What happens when partners in a 50-50 partnership cannot agree as to ownership matters?

UPDATED: Oct 1, 2022

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What happens when partners in a 50-50 partnership cannot agree as to ownership matters?

A former friend of mine and I own a plane together 50-50. We disagree on acceptable usage of the plane and have deemed that we are unable to be partners in co-ownership. We both want to purchase the airplane and so are stuck in a stalemate. I have therefore suggested that we sell the plane and split the profits. He is not happy with this idea and wants to attend mediation and has asked that it be made binding whereby the judge/mediator decides the fate of the plane and as to who gets to own it. I’m happy to attend mediation but am I correct in assuming that any judge/mediator won’t be willing to say either person A or person B gets to buy it from the other party?

Asked on January 1, 2019 under Business Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Mediation is not binding--if it is binding, it is arbitration, which is different. Mediation is a voluntary attempt to resolve matters; the mediator tries to help you find common ground, but can't force you to accept his/her proposals.
You can engage in binding arbitration, but you could also sue for a court order requring that the plane be sold and proceeds split, which could have the same effect, since in my experience, with 50-50 ownership, neither an arbitrator nor a court will order that one side can buy it from the other, since both have equal claims. Rather, when claims are equal, selling the asset and dividing the proceeds is the law's usual recourse. Binding arbitration is about as time consumming and expensive as litigation: I have not seen it save substantial timne or money, by the way.
Litigation and arbitration can be expensive and take months (or more). If your partner is dead set on purchasing it, so you will be paid for your share of or interest in the plane, let him do that: you'll get paid the same way you would if the plane is sold and profits split. Just negotiate a fair price with him, bearing in mind that it's worth taking a bit less than you might get in a court-forced sale to avoid the time, cost, and headache of litigation or arbitration.

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