47. Are You Liable for the Debts of the Syndicate?

When you make your investment in a syndicate, you participate in a business. Any business, even a well man­aged one, may fail. The question is whether there is any possibility that you, as a co-owner of the business may be called upon to pay its debts. The chances that such a sit­uation will arise with a real estate syndicate are probably slim. But there are quite a few speculative ventures which bear almost no relationship to investment in real estate. Whether you plan investing in a conservative or speculative venture, you would probably like to be sure that your risk is limited to your investment and that un­der no circumstances can you be called upon to pay the debts of the syndicate. Some brochures contain this in­formation in plain language.

The liability of a limited partner is limited to the amount of Ms original capital contribution. Any participant may be personally liable to a person outside the venture for the full amount of any obligation of the agent as a partner in Associates, or any lia­bility of the partnership, which arises after the effec­tive date of participation.

Nothing difficult about the two clauses. In the first case you are not personally liable for any debts. In the second case you are or may be liable for debts. Other brochures may and probably will tell you whether you will or will not be personally liable for the debts of the venture, but they use legal phrases which may not be quite clear to you. If your status concerning liability is not fully spelled out in the brochure, or if you are not sure that you un­derstand it, don't hesitate to ask for legal advice. This is a highly technical matter and it cannot be discussed and explained here in all its details.

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