If I own a commercial property with a friend and we purchased the property with an LLC but my friend has not paid any taxes for 3 years, do they loose their interest?
Question Details: I have owned this property for 11 years. My friend hasn't contributed to his portion of the taxes and has left me to pay his portion of the taxes for the past 3 year and has not made an attempt to pay me back what I paid to cover their share. The property would have been foreclosed by the lender if I had not paid the taxes and I'm in jeopardy of losing the property because he cannot pay the taxes or balloon payment which is due. If I pay the remaining balloon payment does my friend loose his interest in the property because of his inability to pay?
No, he does not, unless the LLC's written operating agreement specifically states that if a member (owner) of the LLC does not contribure, he loses his interest in the company or property:
1) Generallky, one property owner (or owner of the company which itself owns the property) not paying taxes or costs does not deprive him of any ownership.
2) The property is not owned by you or your friend, based on what you write: it is owned by the LLC. Therefore, your friend not contributing does not affect ownership--it remains owned by the LLC. And your friend's ownership in or of the LLC is not affected by failing to contribute, unless there was something in writing specifically stating that he would lose rights or ownership if he did not contribute.