The limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership. The LLLP form of

business entity In law, a legal person is any person or 'thing' (less ambiguously, any legal entity) that can do the things a human person is usually able to do in law – such as enter into contracts, sue and be sued, own property, and so on. The reason for ...

is recognized under United States commercial law. An LLLP is a

limited partnership A limited partnership (LP) is a form of partnership similar to a general partnership except that while a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited ...

, and it consists of one or more general partners who are liable for the obligations of the entity, as well as or more protected-liability limited partners. Typically, general partners manage the LLLP, while the limited partners' interest is purely financial. Thus, the most common use of limited partnership is for purposes of investment.

LLLP versus LP

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. An LLLP allows liability for debts and obligations of the limited partnership to be transferred from the general partners to an external insurer, something that is not possible with a traditional LLP. By having the limited partnership make an election under state law, the general partners are afforded

limited liability Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...

for the debts and obligations of the limited partnership that arise during the period that the LLLP election is in place. The manner of election varies in accord with state law. For example, in Delaware LLLP elections take the form of a limited partnership electing to be a

limited liability partnership A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not ...

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Delaware Delaware ( ) is a state in the Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes its name from the adjacent ...

, while in

Florida Florida is a state located in the Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Bahamas and Atlantic Ocean, and ...

Hawaii Hawaii ( ; haw, Hawaii or ) is a state in the Western United States, located in the Pacific Ocean about from the U.S. mainland. It is the only U.S. state outside North America, the only state that is an archipelago, and the only stat ...

and

Kentucky Kentucky ( , ), officially the Commonwealth of Kentucky, is a state in the Southeastern region of the United States and one of the states of the Upper South. It borders Illinois, Indiana, and Ohio to the north; West Virginia and Virginia ...

the election is made in the certificate of limited partnership. Not all states presently allow business entities to form as LLLPs. Most states that recognize LLLPs require that an entity identify itself as an LLLP in its name, but that requirement is not universal. LLLPs are most common in the

real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more genera ...

business, although other businesses can also use the form, for example, CNN. Questions remain 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

The following states have statutes that enable LLLPs. * Alabama * Alaska * Arizona * Arkansas * Colorado * Delaware * District of Columbia * Florida * Georgia * Hawaii * Idaho * Indiana * Iowa * Kentucky * Maryland * Minnesota * Missouri * Montana * Nevada * New Mexico * North Carolina * North Dakota * Ohio * Oklahoma * Pennsylvania * South Dakota * Tennessee * Texas * Utah * Virginia * Washington * Wyoming * 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. While registering an LLLP formed in another state in California will trigger the same annual franchise tax applicable to entities formed California. The statute governing whether an LLLP must register is less inclusive than the statute for out-of-state LLCs. Illinois, though not having an enabling statute, does allow formation of an LLLP under RULPA (Revised Uniform Limited Partnership Act).

References

{{Reflist United States business law Types of business entity Legal entities