Page 1 

You are asking. . .

Q.We are making a loan to a general partnership. Is it necessary that we have a general partner sign a guaranty in order to have the general partner liable for repayment? Isn't he already liable for repayment because he is a general partner?

A. For years, the general rule was that a general partner is personally liable for the debts of a general partnership. However, with the creation of the LLP, some general partnerships are actually limited liability partnerships, and a general partner normally is not liable for the debts of an LLP unless the partner signs a guaranty. Too, even if the general partnership is not an LLP, a general partner is only liable for the debts of the general partnership that arose when he was a general partner. If you make a loan to a general partnership, and a person later becomes a general partner, that person is not liable for the loan unless he or she signs a guaranty or some other agreement which makes that person liable. If you have that person sign a guaranty after the loan is made, you must provide some sort of consideration to that person or to the partnership in exchange for the guaranty, such as an additional loan or an extension of the loan. A general partner who signs a well-written guaranty will have a much harder time arguing that she is not liable for the loan.