Episode 22: Understanding Your Investor Rights – What Can You Control As A Limited Partner?

Building Passive Income

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Welcome to Building Passive Income with CREI Collin

What rights do you actually have when you invest in a real estate syndication? CREI Collin breaks down the legal protections, information rights, voting rights, and fiduciary duties that safeguard your investment as a limited partner. Learn what you can control, what you can’t control, and how to protect your rights before things go wrong.

What You’ll Learn

The fundamental trade-off: passivity for simplicity
Where your rights are defined (PPM and Operating Agreement)
Your information rights: updates, financials, and transparency
Your economic rights: distributions and profit participation
Your voting rights: when you get a say in major decisions
Fiduciary duties sponsors may owe (and how they’re limited)
What you cannot control as a limited partner
Red flags that signal your rights may be at risk

Key Topics Covered

Operating Agreement: The legal document that defines your rights
Information Rights: Financial statements, K-1s, and investor updates
Economic Rights: Cash flow distributions and sale proceeds
Voting Rights: Major amendments, GP removal, and exit timing
Fiduciary Duties: Duty of care and duty of loyalty (and limitations)
What You Can’t Control: Day-to-day operations, forced sales, illiquidity
Red Flags: Stopped communication, missed distributions, undisclosed conflicts

Timestamps

[00:00] Introduction: Giving up control doesn’t mean no rights
[02:00] The fundamental trade-off of passive investing
[03:30] Where your rights are defined
[05:00] Information rights: Your right to know
[07:30] Economic rights: Your right to get paid
[09:45] Voting rights: When you get a say
[11:30] Fiduciary duties: The sponsor’s obligations
[13:00] What you cannot control
[14:15] Red flags to watch for
[15:30] How to protect your rights proactively

Key Takeaways

Read the Operating Agreement—it defines all your legal rights as an LP
Many agreements require regular updates and K-1s, but specifics vary by deal
Distributions depend on available cash and operating agreement terms
Material changes typically require LP approval, often by majority or supermajority
Depending on state and agreement, sponsors may owe fiduciary duties (often limited)
You generally cannot force a sale or control day-to-day operations
Watch for red flags: stopped communication, unexplained missed distributions

Resources Mentioned

Operating Agreement review checklist
Episode 21: How to Read a PPM
Episode 23: Anatomy of a Syndication Deal
CREI Partners investor resources: CREIPartners.com
Schedule a consultation: Let’s Talk

Action Step

Pull out the Operating Agreement from one of your current syndication investments. Read the sections on LP rights, information requirements, voting thresholds, and fiduciary duties. Make sure you understand what you can and can’t control. If you have questions, reach out to the sponsor for clarification.

Disclaimer

This podcast is for educational and informational purposes only and should not be construed as investment, tax, or legal advice. Always consult with your CPA, attorney, and financial advisor before making any investment decisions.

Call to Action

Ready to Build Your Diversified Passive Income Portfolio? Let’s create your personalized portfolio strategy together. Schedule your free 30-minute consultation: Let’s Talk

Meta Description

What rights do you have as a limited partner in a real estate syndication? Learn about information rights, voting rights, fiduciary duties, and how to protect yourself.

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