When starting a business, partners may feel excited and optimistic regarding the future of the company and may believe that they will always get along with one another. This is not always true.
There are a number of factors which can affect the day to day running of a business, such as change in legislation or personal vision for the company. These issues are likely to create a difference in opinion in minor matters or major transactions and lead to stressful situations. Therefore, it is wise to consider the possibility of obtaining a partnership agreement which protects everyone’s interest along the way.
What is a partnership agreement?
A partnership agreement is a formal contract that outlines each partners’ responsibility and aims to divide these equally between all parties. Depending on what type of company you have, a partnership agreement may take on a slightly different name. There are three types of agreements, including:
- Operating Agreement for limited companies;
- Shareholder Agreement for corporations;
- Partnership Agreement for general partnerships
Why create a partnership agreement?
There are major benefits to having a partnership agreement, some of these are discussed below:
This form of agreement helps to establish rules for each partner and dictates how a partnership is run. A major benefit to having such an agreement in place is that it removes any doubt as to the partners’ position and role within a company, thus, leading to fewer disagreements.
If a partnership agreement does not cover a particular situation, there may be disagreements concerning its operation which could result in solicitors being involved. If the dispute is not resolved, it will cost the business time and money to reach a fair decision, especially if courts are involved. Planning in advance and setting out clear terms will help to remove the stress and reduce the chances of a dispute getting out of control.
The Partnership Act 1890
This piece of legislation will be used to govern a partnership in cases where there is no partnership agreement. This will put the company and its partners at a major disadvantage, as the law is quite archaic and will presume all partners have an equal stake in the business. This will not factor in a non-performing or disruptive partner and will contribute to further disputes moving forward.
If you do not have a partnership agreement, the law as mentioned previously, will assume all partners have an equal share. Therefore, this will not take into account how much each partner has contributed to the company in terms of capital and is likely to result in an unfair financial settlement for those who may not have invested as much or carried out the same level of responsibility.
As seen in the examples above, the main purpose of a partnership agreement is to ensure that all partners have a clear vision of their roles and responsibilities. It acts as a safeguard to protect their financial interests as well as dictate how partners can be removed. The main goal here is to ensure fair practices and reduce costs to the company due to disagreements and/or failure to perform.
This article is for information purposes only and does not constitute legal advice. Please get in touch with us by calling 01244 478730 or email email@example.com and one of our experts will be able to advise.
Due to the outbreak of Covid-19, the Coronavirus Act 2020, provided tenants, in the rented sector, with protection from eviction, to pevent a homelessness crisis. Tenants received an extension to the notice periods, when a landlord tried to recover possession of their property. The Government also prevented evictions from being enforced by bailiffs. However,the ban on eviction enforcement in England came to an end on 31 May 2021. This article explores the ban being lifted and the impact of the ban being lifted.
Lifting of Eviction Ban
In England, bailiffs will be able to enforce evictions from 1 June 2021. However, if someone in the property, has Covid-19 symptoms, or is self-isolating, bailiffs will not be able to enforce evictions. Landlords will only need to give four months’ notice of eviction, as opposed to six months’ notice, that was required since the start of the pandemic. Subject to the Government’s roadmap, it is likely that from 1 October 2021, two months’ notice periods will return. Notice periods for serious cases will remain lower: domestic abuse (2 to 4 weeks’ notice), anti-social behaviour (immediate to 4 weeks’ notice), death of a tenant (2 months’ notice), false statement (2 to 4 weeks’ notice), 4 months’ or more accumulated rent arrears (4 weeks’ notice), breach of immigration rules (2 weeks’ notice). From 1 August, where there is less than 4 months’ unpaid rent, notice periods should reduce to 2 months’ notice.
Impact of the Ban being Lifted
Many councils are warning that the ban being lifted will result in a wave of homelessness, costing a potential £2.2 billion. A study by Shelter, found that 72% of private renters in England, are worried about losing their home, and are already cutting back on heating and food to pay rent. However, tenants still have access to the furlough scheme, and a £20.00 per week uplift in Universal Credit, which the Government has extended until 30 September 2021. Also, evictions will not be enforced if someone in the property has Covid-19 symptoms or is self-isolating. This caveat could prompt a tenant to feign Covid symptoms to prevent enforcement action from a bailiff, and stay in the property. Whilst the ban has been lifted, the ban has not been lifted completely.
The true impact of the ban being lifted is yet to be seen. It is clear that the narrative has been very tenant-centric but more consideration needs to be given to landlords. The Ministry of Housing, Communities and Local Government stated that 45% of private landlords own one property, and are extremely vulnerable to rent arrears. Landlords have outgoings, such as mortgages and bills. There needs to be a consideration of the need for landlords to access justice, and their financial plight, as a result of the Covid pandemic. Specialist legal advice from MLS will be needed by landlords, who seek to evict their tenants, as the eviction ban has not been lifted absolutely.
This article does not constitute legal advice. The law relating to landlord and tenant matters changes rapidly. Please ring us for an up to date legal advice on 01244 478 730
New Safety Rules for Residential Landlords – April 2021 – What does it mean for Tenants and Landlords? (by Jessie Smith)
The new Electrical Safety Standards in Private Rented Sector (England) Regulations 2020 came into force on the 1st April 2021 and require private sector landlords to monitor the safety of the electrical systems in their properties as well as making any necessary inspections and improvements.
What are the duties of Landlords under the New Safety Rules?
- Electrical instillations to be inspected and tested at least every five years followed by a copy of the safety report to go to the tenant within 28 days.
- Ensure that national standards for electrical safety are met.
- A safety report should also be given to a new tenant before they move in.
- A copy of the report must be sent to any local authority within 7 days of request.
- Complete any remedial or further investigative work shown by the report within 28 days or less if specified by the inspector.
What are the affected properties?
- Regulations apply to all private tenants who pay rent and occupy the property. They also apply to properties which are occupied by multiple parties who share facilities.
Who will enforce the Regulations?
- Local Authorities can enforce the new safety rules if they have reasonable grounds to believe that a landlord is in breach of the rules.
- If this is the case, the Local Authority will serve the landlord with a remedial notice and if this is not complied with the authority can step in to arrange a completion of the necessary work and then they will recover the cost from the landlord.
- Local Authorities also have the power to impose a penalty on the landlord for the breach of regulations ( with a notice of intent ) which the landlord has the right to appeal within 28 days of the notice.
Who can carry out the Inspections?
Inspections must be carried out be a qualified professional. Landlords can choose an inspector who is a member of the Competent Person scheme established by the electrical safety industry however the landlord can also choose a non-member and have them sign a checklist to verify their qualifications. Fixed electrical parts of the property such as wiring, and sockets must be inspected although the new rules do not apply to appliances such as refrigerators or cookers, but these still should be regularly checked.
Issues an inspector would be looking for include:
- Fire hazards
- Electrical shock risks
- Defective electrical work
Here an MLS we are regularly instructed by landlords to advise on compliance and possession claims. If you have any questions please contact us on 01244 478 730 , we will be happy to help.
This article is for information purposes only and does not constitute legal advice. Please contact us for advice.