Q&As

How is security taken over land and uncalled capital of a limited partnership?

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Published on LexisPSL on 30/08/2018

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • How is security taken over land and uncalled capital of a limited partnership?
  • Summary
  • What is an ELP?
  • Status of GPs
  • Status of LPs
  • Private Fund Limited Partnerships
  • Why are ELPs used as borrowers?
  • Who executes the documents?
  • Taking security from over land held by an ELP
  • Taking security over unpaid capital contributions
  • More...

Summary

An ELP has no separate legal personality and this gives rise to a number of complexities that affect the structure of a lending transaction and the form of any security taken to support borrowing by an ELP. A lender must ensure that the ELP’s partnership agreement allows a general partner (GP) to enter into the relevant security documents. The limited partners (LPs) are unlikely to want to be party to any documents as they would run the risk of losing their limited liability status. Generally, the lender will be looking to the GP acting on behalf of the ELP to execute all of the transaction documents.

What is an ELP?

An ELP is a partnership that is formed under the Limited Partnership Act 1907 (LPA 1907) and registered at Companies House as an ELP. Although an ELP has no separate legal personality (which contrasts to the position with a limited liability partnership formed under the Limited Liability Partnership Act 2000 and the position in Scotland where a limited partnership does have a separate legal personality), it does have unlimited capacity.

An ELP must consist of one or more LPs and one or more general partners GP. Most commonly there is a sole GP.

For a detailed explanation of the form and status of an ELP, LPs and GPs, see Practice Note: The nature of a limited partnership and

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