N.Y. Partnership Law § 73

Retiring partner share value: N.Y. Partnership Law § 73

Under N.Y. Partnership Law § 73, a retiring partner or estate gets the value of their interest at dissolution plus interest or profits as an ordinary creditor.

Official text N.Y. Partnership Law § 73 — New York

§ 73. Rights of retiring or estate of deceased partner when the business is continued. When any partner retires or dies, and the business is continued under any of the conditions set forth in section seventy-two, subdivisions one, two, three, five and six, or section sixty-nine, paragraph (b) of subdivision two, without any settlement of accounts as between him or his estate and the person or partnership continuing the business, unless otherwise agreed, he or his legal representative as against such persons or partnership may have the value of his interest at the date of dissolution ascertained, and shall receive as an ordinary creditor an amount equal to the value of his interest in the dissolved partnership with interest, or, at his option or at the option of his legal representative, in lieu of interest, the profits attributable to the use of his right in the property of the dissolved partnership; provided that the creditors of the dissolved partnership as against the separate creditors, or the representative of the retired or deceased partner, shall have priority on any claim arising under this section, as provided by section seventy-two, subdivision eight of this chapter.

Text as published in the 2026 snapshot of the code.

Source: Vaquill Open US Law, compiled from official state publishers (huggingface.co), reproduced under license CC BY 4.0.

Read this provision at the official source →

What it actually says

When a partner retires or dies and the business is continued under the conditions the section lists - § 72(1), (2), (3), (5) and (6), or § 69(2)(b) - without any settlement of accounts between that partner or the estate and the persons continuing the business, then unless otherwise agreed the retiring partner or the legal representative may have the value of the interest at the date of dissolution ascertained.

What follows is the choice that makes this section worth knowing. Having had the value ascertained, the person is entitled to receive, as an ordinary creditor, an amount equal to the value of the interest in the dissolved partnership with interest - or, at that person's option, in lieu of interest, the profits attributable to the use of his right in the property of the dissolved partnership. Interest, or a share of what the continuing business earned by using the departed partner's stake. Where the business has done well since, that election matters a great deal, and it belongs to the outgoing side.

Two qualifications frame it. The valuation date is the date of dissolution, not the date of payment or of judgment. And the status conferred is that of an ordinary creditor, with the proviso that creditors of the dissolved partnership have priority over the separate creditors or the representative of the retired or deceased partner on any claim arising under this section, as provided by § 72(8). Everything is subject to a contrary agreement, so a partnership agreement with a buy-out formula displaces it.

When it applies

  • A partner dies and the surviving partners carry on the business without paying out the estate.
  • A partner retires and the firm continues to trade using the assets without settling accounts.
  • An estate must choose between interest and a share of the profits earned since the death.
  • The parties disagree over the date at which the departing partner's interest should be valued.
  • A partnership agreement contains a buy-out formula that one side says is too low.

What this section does not say

  • It does not apply where the partners agreed otherwise. A buy-out provision in a partnership agreement displaces the section.
  • It does not make the estate a continuing partner. The status conferred is that of an ordinary creditor.
  • It does not value the interest as at today. The date is the date of dissolution.
  • It does not put the departing side ahead of partnership creditors, who have priority under § 72(8).
  • It does not decide who may continue the business or on what terms - those are §§ 69 and 72.

Worked examples

Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.

Illustrative example

A partner in a small restaurant dies. The surviving partners carry on trading with everything the business owns and never settle anything with the estate. Two good years pass.

How the wording applies

Where the business is continued without any settlement of accounts, the legal representative may have the value of the deceased partner's interest ascertained at the date of dissolution, and is then entitled, as an ordinary creditor, to that value with interest - or, at their option and in lieu of interest, to the profits attributable to the use of the deceased partner's right in the property of the dissolved partnership. Where trading has gone well since, that election is worth a great deal, and it belongs to the outgoing side.

How the parties settled it

They agree a valuation date and a single valuer, and the estate takes a share of the two years' profits instead of interest, paid over eighteen months out of the business.

Illustrative example

A retiring partner finds that the buy-out formula in the partnership agreement produces a figure far below what he believes his share is worth, and argues the statute should govern instead.

How the wording applies

Everything in the section operates "unless otherwise agreed", so a partnership agreement containing a buy-out formula displaces it. What decides this is whether the formula actually covers the situation that has arisen - the section fills gaps rather than overriding bargains the partners made for themselves.

How the parties settled it

They apply the formula and add a separate payment for the goodwill of the accounts he personally brought in, and update the formula for everyone before the next partner leaves.

Illustrative example

An estate and the continuing partners accept that something is owed but not when the share should be valued. The estate points to today's healthy figures; the partners point to the date of the death.

How the wording applies

The section is explicit that the value of the interest is ascertained at the date of dissolution, not at the date of payment or of judgment. The growth since then is dealt with by the other half of the same sentence - the election to take the profits attributable to the use of that interest instead of interest on its value.

How the parties settled it

They value at the date of dissolution, the estate elects profits rather than interest, and both sign off an agreed profit figure for the period instead of reopening the whole accounts.

How courts have read it

Decisions construing this provision. The question and the summary are ours; the quoted sentence is the court's own words, taken from the published opinion. These are the decisions in our corpus, not every decision there is, and nothing here predicts any other case. Reported 2003 to 2017.

Breidbart v. Wiesenthal, 108 A.D.3d 492 (2013)

Appellate Division

What the court had to decide

Does the gain on the sale of real property sold by the partnerships constitute 'profits' under Partnership Law § 73?

What it held

The gain on the sale of real property does not constitute 'profits' under Partnership Law § 73; the plaintiffs are not entitled to a share in the appreciation of partnership assets after the date of dissolution.

In the court's words
Here, since the partnership dissolved on April 12, 2000, the plaintiffs were not entitled to a share in the appreciation of partnership assets after that date (see Tarantino v Albert, 160 AD2d 310 [1990]; see also Ronan v Valley Stream Realty Co., 249 AD2d 288 [1998]).

Breidbart v. Wiesenthal, 44 A.D.3d 982 (2007)

Appellate Division

What the court had to decide

Whether the plaintiffs are precluded by a prior Surrogate's decree from litigating the fair market value of the partnership assets on the dissolution date for purposes of Partnership Law § 73.

What it held

No, the plaintiffs are not precluded; the matter is remitted for a hearing and appraisal to determine the fair market value as of April 12, 2000.

In the court's words
Under the circumstances of this case, the plaintiffs are not precluded by the decree of the Surrogate’s Court settling the trustee’s account from litigating the fair market value of the assets on April 12, 2000

Breidbart v. Wiesenthal, 44 A.D.3d 985 (2007)

Appellate Division

What the court had to decide

When should a partner or his estate be required to make the election under Partnership Law § 73 between receiving interest or profits attributable to the use of his right in the property of the dissolved partnership?

What it held

The election under Partnership Law § 73 should be made after the value of the plaintiff's interest is determined, so they can know which option yields more.

In the court's words
However, the election should be made after the value of the plaintiffs’ interests as of April 12, 2000, is determined, when the plaintiffs can ascertain whether the interest on that value is in excess of the profits to which they are entitled pursuant to Partnership Law § 73.

Silvernail v. Silvernail, 22 A.D.3d 970 (2005)

Appellate Division

What the court had to decide

Under Partnership Law §73, what is a withdrawing partner entitled to receive when the business is continued after his withdrawal?

What it held

A withdrawing partner who contributed property used to earn profits is entitled to receive the share of the partnership's profits attributable to that asset, not for assets he removed, and may elect profits in lieu of interest.

In the court's words
Under the circumstances, because the property was used to earn profits for the business, plaintiff was entitled to receive the share of the partnership’s profits attributable to that asset.

Source: Caselaw Access Project, CC0 1.0 Universal (public domain dedication).

Related sections

N.Y. Partnership Law § 40 Equal profits, no salary: N.Y. Partnership Law § 40 N.Y. Partnership Law § 43 Partnership Law § 43: a partner must account for any private benefit N.Y. Partnership Law § 44 Partnership Law § 44: a partner's right to a formal account N.Y. Partnership Law § 26 Partners Liable Unless LLP | N.Y. Partnership Law § 26 N.Y. Partnership Law § 11 Profit is prima facie evidence: N.Y. Partnership Law § 11

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We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.

This page reproduces the text of N.Y. Partnership Law § 73 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in New York.

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