Subchapter V. Transferable Interests and Rights of Transferees and Creditors.

§ 29–805.01. Nature of transferable interest.

A transferable interest is personal property.

§ 29–805.02. Transfer of transferable interest.

(a) Subject to § 29-805.03(f), a transfer, in whole or in part, of a transferable interest:

(1) Is permissible;

(2) Shall not by itself cause a member’s dissociation or a dissolution and winding up of the limited liability company’s activities and affairs; and

(3) Subject to § 29-805.04, shall not entitle the transferee to:

(A) Participate in the management or conduct of the company’s activities and affairs; or

(B) Except as otherwise provided in subsection (c) of this section, have access to records or other information concerning the company’s activities and affairs.

(b) A transferee shall have the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled.

(c) In a dissolution and winding up of a limited liability company, a transferee shall be entitled to an account of the company’s transactions only from the date of dissolution.

(d) A transferable interest may be evidenced by a certificate of the interest issued by the limited liability company in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate.

(e) A limited liability company need not give effect to a transferee’s rights under this section until the company has notice of the transfer.

(f) A transfer of a transferable interest in violation of a restriction on transfer contained in the operating agreement shall be ineffective as to a person having notice of the restriction at the time of transfer.

(g) Except as otherwise provided in § 29-806.02(4)(B), when a member transfers a transferable interest, the transferor shall retain the rights of a member other than the interest in distributions transferred and shall retain all duties and obligations of a member.

(h) If a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest, the transferee shall be liable for the member’s obligations under §§ 29-804.03 and 29-804.06(c) known to the transferee when the transferee becomes a member.

(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720; Mar. 5, 2013, D.C. Law 19-210, § 2(h)(6)(B), 59 DCR 13171.)

Section References

This section is referenced in § 29-804.04, § 29-805.03, § 29-805.04, and § 29-807.05.

Effect of Amendments

The 2013 amendment by D.C. Law 19-210 substituted “Subject to § 29-805.03(f), a transfer” for “A transfer” in the introductory language of (a); substituted “activities and affairs” for “activities” throughout (a); and substituted “If” for “When” at the beginning of (h).

Editor's Notes

Uniform Law: This section is based on § 502 of the Uniform Limited Company Act (2006 Act).

Application of Law 19-210: Section 7 of D.C. Law 19-210 provided that the act shall apply as of January 1, 2012.

§ 29–805.03. Charging order.

(a) On application by a judgment creditor of a member or transferee, the Superior Court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. Except as otherwise provided in subsection (f) of this section, a charging order constitutes a lien on a judgment debtor’s transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that would otherwise be paid to the judgment debtor.

(b) To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under subsection (a) of this section, the Superior Court may:

(1) Appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made; and

(2) Make all other orders necessary to give effect to the charging order.

(c) Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, the Superior Court may foreclose the lien and order the sale of the transferable interest. Except as otherwise provided in subsection (f) of this section, the purchaser at the foreclosure sale shall obtain the transferable interest, shall not thereby become a member, and shall be subject to § 29-805.02.

(d) At any time before foreclosure under subsection (c) of this section, the member or transferee whose transferable interest is subject to a charging order under subsection (a) of this section may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the Superior Court.

(e) At any time before foreclosure under subsection (c) of this section, a limited liability company or one or more members whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order.

(f) If a court orders foreclosure of a charging order lien against the sole member of a limited liability company:

(1) The court shall confirm the sale;

(2) The purchaser at the sale obtains the member’s entire interest, not only the member’s transferable interest;

(3) The purchaser thereby becomes a member; and

(4) The person whose interest was subject to the foreclosed charging order is dissociated as a member.

(g) This chapter shall not deprive any member or transferee of the benefit of any exemption laws applicable to the member’s or transferee’s transferable interest.

(h) This section provides the exclusive remedy by which a person seeking to enforce a judgment against a member or transferee may, in the capacity of judgment creditor, satisfy the judgment from the judgment debtor’s transferable interest.

(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720; Mar. 5, 2013, D.C. Law 19-210, § 2(h)(6)(C), 59 DCR 13171.)

Section References

This section is referenced in § 29-801.09, § 29-804.04, § 29-805.02, § 29-806.02, and § 29-807.05.

Effect of Amendments

The 2013 amendment by D.C. Law 19-210 substituted “Except as otherwise provided in subsection (f) of this section, a charging order constitutes” for “A charging order shall constitute” in (a); substituted “Except as otherwise provided in subsection (f) of this section, the purchaser” for “The purchaser” in (c); redesignated former (f) and (g) as present (g) and (h), respectively; and added present (f).

Editor's Notes

Uniform Law: This section is based on § 503 of the Uniform Limited Company Act (2006 Act).

Application of Law 19-210: Section 7 of D.C. Law 19-210 provided that the act shall apply as of January 1, 2012.

§ 29–805.04. Power of personal representative of deceased member.

If a member dies, the deceased member’s personal representative or other legal representative may exercise the rights of a transferee provided in § 29-805.02(c) and, for the purposes of settling the estate, the rights of a current member under § 29-804.10.