Limited Partnership Interest Transfer and Assignee Admission in Utah

At a glance

Requirements one by one

Transferable interest and transfer effect

Section 16-19-101(26) defines a transferable interest as the right to receive distributions under the partnership agreement, even after the owner stops being a partner. Section 16-19-701 calls it the partner’s only transferable interest. A transfer of all or part of that interest is permissible, but § 16-19-702(1) says it alone does not cause dissociation or dissolution and winding up.

Transferee rights and admission

Section 16-19-702(2) gives the transferee the distributions the transferor would otherwise receive. Subsection (1) withholds management and ordinary records rights; subsection (3) grants an account of transactions only in dissolution and winding up, beginning at dissolution. To become a limited partner after formation, § 16-19-301(2) provides for admission under the partnership agreement or by affirmative vote or consent of all partners.

What trips people up

An economic transfer leaves partner duties in place. Section 16-19-702(7) keeps the transferor’s remaining partner rights and all duties. If a limited partner transfers the entire transferable interest, § 16-19-601(2)(d)(ii) allows unanimous expulsion by the other partners, except for a security transfer or an uncompleted charging-order foreclosure. The transfer itself does not expel the partner.

Restrictions and notice have different jobs. The agreement governs partner relations under § 16-19-107. Section 16-19-702(6) makes a restricted transfer ineffective against a person who knew or had notice of the restriction when it occurred. Subsection (5) separately lets the partnership wait to give the transferee’s rights effect until it knows or has notice of the transfer. Subsection (4) permits, but does not require, a certificate of transferable interest.

Admission can carry existing obligations. Under § 16-19-702(8), a person admitted as a general or limited partner with respect to the transferred interest is liable for the transferor’s obligations under §§ 16-19-502 and 16-19-505 that the person knew about on admission.

The code numbers changed October 1, 2026. Enrolled S.B. 40 recodified the limited-partnership act from Title 48, Chapter 2e to Title 16, Chapter 19; § 297 made the change effective October 1. Older agreements and forms may still cite former § 48-2e-702 for the transfer rule now at § 16-19-702.

Common questions

Can a general partner assign the distribution right? Yes. Section 16-19-702(7) addresses both general and limited partners; the general partner keeps other rights and duties after transfer. The assignment does not itself make the recipient a general partner.

Must the interest have a paper certificate? No. Section 16-19-702(4) says the interest may be evidenced by a certificate; if the partnership issues one, the provision permits transfer by transfer of that certificate, subject to the section’s other rules.

Statutes and sources

• Utah Code § 16-19-101: “(26)(a) "Transferable interest" means the right, as initially owned by a person in the person's capacity as a partner, to receive distributions from a limited partnership in accordance with the partnership agreement, whether or not the person remains a partner or continues to own any part of the right. (b) [ The term] "Transferable interest" applies to any fraction of the interest, by whomever owned.” (official enrolled act; accessed October 2, 2026).
• Utah Code § 16-19-107: “(1) Except as otherwise provided in Subsections (3) and (4), the partnership agreement governs: (a) relations among the partners as partners and between the partners and the limited partnership; (b) the activities and affairs of the limited partnership and the conduct of those activities and affairs; and (c) the means and conditions for amending the partnership agreement. (2) To the extent the partnership agreement does not provide for a matter described in Subsection (1), this chapter governs the matter.” (official enrolled act; accessed October 2, 2026).
• Utah Code § 16-19-301: “(2) After formation, a person becomes a limited partner: (a) as provided in the partnership agreement; (b) as the result of a transaction effective under[ Part 11, Merger, Interest Exchange, Conversion, and Domestication] : (i) Chapter 1a, Part 7, Merger; (ii) Chapter 1a, Part 8, Interest Exchange; (iii) Chapter 1a, Part 9, Conversion; or (iv) Chapter 1a, Part 10, Domestication; (c) with the affirmative vote or consent of all the partners; or (d) as provided in Subsection [48-2e-801(1)(d)] 16-19-801(1)(d) or (1)(e).” (official enrolled act; accessed October 2, 2026).
• Utah Code § 16-19-601: “(d) the person is expelled as a limited partner by the unanimous vote or consent of the other partners if: (i) it is unlawful to carry on the limited partnership's activities and affairs with the person as a limited partner; (ii) there has been a transfer of all of the person's transferable interest in the limited partnership, other than: (A) a transfer for security purposes; or (B) a charging order in effect under Section [48-2e-703] 16-19-703 which has not been foreclosed;” (official enrolled act; accessed October 2, 2026).
• Utah Code § 16-19-701: “(1) The only interest of a partner which is transferable is the partner's transferable interest. (2) [ ]A transferable interest is personal property.” (official enrolled act; accessed October 2, 2026).
• Utah Code § 16-19-702: “(1) A transfer, in whole or in part, of a transferable interest: (a) is permissible; (b) does not by itself cause the person's dissociation or a dissolution and winding up of the limited partnership's activities and affairs; and (c) subject to Section [48-2e-704] 16-19-704, does not entitle the transferee to: (i) participate in the management or conduct of the limited partnership's activities or affairs; or (ii) except as otherwise provided in Subsection (3), have access to required information, records, or other information concerning the limited partnership's activities and affairs. (2) A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled. (3) 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. (4) 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. (5) A limited partnership need not give effect to a transferee's rights under this section until the limited partnership knows or has notice of the transfer. (6) A transfer of a transferable interest in violation of a restriction on transfer contained in the partnership agreement is ineffective as to a person having knowledge or notice of the restriction at the time of transfer. (7) Except as otherwise provided in Subsections [48-2e-601(2)(d)(ii)] 16-19-601(2)(d)(ii) and [48-2e-603(4)(b)] 16-19-603(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. (8) 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 Sections [48-2e-502] 16-19-502 and [48-2e-505] 16-19-505 known to the transferee when the transferee becomes a partner.” (official enrolled act; accessed October 2, 2026).
• 2026 Utah S.B. 40 § 297: “Section 297. Effective Date. This bill takes effect on October 1, 2026.” (official enrolled act; accessed October 2, 2026).
• Utah Code § 16-19-502: “(1) A person's obligation to make a contribution to a limited partnership is not excused by the person's death, disability, dissolution, or other inability to perform personally.” (official enrolled act; accessed October 2, 2026).
• Utah Code § 16-19-505: “(2) A person that receives a distribution knowing that the distribution violated Section [48-2e-504] 16-19-504 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 Section [48-2e-504] 16-19-504.” (official enrolled act; accessed October 2, 2026).
• Former Utah Code § 48-2e-702: “Renumbered 10/1/2026 48-2e-702 Transfer of transferable interest.” (official enrolled act; accessed October 2, 2026).