the entity. The latter might have been impossible except that these two subjects were very litigious. In the complaint that one of the two subjects filed against the other, there were exhibits that detailed the percentages each of them held in some of the entities that they both had entered into.

 

Finally, after untangling the holdings and researching the properties owned both by the living partner herself, and as a partner in the companies she had an interest in, we discovered that there were eight properties, for which her portion had a current net equity of over $14 million. The other partner’s heirs' interest in real property through various entities was worth about $7 million in net equity. One of the properties that they both had a current interest in was due to close a sale shorty after the mediation date. It was a highly valuable site on the water in a beach town. We reported all of the real property asset information to our client.

 

For the thorough asset search they required, our client also wanted us to do bank and brokerage searches to determine the approximate liquid assets of each partner and the partnership.  We again first faced a complication in doing a bank search on the original real estate partnership because it was unclear what the FEIN (needed for bank searches) and actual address was since both had been changed over the years. When we eventually did obtain the right identifiers, it turned out that the partnership had almost a half a million in the bank, close to the past due amount owed our client. We also discovered that the living partner had substantial liquid assets and the trust account of the heirs of the other partner also had a five figures account.

 

The information we uncovered proved very valuable to the attorneys for the client in the mediation.

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