Civil engineer Ghusalal Patel is a real estate investor and consultant based in New York. In his work, Ghusalal Patel advises real estate professionals on forming limited partnerships.
In real estate, partnerships are formed as vehicles to acquire, develop, or manage property. Limited partnerships may have general partners, who are usually experienced developers or real estate agents, or partners who are basically investors.
The partners contribute money in exchange for shares of ownership. These shares entitle the partners to income from managed assets or to a portion of the proceeds once an asset is sold.
In a limited partnership, the rights and duties of general and limited partners are uniquely different. A general partner has active control and decision-making authority over the partnership.
Therefore, general partners can make daily management decisions, determine assets to acquire and sell, and even sign documents on behalf of the partnership. In addition, general partners may have unlimited liability with regard to the partnership's debts.
Limited partners do not have management or decision-making authority. However, their liability is limited to the extent of their capital contributions.
