General Partner Interest Sales Legal Issues

1. General Partner Interest SalesLegal Issues Robert H. Adkins

2. Basic Terms • Purchase Price • Deposit • Refundability • Additional deposit in return for extension of closing date

3. Basic Terms • Timeline • Due diligence review period • Seller’s responsibility to provide documents • Buyer’s diligence period • Title and survey • Site visits, testing • Multi‑property portfolio—must buyer buy all or none, or can buyer pick and choose

4. Basic Terms • Timeline • Additional time to obtain third party consents • Rights to extend closing date to cure defaults

5. Basic Terms • Closing prorations and adjustments • Who pays various closing costs, e.g.: • Transfer taxes • Title insurance premiums • Escrow agent fees • Lender consent fees

6. Basic Terms • Closing prorations and adjustments cont’d • Do existing reserve accounts stay with the partnership, is there a purchase price adjustment • Any adjustments at closing for operating cash, outstanding accounts payable, delinquent rents

7. Documents • Purchase agreement • Assignment of general partner interest, other items (e.g., deferred development fees) • Amendment to existing partnership agreement • Guaranty of obligations of new general partner to limited partner • Option/right of first refusal for general partner to purchase property after compliance period

8. Consents • Limited partner • Consent to general partner interest sale • Approval of replacement property manager • Will limited partner look for inducements to granting consents, e.g.: • Extension/expansion of general partner guaranties • Modifications to cash distributions • Expansion of limited partner post‑compliance exit strategy rights

9. Consents • Lenders • Consent to general partner interest sale • Approval of replacement guarantor, key principal • Approval of replacement property manager • Credit agency (if required) • Co‑general partner (if any) • Estoppel certificate from limited partner and lenders as to absence of defaults

10. Representations and Indemnifications • Are seller representations limited to those matters which cannot be directly investigated during due diligence period? • Survival of representations after closing • No recovery by buyer unless total damages exceed minimum amount (materiality requirement) • No recovery by buyer in excess of a maximum amount (purchase price?)

11. Representations and Indemnifications • No recovery by buyer for matters buyer knows of prior to closing • Indemnification of buyer by seller for claims and disputes vs. limited partner, co‑general partner • Indemnification of buyer by seller for claims and disputes vs. previously removed general partner

12. General partner guarantiesto limited partner • Project completion, repurchase, operating deficits, loss of projected tax credits • Seller liable for guaranty liability arising prior to closing, buyer liable thereafter

13. Buyer’s rights to receive fees and distributions from partnership • Amounts paid from any future limited partner equity installments, including development fees • Amounts paid from future cash flow and sale/refinance proceeds • Deferred development fees • Accrued partnership management fees • Property disposition fee • Buyer’s right to take over property management