Limited Partnership Interest Transfer and Assignee Admission in Tennessee

At a glance

Requirements one by one

Law and transferable interest

Section 61-3-1207 applies the 2017 act to domestic limited partnerships formed on or after January 1, 2018, and those older partnerships that elected into it. An older partnership that did not elect remains under the 1988 act if that act governed it; a pre-1988 partnership governed by earlier law remains under that law, subject to the statute’s term-extension exception. Under § 61-3-701 the transferable interest is personal property. Section 61-3-702(a) permits whole or partial transfer without itself dissociating the partner or starting winding up.

Transferee rights and admission

Section 61-3-702(b) gives the transferee the distributions otherwise payable to the transferor. Management and ordinary records do not pass with that right under subsection (a); subsection (c) allows a dissolution accounting only from the dissolution date. Section 61-3-301 allows limited-partner admission after formation under the agreement or by the affirmative vote or consent of all partners, among its statutory routes. It also permits admission without acquiring a transferable interest or owing a contribution.

What trips people up

A full transfer does not itself end partner status. Section 61-3-702(g) keeps the transferor’s remaining partner rights and all duties. Sections 61-3-601(b)(4) and 61-3-603(4) allow separate expulsion by all other partners after a full transfer, but exclude a security transfer and an uncompleted charging order. Section 61-3-105 deems a person who becomes a partner to assent to the partnership agreement.

Notice and restrictions affect recognition. Section 61-3-702(e) lets the partnership wait until it knows or has notice of the transfer before giving transferee rights effect. Subsection (f) makes a transfer violating an agreement restriction ineffective if the intended transferee knew or had notice of the restriction when the transfer occurred. Subsection (d) permits an interest certificate and, subject to that section, transfer by transferring the certificate.

Known liabilities can follow admission. Section 61-3-702(h) makes a transferee who becomes a partner liable for the transferor’s obligations under §§ 61-3-502 and 61-3-505 that were known to the transferee at admission. Section 61-3-502 describes contribution duties; § 61-3-505 addresses a knowing receipt of an improper distribution.

Common questions

Can a person become a limited partner without buying an interest? Yes. Section 61-3-301 expressly permits admission without a transferable interest or contribution obligation.

Does a transferee get records on demand before admission? No. Section 61-3-702(a)(3) withholds ordinary information rights from the transferee, while § 61-3-304 gives a limited partner a demand route.

Statutes and sources

• Tenn. Code Ann. § 61-3-105: “61-3-105. Partnership agreement — Effect on limited partnership and person becoming partner — Preformation agreement. A limited partnership is bound by and may enforce the partnership agreement, whether or not the partnership has itself manifested assent to the agreement. A person that becomes a partner is deemed to assent to the partnership agreement. Two (2) or more persons intending to become the initial partners of a limited partnership may make an agreement providing that upon the formation of the partnership, the agreement shall become the partnership agreement.” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-301: “61-3-301. Becoming limited partner. Upon formation of a limited partnership, a person becomes a limited partner as agreed among the persons that are to be the initial partners. After formation, a person becomes a limited partner: As provided in the partnership agreement; As the result of a transaction effective under part 11 of this chapter; With the affirmative vote or consent of all the partners; or As provided in § 61-3-801(a)(4) or (a)(5). A person may become a limited partner without: Acquiring a transferable interest; or Making or being obligated to make a contribution to the limited partnership.” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-304: “61-3-304. Rights to information of limited partner and person dissociated as limited partner. On ten-days' demand, made in a record received by the limited partnership, a limited partner may inspect and copy required information during regular business hours in the limited partnership's principal office. The limited partner need not have any particular purpose for seeking the information.” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-502: “61-3-502. Liability for contribution. A person's obligation to make a contribution to a limited partnership is not excused by the person's death, disability, termination, or other inability to perform personally.” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-505: “A person that receives a distribution knowing that the distribution violated § 61-3-504 is personally liable to the limited partnership but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under § 61-3-504.” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-601: “61-3-601. Dissociation as limited partner. A person does not have a right to dissociate as a limited partner before the completion of the winding up of the limited partnership. A person is dissociated as a limited partner when: The limited partnership knows or has notice of the person's express will to withdraw as a limited partner, but, if the person has specified a withdrawal date later than the date the partnership knew or had notice, on that later date; An event stated in the partnership agreement as causing the person's dissociation as a limited partner occurs; The person is expelled as a limited partner pursuant to the partnership agreement; The person is expelled as a limited partner by the affirmative vote or consent of all the other partners if: It is unlawful to carry on the limited partnership's activities and affairs with the person as a limited partner; There has been a transfer of all the person's transferable interest in the limited partnership, other than: A transfer for security purposes; or A charging order in effect under § 61-3-703;” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-603: “61-3-603. Dissociation as general partner. A person is dissociated as a general partner when: The limited partnership knows or has notice of the person's express will to withdraw as a general partner, but, if the person has specified a withdrawal date later than the date the partnership knew or had notice, on that later date; An event stated in the partnership agreement as causing the person's dissociation as a general partner occurs; The person is expelled as a general partner pursuant to the partnership agreement; The person is expelled as a general partner by the affirmative vote or consent of all the other partners if: It is unlawful to carry on the limited partnership's activities and affairs with the person as a general partner; There has been a transfer of all the person's transferable interest in the partnership, other than: A transfer for security purposes; or A charging order in effect under § 61-3-703;” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-701: “61-3-701. Nature of transferable interest. A transferable interest is personal property.” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-702: “61-3-702. Transfer of transferable interest. A transfer, in whole or in part, of a transferable interest: Is permissible; Does not, by itself, cause a person's dissociation as a partner or a dissolution and winding up of the limited partnership's activities and affairs; and Subject to § 61-3-704, does not entitle the transferee to: Participate in the management or conduct of the limited partnership's activities and affairs; or Except as otherwise provided in subsection (c), have access to required information, records, or other information concerning the limited partnership's activities and affairs. A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled. In a dissolution and winding up of a limited partnership, a transferee is entitled to an account of the limited partnership's transactions only from the date of dissolution. A transferable interest may be evidenced by a certificate of the interest issued by a limited partnership in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate. A limited partnership need not give effect to a transferee's rights under this section until the partnership knows or has notice of the transfer. A transfer of a transferable interest in violation of a restriction on transfer contained in the partnership agreement is ineffective if the intended transferee has knowledge or notice of the restriction at the time of transfer. Except as otherwise provided in §§ 61-3-601(b)(4)(B) and 61-3-603(4)(B), if a general or limited partner transfers a transferable interest, the transferor retains the rights of a general or limited partner other than the transferable interest transferred and retains all the duties and obligations of a general or limited partner. If a general or limited partner transfers a transferable interest to a person that becomes a general or limited partner with respect to the transferred interest, the transferee is liable for the transferor's obligations under §§ 61-3-502 and 61-3-505 known to the transferee when the transferee becomes a partner.” (2017 enacted act; accessed October 2, 2026).
• Tenn. Code Ann. § 61-3-1207: “61-3-1207. Applicability — Savings clause. This chapter applies to: Every domestic limited partnership formed on or after January 1, 2018; Any domestic limited partnership that was formed prior to January 1, 2018, and that has elected to be governed by this chapter pursuant to subsection (b); and The outstanding and future interests in the respective domestic limited partnerships described in subdivisions (a)(1)(A) and (B). If there are other specific statutory provisions that govern the formation of, impose restrictions or requirements on, confer special powers, privileges or authorities on or fix special procedures or methods for special categories of limited partnerships, then, to the extent those provisions are inconsistent with or different from this chapter, those provisions prevail. On or after January 1, 2018, a domestic limited partnership formed prior to January 1, 2018, under the Tennessee Uniform Limited Partnership Act of 1988, compiled in chapter 2 of this title, may voluntarily elect to be governed by this chapter by amending its certificate of limited partnership to include the statement “This limited partnership elects to be governed by the Tennessee Uniform Limited Partnership Act of 2017,” or a statement of like import. The election and amendment to the certificate of limited partnership is not effective unless it has been approved in a record by: All general partners; and The limited partners or, if there is more than one (1) class or group of limited partners, then by each class or group of limited partners, in either case, by limited partners who own more than fifty percent (50%) of the then current percentage or other interest in the profits of the domestic limited partnership owned by all of the limited partners or by the limited partners in each class or group, as appropriate. Any partnership presently governed by the Tennessee Uniform Limited Partnership Act of 1988 that does not voluntarily elect to be governed by this chapter pursuant to subdivision (b)(1), continues to be governed by the Tennessee Uniform Limited Partnership Act of 1988. Any limited partnership that does not voluntarily elect to be governed by this chapter pursuant to subdivision (c)(1), shall continue to be governed by the law under which the limited partnership is presently governed, except that the limited partnership shall not have its term extended other than under this chapter.” (2017 enacted act; accessed October 2, 2026).