Group Ownership of a Car (partnership)

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astrohip
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Group Ownership of a Car (partnership)

Post by astrohip » Wed May 29, 2019 11:54 am

A group of us (8 extended family) own a vacation home, thru a partnership. We want to get a car to leave at the house, and no one wants it under their name, for obvious reasons. There are some things that are difficult to get under a partnership name (eg, Comcast), so one person does it, and gets reimbursed. But for an auto, with the potential liability, we want to get it under the partnership name, and insured that way.

Has anyone done this? Any pitfalls, things to be aware of? Any issues getting the state to put the title in a LTD name (Colorado)? How about insurance?

Thanks for any feedback!
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btenny
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Re: Group Ownership of a Car (partnership)

Post by btenny » Wed May 29, 2019 12:35 pm

A group of us did it way back when on a car and some condos in Colorado. We put all five names on the title for the car and the condo deeds. I used my SSN for taxes and some other stuff and put all five names when we filed. We had separate partnership papers to talk about percentage shares and selling and so forth. We did not look into a LLC or other ownership vehicles. So I have no idea if you can do that.

But be careful of how you title or re-title stuff in Colorado. The state has some strict tax laws for property sales. They tax you about 4% (I think) when you sell anything irregardless of state residency or who you are selling too. So selling or transferring title may be considered a sale.

Good Luck.

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astrohip
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Re: Group Ownership of a Car (partnership)

Post by astrohip » Wed May 29, 2019 12:53 pm

btenny wrote:
Wed May 29, 2019 12:35 pm
A group of us did it way back when on a car and some condos in Colorado. We put all five names on the title for the car and the condo deeds. I used my SSN for taxes and some other stuff and put all five names when we filed. We had separate partnership papers to talk about percentage shares and selling and so forth. We did not look into a LLC or other ownership vehicles. So I have no idea if you can do that.

But be careful of how you title or re-title stuff in Colorado. The state has some strict tax laws for property sales. They tax you about 4% (I think) when you sell anything irregardless of state residency or who you are selling too. So selling or transferring title may be considered a sale.

Good Luck.
Thanks, good info. I'm going to assume a partnership can register a vehicle, seems too common an occurrence. I'm going to be at a county courthouse next week (Pitkin Cnty) anyway, will check and see if any issues.

I wonder is insurance is a problem though.
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WhyNotUs
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Re: Group Ownership of a Car (partnership)

Post by WhyNotUs » Wed May 29, 2019 1:23 pm

Call the insurer that covers the home with a policy sold to the LTD and ask them to quote the same for the type of car you would buy. Cars are titled to businesses all of the time and insurance company is likely to ask you to scan everyone's DL that will be listed as a driver.
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dm200
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Re: Group Ownership of a Car (partnership)

Post by dm200 » Wed May 29, 2019 1:45 pm

Would having ownership in the name of the partnership make any of the partners less liable individually for potential lawsuits, etc.?

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Re: Group Ownership of a Car (partnership)

Post by astrohip » Wed May 29, 2019 6:10 pm

dm200 wrote:
Wed May 29, 2019 1:45 pm
Would having ownership in the name of the partnership make any of the partners less liable individually for potential lawsuits, etc.?
I'm hoping and thinking it would.
"Happiness is not about doing, it’s about being." - R Branson

Gill
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Re: Group Ownership of a Car (partnership)

Post by Gill » Wed May 29, 2019 6:54 pm

astrohip wrote:
Wed May 29, 2019 6:10 pm
dm200 wrote:
Wed May 29, 2019 1:45 pm
Would having ownership in the name of the partnership make any of the partners less liable individually for potential lawsuits, etc.?
I'm hoping and thinking it would.
All partners can be held jointly and severally personally liable for debts of the partnership. Dm200 pointed this out.
Gill
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astrohip
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Re: Group Ownership of a Car (partnership)

Post by astrohip » Wed May 29, 2019 7:45 pm

Gill wrote:
Wed May 29, 2019 6:54 pm
All partners can be held jointly and severally personally liable for debts of the partnership. Dm200 pointed this out.
Gill
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
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Nate79
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Re: Group Ownership of a Car (partnership)

Post by Nate79 » Wed May 29, 2019 7:55 pm

astrohip wrote:
Wed May 29, 2019 7:45 pm
Gill wrote:
Wed May 29, 2019 6:54 pm
All partners can be held jointly and severally personally liable for debts of the partnership. Dm200 pointed this out.
Gill
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
You have legal representation that told you this?

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Re: Group Ownership of a Car (partnership)

Post by playtothebeat » Wed May 29, 2019 7:58 pm

astrohip wrote:
Wed May 29, 2019 7:45 pm
Gill wrote:
Wed May 29, 2019 6:54 pm
All partners can be held jointly and severally personally liable for debts of the partnership. Dm200 pointed this out.
Gill
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
I believe that’s right. Who is the GP? The GP is liable. I assume you have an LLC set up as a GP to cover yourselves individually?

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Re: Group Ownership of a Car (partnership)

Post by astrohip » Wed May 29, 2019 8:07 pm

Nate79 wrote:
Wed May 29, 2019 7:55 pm
astrohip wrote:
Wed May 29, 2019 7:45 pm
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
You have legal representation that told you this?
IANAL, but it's generally known that limited partners aren't responsible for LP debts.

https://www.investopedia.com/terms/l/li ... artner.asp

Here's a snippet...

A limited partner has purchased shares in the partnership as an investment but is not involved in its day-to-day business. Limited partners cannot incur obligations on behalf of the partnership, participate in daily operations, or manage the operation.

Because limited partners do not manage the business, they are not personally liable for the partnership's debts. A creditor may sue for repayment of the partnership's debt from the general partner's personal assets.

A limited partner may become personally liable only if they are proved to have assumed an active role in the business, taking on the duties of a general partner.

A limited partner's loss from the company's operations may not exceed the amount of the individual's investment.


playtothebeat wrote:
Wed May 29, 2019 7:58 pm
astrohip wrote:
Wed May 29, 2019 7:45 pm
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
I believe that’s right. Who is the GP? The GP is liable. I assume you have an LLC set up as a GP to cover yourselves individually?
Yes and yes.
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Nate79
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Re: Group Ownership of a Car (partnership)

Post by Nate79 » Wed May 29, 2019 8:13 pm

astrohip wrote:
Wed May 29, 2019 8:07 pm
Nate79 wrote:
Wed May 29, 2019 7:55 pm
astrohip wrote:
Wed May 29, 2019 7:45 pm
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
You have legal representation that told you this?
IANAL, but it's generally known that limited partners aren't responsible for LP debts.

https://www.investopedia.com/terms/l/li ... artner.asp

Here's a snippet...

A limited partner has purchased shares in the partnership as an investment but is not involved in its day-to-day business. Limited partners cannot incur obligations on behalf of the partnership, participate in daily operations, or manage the operation.

Because limited partners do not manage the business, they are not personally liable for the partnership's debts. A creditor may sue for repayment of the partnership's debt from the general partner's personal assets.

A limited partner may become personally liable only if they are proved to have assumed an active role in the business, taking on the duties of a general partner.

A limited partner's loss from the company's operations may not exceed the amount of the individual's investment.


playtothebeat wrote:
Wed May 29, 2019 7:58 pm
astrohip wrote:
Wed May 29, 2019 7:45 pm
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
I believe that’s right. Who is the GP? The GP is liable. I assume you have an LLC set up as a GP to cover yourselves individually?
Yes and yes.
So the answer to my question is no?

6Pack
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Re: Group Ownership of a Car (partnership)

Post by 6Pack » Wed May 29, 2019 8:53 pm

astrohip wrote:
Wed May 29, 2019 6:10 pm
dm200 wrote:
Wed May 29, 2019 1:45 pm
Would having ownership in the name of the partnership make any of the partners less liable individually for potential lawsuits, etc.?
I'm hoping and thinking it would.
Yes, titling the vehicle in he name of the partnership would help prevent personal liability. However, that liability would shift to the partnership, which owns the vacation house. I’d go with a separate LLC to own the vehicle. Yes, LLCs, partnerships, corporations, etc... can own vehicles. If you didn’t purchase the vehicle yet, you’ll be able to save on transfer fees and just purchase the vehicle in the name of the LLC.

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snackdog
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Re: Group Ownership of a Car (partnership)

Post by snackdog » Wed May 29, 2019 10:22 pm

Would leasing instead of owning was any of the liability burden?

WhyNotUs
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Re: Group Ownership of a Car (partnership)

Post by WhyNotUs » Wed May 29, 2019 10:29 pm

I would want to know the cost of coverage before I spent a lot of time worrying about it. Dividing things by 8 solves many problems.
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astrohip
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Re: Group Ownership of a Car (partnership)

Post by astrohip » Wed May 29, 2019 10:43 pm

astrohip wrote:
Wed May 29, 2019 8:07 pm
Nate79 wrote:
Wed May 29, 2019 7:55 pm
astrohip wrote:
Wed May 29, 2019 7:45 pm
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
You have legal representation that told you this?
So the answer to my question is no?
Really, you want to pursue this line? I'm far more interested in getting feedback on my issue, than debating how LPs work.

But sure, let's do it. Tell me how a limited partner is responsible for the debts of a Limited Partnership.
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ResearchMed
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Re: Group Ownership of a Car (partnership)

Post by ResearchMed » Wed May 29, 2019 10:51 pm

astrohip wrote:
Wed May 29, 2019 6:10 pm
dm200 wrote:
Wed May 29, 2019 1:45 pm
Would having ownership in the name of the partnership make any of the partners less liable individually for potential lawsuits, etc.?
I'm hoping and thinking it would.
I would think this would make it MORE likely that all are liable individually if one of them has a major accident... hence HIGH insurance coverage.

This is heading into areas, including with the number of 'partners' where some corporate structure might be useful.
But that would only avoid individual liability if ALL property is held in the corporate name, and this would need to include a mortgage. If there's no mortgage, that solves what is often a major problem for true corporate shielding (including LLC type).

And don't forget, "anyone can sue anyone else for anything, and you'd still need to defend..." :annoyed
Again, good insurance, including umbrella, probably for everyone.

RM
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Re: Group Ownership of a Car (partnership)

Post by Nate79 » Thu May 30, 2019 6:07 am

astrohip wrote:
Wed May 29, 2019 10:43 pm
astrohip wrote:
Wed May 29, 2019 8:07 pm
Nate79 wrote:
Wed May 29, 2019 7:55 pm
astrohip wrote:
Wed May 29, 2019 7:45 pm
This is an LP, a Limited Partnership. The limited partners aren't responsible for the debts of the partnership.
You have legal representation that told you this?
So the answer to my question is no?
Really, you want to pursue this line? I'm far more interested in getting feedback on my issue, than debating how LPs work.

But sure, let's do it. Tell me how a limited partner is responsible for the debts of a Limited Partnership.
No, I asked if you got legal representation to ensure your opinion is correct for your specific case. Or were you just reading stuff on the internet. But assuming you know all the details you understand things like piercing the corporate veil, sham partnerships by family members, personal use of corporate assets, etc.

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astrohip
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Re: Group Ownership of a Car (partnership)

Post by astrohip » Thu May 30, 2019 7:57 am

Nate79 wrote:
Thu May 30, 2019 6:07 am
No, I asked if you got legal representation to ensure your opinion is correct for your specific case. Or were you just reading stuff on the internet. But assuming you know all the details you understand things like piercing the corporate veil, sham partnerships by family members, personal use of corporate assets, etc.
Thanks, I appreciate the concern. I was mis-reading your post as insinuating there is no shielding, but I see now you were simply making sure I was properly protected. Never hurts to ask! And yes, we're in good shape.
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Re: Group Ownership of a Car (partnership)

Post by BolderBoy » Thu May 30, 2019 8:42 am

btenny wrote:
Wed May 29, 2019 12:35 pm
But be careful of how you title or re-title stuff in Colorado. The state has some strict tax laws for property sales. They tax you about 4% (I think) when you sell anything irregardless of state residency or who you are selling too. So selling or transferring title may be considered a sale.
Can you amplify on this a bit, please? I was unaware that there is a 4% sales tax on property sales.
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dm200
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Re: Group Ownership of a Car (partnership)

Post by dm200 » Thu May 30, 2019 10:49 am

astrohip wrote:
Wed May 29, 2019 6:10 pm
dm200 wrote:
Wed May 29, 2019 1:45 pm
Would having ownership in the name of the partnership make any of the partners less liable individually for potential lawsuits, etc.?
I'm hoping and thinking it would.
As a practical matter, I wonder if this is a big issue/risk?

Assuming all parties are responsible type folks AND you all get along well - then I might "consider" -

Title and register and insure the car under one of the group. Maybe the one located nearest the property or the one with the lowest cost insurance? Set very high liability limits and, in this case, low deductibles for collision and comprehensive. Make sure all families are listed with the insurance. Create and maintain a written (but not legally binding) agreement and procedures that might include:
- reimbursement to "owner" for insurance
- reimbursement/payment if the "owner" has an increased overall premium due to incidents with this car
- the "rules" about what family members can drive the car, such as children (with licenses, of course). I would suggest agreeing to "NO"
- since a non-owner's insurance may also cover liability matters, agreements that ALL non-owners carry a certain level of liability coverage

I would also select a car model that is less likely to be involved in "situations".

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