How can we handle a disgruntled co-owner?
There are six co-owners of the family farm. We rent the land to a farmer, and each owner gets about $600 per year. One owner always wants things done his way and has refused our fair buyout offer.
Instead, he is threatening to have the court sell the whole farm and then take his share. Can he do this?
Whether an owner can force a sale of the business in court depends on the terms of your ownership agreement (assuming you have one). Ownership agreements can (and should) set out procedures for handling the buyout of an owner who is simply not getting along with everyone else. The agreement should also indicate how the owners will value the business so that the interest of the departing owner can be fairly calculated.
However, if you have no ownership agreement, the departing owner could bring a lawsuit, claiming that the owners are stalemated and can't agree. Whether he'd be successful or whether the court would engineer a buyout remains to be seen. Either way, you're looking at an investment in attorney's fees to ensure you're properly represented.
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.