50/50 ownership in LLCs or other closely held businesses means that every major decision requires unanimous consent. When the relationship works, that balance creates accountability and shared commitment. When it breaks down, it creates something else entirely: a business that cannot move forward, a partner you cannot override, and a legal situation with no clear resolution.
Where you go from here depends largely on your governing documents. A well-drafted operating agreement will include tie-breaking mechanisms, buyout procedures, or both – giving you a defined, equitable path forward that does not require a courtroom. Texas courts will often strictly enforce company agreements, so long as they are not contrary to other Texas law.
Without those provisions, Texas law becomes the default. The Texas Business Organizations Code does not provide an automatic tiebreaker, and no court will simply step in and take a side. There are tools available to deadlocked partners under Texas law, but the outcomes can be unpredictable, and the process is rarely quick.
Understanding your options before you act can mean the difference between resolving a dispute on your terms and leaving the outcome to a judge's discretion.
What Causes a 50/50 Deadlock?
A deadlock occurs when two owners with equal voting rights cannot reach agreement on a material business decision and no governing mechanism exists to resolve the impasse.
Without a tiebreaker, minor disagreements can escalate into company-ending stalemates. These are the most common reasons they do:
- Decision-making deadlock. Neither owner has a majority vote to break a tie. The business freezes over hiring decisions, spending approvals, or strategic direction – and each owner’s equal veto power can block the other's plans indefinitely.
- Disproportionate workloads. One owner logs the hours, generates the revenue, and runs the day-to-day operations. The other contributes capital or shows up less. Splitting profits equally while carrying unequal weight is one way to cause resentment between the parties and can result in intentional deadlocks.
- Divergent visions. Business owners who started out aligned often drift apart as the business matures. One wants to reinvest and scale; the other wants distributions. One is willing to take on debt; the other is not. One wants to sell; the other wants to pass the business to their children.
- Financial disagreements. How much to pay themselves, whether to fund a capital call, and what counts as a legitimate business expense are recurring flashpoints – particularly when one owner exercises more practical control over the finances than the other.
- No written agreement. Friendships and handshakes do not substitute for an operating or partnership agreement. Without one, there is no pre-agreed plan for what happens if an owner wants out, becomes incapacitated, or stops pulling their weight – and no legal boundaries to fall back on when the relationship sours.
Sound familiar? Next let’s look at ways to break these types of deadlocks in Texas.
Step 1 – Look to Your Governing Documents First
If your partnership agreement or LLC operating agreement includes a buy-sell clause, mediation requirement, or tiebreaker provision, that document, in nearly all situations, controls. Start there before considering any other remedy.
If your partnership is registered as an LLP or LLLP, that registration affects your personal liability – not your voting, withdrawal, or buyout rights. Those are still governed by your partnership agreement and by the rules for general or limited partners described below. A partnership dispute attorney can review your governance documents with you and identify the provisions that apply.
If you don’t have a governing document such as an LLC operating agreement or a partnership agreement, and you have not yet encountered a 50/50 dispute, speak to your fellow owners about getting one into place before a deadlock occurs.
If your governing documents are silent on deadlock, skip to Step 2 – Voluntary Exit Options below.
Buy-Sell Clauses
The most common and powerful deadlock-resolution tool in a 50/50 partnership is the buy-sell clause – sometimes called a "shotgun" clause. One partner makes a written offer to purchase the other’s interest at a specified price. The receiving partner must then either accept the buyout at that price or turn the offer around and buy the offering partner out at the same price. The clause creates a strong incentive for the offering partner to set a fair price, since they could be forced to sell at their own offer price.
If your agreement includes a buy-sell clause, the clock starts running the moment a notice is sent – missing the response deadline can be treated as a binding, irrevocable decision.
Mediation and Arbitration
Many company agreements require the owners to submit deadlocked disputes to mediation before exercising other remedies, with unresolved disputes then escalating to arbitration.
- Mediation is less formal, preserves the working relationship, and costs less.
- Arbitration provides a final, enforceable resolution by a neutral third party outside the court system – and can resolve valuation disputes, governance disagreements, and ownership transitions without dissolving the business.
Third-Party Tiebreaker
Some agreements designate a neutral third party – often a retired judge, an industry professional, or a mutually agreed-upon manager – who is empowered to cast a deciding vote or make a binding decision on specified categories of deadlocked issues. This mechanism works well for operational disputes, such as capital expenditure decisions, but is less suited to fundamental disagreements about the partnership's direction or ownership.
Tie-Breaking Manager Authority
A partnership agreement may designate one partner as a managing partner with authority to break ties on ordinary business matters. This approach is straightforward to administer but requires partners or LLC members to accept an asymmetry in decision-making authority at the outset.
Step 2 – Voluntary Exit Options
Whether your governing agreement is silent on exit procedures, or you have simply decided you are ready to walk away, Texas law does give you a path out. The rules differ significantly, though, depending on whether you are a general partner, a limited partner, or an LLC member. (Note: registering your partnership as an LLP or LLLP changes your liability exposure, not your exit rights.)
General Partners
Texas partnership law gives any general partner – whether in a general partnership or a limited partnership – the inherent right to withdraw at any time simply by giving notice.
Should you withdraw, Texas law gives you two routes for recovering the value of your interest in the partnership:
- Winding up the partnership and distributing assets; or
- If the remaining partners elect to continue the business, the partnership must redeem your interest at fair value.
If the parties cannot agree on a fair value, the partnership must pay its own estimate. Any disagreement over that value can be settled through mediation or in court.
There's a catch: Withdrawing before a partnership's stated goal or term is complete can be treated as a wrongful withdrawal. The partnership can sue to recover its own losses – lost profits, the cost of finding a replacement, disruption expenses – and the remaining partners can separately sue for their personal losses, such as reduced interest value or the added burden of covering your share.
Limited Partners
Limited partners are passive investors who do not take part in day-to-day management, and Texas law does not extend the same automatic withdrawal right to limited partners that it gives general partners. Whether you can exit, and on what terms, depends almost entirely on what your limited partnership agreement says. If that agreement is silent, you have no legal right to withdraw.
A note on LLPs and LLLPs: Registering a general partnership as an LLP, or a limited partnership as an LLLP, shields partners from personal liability for the business’s obligations. It does not change anyone’s withdrawal or buyout rights. Those still follow the rules above, depending on whether you hold a general or limited partner interest.
LLC Members
If your business is structured as a Texas LLC, the rules are fundamentally different – and considerably more restrictive. Texas LLC law does not give members an automatic right to withdraw or be expelled. Whether an LLC member can exit, and on what terms, is determined almost entirely by the operating agreement. If your agreement is silent on withdrawal or buyout procedures, your only legal option may be to ask the courts to intervene (Step 3 below).
For more about LLC member buyouts, read our legal guide, How to Buy Out Your LLC Partner in Texas.
Which Rules Apply to You?
A quick reference for voluntary exit options, depending on your entity type:
| Withdrawal Right | Buyout Right | |
|---|---|---|
| General Partner (GP) | Yes – can withdraw at any time by giving notice, but may owe damages if the withdrawal breaches the agreement | Yes – payment for the interest if the business continues, or a share of winding-up proceeds |
| General Partner (LP) | Yes – can withdraw by giving written notice, but may owe damages if the withdrawal breaches the agreement | No – unless the agreement says otherwise, the remaining partners choose to pay for the interest or convert it to a limited partner interest |
| Limited Partner (LP) | No – only as the limited partnership agreement allows | Yes, after a permitted withdrawal – fair value of the interest, unless the agreement provides otherwise |
| LLC Member | No – governed by the operating agreement | Governed by the operating agreement |
Step 3 – Judicial Remedies (and Why They Are a Last Resort)
If your partnership or operating agreement is silent on tie-breaking or buyout solutions, and a voluntary exit is not amenable to either partner or member, you can ask the Texas courts to step in.
Note: These judicial remedies apply the same way regardless of whether your business is a general partnership, limited partnership, LLP, LLLP, or LLC.
Involuntary Judicial Dissolution
Either partner or member may petition a Texas court to dissolve the company. A court may order winding up and termination if it finds that:
- The entity's economic purpose is likely to be unreasonably frustrated;
- One owner's conduct makes it not reasonably practicable to continue the business;
- Or it is not reasonably practicable to carry on in conformity with the governing documents.
Interpersonal conflict alone will not persuade a Texas court to dissolve a functioning business. The petitioning member must prove that continuing the business is practically impossible. And because Texas law empowers judges to craft remedies that protect the rights of both parties – from winding down the business to a forced buyout – neither party can control the outcome. You may end up with a verdict you did not expect.
Rehabilitative Receivership
Receivership is a separate option. A court appoints a neutral receiver to manage the business while the dispute is resolved. To get there, you must show that the owners are deadlocked, that they cannot break the deadlock and that the business is suffering or facing irreparable harm as a result. State law also requires showing that other available remedies would be inadequate. Texas courts treat receivership as a harsh, temporary remedy. Once the problem is fixed, management returns to the owners.
When to Contact a 50/50 Partnership or Member Dispute Attorney
The longer a deadlock goes unaddressed, the fewer options you have. A partnership dispute attorney can give you a clear picture of your options, the risks of waiting, and what is at stake if the next move is the wrong one.
Contact Hendershot Cowart P.C.if you are facing any of the following:
- Your partnership, LLC, or closely held business has no written agreement, or your buy-sell and dispute resolution clauses are vague or unclear
- You want to activate a buy-sell clause or other contractual buyout provision in compliance with its terms
- Your business bank accounts have been frozen due to conflicting instructions from the two owners
- The deadlock is preventing the business from paying employees, filing taxes, or fulfilling client contracts
- Your partner is draining business accounts, neglecting clients, or diverting assets
- You suspect the other member is stealing clients, starting a competing business, or taking unauthorized payments
- You want to exit the business but the remaining member refuses to negotiate a fair buyout
- Another member has hired an attorney or threatened to sue you for control of the business
- You need to file for court-ordered dissolution or respond to a dissolution filing
The timing and manner of how you exit – or how you respond to a partner or member who wants out – has lasting financial and legal consequences. An attorney can review your governing documents, advise you on your rights under Texas law, and help you act before the situation forces your hand.
At Hendershot Cowart P.C., our Houston partnership disputeand LLC member dispute attorneysrepresent Texas business owners through every stage of partner disputes – from the first negotiation to arbitration or judicial dissolution. Call (713) 783-3110 or contact us onlineto discuss your situation.
Frequently Asked Questions
How do I get rid of my 50/50 business partner?
Start with your governing documents: a buy-sell clause, tiebreaker provision, or mediation requirement may already give you a defined path to a buyout. If your agreement is silent, you can negotiate a voluntary exit, but Texas law does not let one 50/50 owner unilaterally force the other out – your options are a negotiated buyout, mediation or arbitration, or, as a last resort, petitioning a Texas court for involuntary dissolution. If your partner's conduct involves self-dealing, fraud, or breach of fiduciary duty, that may open additional claims beyond the deadlock framework.
See "Look to Your Governing Documents First" and "Judicial Remedies" above and talk to a partnership dispute attorney before you act.
Can a 50/50 partner force the other to sell in Texas?
Whether one owner can force out the other depends on entity type, the governing agreement, and whether the dispute involves a violation of the law. A forced buyout generally requires a contractual buy-sell mechanism.
See "Voluntary Exit Options" above for how these rights differ by entity type.
Does disagreement alone justify judicial dissolution in Texas?
No. Texas courts require more than interpersonal conflict or a breakdown in the working relationship to dissolve an entity. The deadlock must make it unrealistic to carry on the business as intended – a high evidentiary bar that mere disagreement does not meet.
What is the difference between receivership and dissolution?
Dissolution terminates the business entity and distributes its assets. Rehabilitative receivership appoints a neutral manager to preserve and rehabilitate the business while the dispute is resolved – the entity continues to exist. Receivership is a last resort and does not authorize a forced buyout of ownership interests.
What if one partner is committing misconduct during the deadlock?
Misconduct – such as self-dealing, diverting funds, or breaching fiduciary duties – opens claims beyond deadlock resolution, including breach of fiduciary duty and, in some cases, fraud. These claims carry their own remedies and may provide more direct paths to relief than the deadlock framework alone.
What does a 50/50 deadlock dispute cost in Texas?
Cost depends entirely on which path is taken. A negotiated buyout with legal counsel on both sides is significantly less expensive than litigation. Judicial dissolution or receivership proceedings – particularly contested ones – can be prolonged and costly, with outcomes neither party can predict.
The cost of awell-drafted operating agreement with a deadlock mechanism at the outset is a fraction of the cost to resolve disputes later.
What should I look for in a partnership dispute attorney in Texas?
Look for an attorney with demonstrated experience in Texas business disputes, including member and shareholder disputes, general partnership withdrawals, and judicial dissolution proceedings. The right attorney will review your governing documents before advising on strategy – not push you toward litigation as a default.
Discuss Your Situation with a Houston Partnership Dispute Attorney
The attorneys at Hendershot Cowart P.C. focus on business disputes between co-owners, including partnership deadlocks, LLC member disputes, judicial dissolution proceedings, receiverships, and breach of fiduciary duty claims. We work with Texas business owners to help them understand their legal position and pursue resolution – whether through negotiation, mediation, arbitration, or litigation.
Call (713) 783-3110 to schedule a consultationand discuss your options with an experienced business disputes attorney.