49. May the Sndicate Sell or Mortgage Its Property Without Your Consent?

Whether the syndicator may sell or mortgage the prop­erty of the syndicate without your consent or even with­out consulting you depends entirely on the agreement. Very often the management has the power to make these decisions. In other cases, the brochure states that the management will not sell unless it obtains the consent of a stated percentage of the investors, for instance, one-half or two-thirds of the investors. Such a clause is important where the syndicator gets a substantial percentage of the profits on a resale. If he gets 50% of a $200,000 profit, that would be $100,000. If the object is a large one, the remaining $100,000 divided among a large number of in­vestors may be peanuts. The investors may want to retain a building which yields a good income and promises fu­ture growth. The syndicate manager may wish to sell be­cause he sees a fast profit. If the syndicator gets a sub­stantial part of the profits of the sale, it is particularly important to ascertain whether the sale must be approved by a majority or two-thirds of the investors. Examine the following clause:

The general partner has all the rights and powers as provided in the Partnership Law of the State of New York.

Nothing is said about the specific power to sell. Yet under the law pertaining to limited partnerships the gen­eral partner may have the right to sell property of the syndicate without even consulting the limited partners. The following provision will offer you protection against an unwise sale:

The general partner has represented in the partner­ship agreement that he will not sell the property with­out the consent of 66¾% in interest of the limited part­ners.

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