What constitutes partnership property PA 1890 s. 20
Defines partnership property; must be held for partnership; legal estate in land in trust; co-owners buying land with profits remain co-owners unless agreed.
All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement. Provided that the legal estate or interest in any land, or in Scotland the title to and interest in any heritable estate, which belongs to the partnership shall devolve according to the nature and tenure thereof, and the general rules of law thereto applicable, but in trust, so far as necessary, for the persons beneficially interested in the land under this section. Where co-owners of an estate or interest in any land, or in Scotland of any heritable estate, not being itself partnership property, are partners as to profits made by the use of that land or estate, and purchase other land or estate out of the profits to be used in like manner, the land or estate so purchased belongs to them, in the absence of an agreement to the contrary, not as partners, but as co-owners for the same respective estates and interests as are held by them in the land or estate first mentioned at the date of the purchase.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This section says what counts as partnership property. Any property, rights, or interests that partners originally put into the business, or that the firm later buys or acquires for the business, are partnership property. That includes things like cash, equipment, buildings, or even intangible assets.
Partners must hold and use partnership property only for the partnership's purposes and according to their agreement. They cannot treat it as their own personal property.
If the partnership owns land, the legal title passes according to normal property law (for example, to a deceased partner's heirs), but that person holds it as a trustee for the people who are really entitled to the benefit of the land under this section.
When two or more people already own land together as co-owners (not as partners) and then become partners in using that land for profit, and they buy more land with those profits, that new land belongs to them as co-owners, not as partnership property, unless they agree otherwise.
When it applies
- A partner contributes a van she already owned to the partnership business; the van becomes partnership property.
- Partners use firm money to buy a warehouse for storage; that warehouse is partnership property.
- One partner dies; the legal title to partnership land passes to his personal representatives, but they hold it in trust for the remaining partners and the deceased's share.
- Two friends own a field as joint tenants, then agree to share profits from farming it; they buy an adjacent field with those profits; that new field is owned as co-owners, not as partnership property, unless they agreed otherwise.
- A partner’s separate judgment creditor tries to seize a firm computer; the computer is partnership property and cannot be taken for that partner’s personal debt under s.23.
What this section does not say
- This section does not define what a partnership is – that is covered by s.1.
- It does not deal with liability of the firm for wrongs (s.10–s.12) or misapplication of money (s.11).
- It does not cover the duty to render accounts (s.28) or accountability for private profits (s.29).
- It does not address what happens when partnership property is bought with partnership money – that is s.21.
Related sections
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This page reproduces the text of PA 1890 s. 20 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 England and Wales.