Limited Partnerships Cannot Hold Property

The recent case of Vanquish Properties (UK) Ltd v Brook Street (UK) Ltd provides a useful reminder that a limited partnership ("LP") has no legal personality and that property cannot, therefore, be held in the name of an LP.

What is a limited partnership?

An LP is similar to an ordinary partnership except that it must be registered at Companies House and has two categories of partner: general partners, with responsibility for managing the business and with unlimited liability for the firm's debts and obligations; and limited partners, who invest capital but do not take an active role and whose liability is limited to the capital they have contributed.

Like an ordinary partnership an LP is not a legal entity - it is simply a collection of individuals or companies carrying on a business together.

How can a limited partnership hold property?

As an LP is not a legal entity, it cannot hold a legal estate in land in the name of the LP. The legal owners of the LP's property may be all of the individual partners; however, the legal estate cannot be vested in more than four persons so an LP's property will usually be held on trust by one or more nominees (often the general partners).

It is essential that LPs get this right when buying property or taking a lease; if an LP attempts to take a legal estate in land in the name of the LP the estate will not be validly transferred/created.

The decision in Vanquish Properties (UK) Ltd v Brook Street (UK) Ltd

The LP in this case was Vanquish Properties (UK) Ltd Partnership ("VPLP"). It was made up of one general partner and four limited partners.

The tenant, B, had a lease which contained a break clause exercisable by the landlord (or its successors in title) on 27 September 2016, by giving not less than six months' notice. On 22 March 2016...