I’ve been locked out of my business by my partner – what can I do?

If your business partner has changed the locks to your office or shop, the first thing you need to do is take a quick breath. It may be tempting to retaliate by doing something rash, but it’s in your interests to try and remain calm.

But can my business partner lock me out?

This depends on a few things, like whether your name is on the lease or title of the building. If your name is on the lease or title then you have a legal right to access the premises. There are several options available to you here, like getting an injunction against them or even getting the police involved. But before you do that it’s a good idea to speak to a lawyer and assess all your options.

What if my name is not on the lease or title?

If you’re not named on the lease or title to the property, that doesn’t mean that you don’t have rights. If you have assets in the premises then you do have some rights, but the extent of these and what courses of action are available to you may depend on your partnership agreement. For example, if your partnership agreement says that you’re entitled to 50% of the profits then you may have rights to access the property. If you don’t have a partnership agreement in place, you may still have rights as a partner to the business.  

Regardless of the situation, before you speak to your business partner, or worse try and break in, it’s best to speak to a lawyer to work out exactly what you can and can’t do.

What options may I have?

Depending on your partnership agreement and your specific circumstances you may have several different options available to you. This may include getting an injunction against your business partner, to stop them from doing things with the business property. You may even be able to claim damages from them for losses that you have incurred as a result of being locked out of your business. As a final resort they may even have criminal charges laid against them.

What if I want to end my partnership now?

Once the immediate issue of access to your business is resolved, you may decide that you no longer wish to continue the partnership. If that’s the case, there are several things that you’ll need to do to wind up the partnership.

The first place to look is your partnership agreement. If you have one it may include a process to dissolve or end the partnership and this should be followed. But it’s not always possible to predict every situation when entering a partnership, so it’s always a good idea to show the agreement to a lawyer and ask them for advice on how to end the partnership first.

If you do not have a written partnership agreement, or it doesn’t outline a specific process for dissolving the partnership, then you will need to look at the specific laws of the state or territory that you operate in. While these differ a bit, they all require you to give a formal written notice to all the partners. This will start the process of ending the partnership. To make sure you get the written notice right it’s worthwhile speaking to a lawyer first so they can help you draft it.

Make sure all the paperwork is done

Once the official notice has been issued you will have to get into the details of the dissolution of the partnership. This can be quite a time consuming and paper intensive process. You will need to meet all your legal obligations, like completing your final accounts, submitting partnership tax returns and BAS statements and paying any tax that you may owe. If the partnership has employees, you will also need to finalise their entitlements and any superannuation obligations.

As part of this process any assets and liabilities of the partnership will also need to be sorted out. This includes working out who owns the assets and how they are to be valued. It may also result in taxation obligations, specifically capital gains tax, if you make a capital gain (or loss) on the assets.

This can get complicated so it’s a good idea to speak to PMF Legal about the best way to end your partnership and to ensure it’s done fairly and at minimal cost.