Limited liability limited partnership

The limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership, a form of business entity recognized under U.S. commercial law. An LLLP is a limited partnership and as such consists of one or more general partners and one or more limited partners. The general partners manage the LLLP, while typically the limited partners only have a financial interest.

LLLP versus LP

The difference between an LLLP and a traditional limited partnership lies in the general partner's liability for the debts and obligations of the limited partnership.

In a traditional limited partnership the general partners are jointly and severally liable for its debts and obligations; limited partners are not liable for those debts and obligations beyond the amount of their capital contributions.

In an LLLP, by having the limited partnership make an election under state law, the general partners are afforded limited liability for the debts and obligations of the limited partnership that arise during the period that the LLLP election is in place. Certain LLLP elections take the form of a limited partnership electing to be a limited liability partnership (this is the format used in Delaware, for example) while in other states the election is made in the certificate of limited partnership (examples being Florida, Hawaii and Kentucky). Most states require that an LLLP identify itself in its name, but those requirements are not universal.

Because the LLLP is so new, its use is not widespread. Arkansas, Arizona, Colorado, Delaware, Florida, Georgia, Maryland, Nevada, Texas, and Kentucky have all adopted statutes that allow formation of an LLLP, usually as a conversion of an existing limited partnership (the general partners might want to do this to reduce their legal liability).

The filing fees of an LLLP vs. a limited partnership are at times higher. In the case of Nevada, the Secretary of State charges $75 to register a limited partnership and $100 to register an LLLP. Additionally, the initial and annual report filing for an LLLP in Nevada is $175 vs. $125 for a limited partnership. Conversely, in Kentucky the filing fee for a limited partnership is no higher if the partnership elects to be an LLLP.

LLLPs are most common in the real estate business, although other businesses can also use the form, for example, CNN. There are significant questions about whether the limited liability provided to general partners by the LLLP election will be effective in states that do not have an LLLP statute.

States with LLLP enabling statutes

Arizona
Arkansas
Colorado
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Iowa
Kentucky
Maryland
Minnesota
Missouri
Nevada
North Carolina
North Dakota
Oklahoma
Pennsylvania
South Dakota
Texas
Virginia
US Virgin Islands

Though California does not have a state statute allowing formation of an LLLP, it does recognize LLLPs formed under the laws of another state. Registering an LLLP formed in another state in California will require the annual franchise tax of $800, the same as other entities formed in California.¹

Illinois, though not having an enabling statute, does allow formation of an LLLP under RULPA (Revised Uniform Limited Partnership Act).

Notes

^ California Franchise Tax Board instructions

References

External links

Nevada Secretary of State [1]
Nevada Secretary of State Website [2]
California Franchise Tax Board [3]

[1] California Franchise Tax Board instructions

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Limited liability limited partnership Ultimate Study Guide