What Is an Assignment of Partnership Interest?
An assignment of partnership interest form lets a partner sell their interest in the partnership to a new partner. In this contract, the potential new partner agrees to pay the current partner for their stake in the partnership.
Companies often reassign interests to change cash flow, reallocate assets, or shift strategies. This form provides legal proof and helps the involved parties understand the terms.
In some cases, full partnership rights cannot be sold to the new partner unless all current partners consent to the sale. Economic partnership rights, however, can typically be sold without the agreement of all partners.
Resources for Your Partnership
Review Legal Templates’s guides on transferring business ownership and the advantages and disadvantages of a partnership to run your partnership smoothly.
How to Write an Assignment of Partnership Interest Form
Writing an assignment of partnership interest form requires you to gather information about the transfer. Create an effective assignment of interest with the following steps:
Step 1 – Identify the Parties Involved
Start by identifying the current partner and the new individual who will receive the ownership interest. The partner who transfers their interest is known as the assignor, and the recipient is designated as the assignee. Provide the full legal name and address of each party involved.
Step 2 – Reference the Partnership
Next, identify the partnership affected by the transfer of interest. Record the partnership’s name and the date and state of establishment. Also consider the type of partnership to determine any specific terms for the transfer. Common types of partnerships include the following:
- General partnership
- Limited partnership
- Limited liability partnership
- Real estate partnership
- 50/50 partnership
Step 3 – Outline the Transfer Process
Note whether the transfer of interest requires partner approval before the transaction. Some agreements include a right of first refusal, giving the original partners the right to purchase interests before an outside party. If required, attach an approval agreement or have the approving party sign.
Once approved, include the total percentage of interest held by the assignor and the percentage given to the assignee. Then, record the amount paid by the assignee in exchange for their interests, and provide the closing date.
Step 4 – Set Legal Considerations
Partnership interests may be subject to legal or organizational limitations. Define the status of the new interest-holder to clarify if they are entitled to participate in management decisions.
In addition, note which state laws will govern the agreement and potential disputes. Finally, document the agreement date to set the timeline of effectiveness.
Sample Assignment of Partnership Interest
Use Legal Templates’s free assignment of partnership interest agreement to prove the terms of your transaction. Our customizable form is available to download in PDF and Word format.
