What Is the Liability of a General Partner in a Limited Partnership in Texas?
A limited partnership in Texas gets created when two or more individuals file a certificate of formation with the Texas secretary of state. A limited partnership consists of two types of partners. One or more general partners, and one or more limited partners make up a Texas limited partnership. General and limited partners of a Texas limited partnership have different degrees of control and liability protection regarding company obligations.
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Control
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When it comes to a limited partnership in Texas, the company's general partner has full control over the company's affairs. The general partner manages the company and makes all the operational decisions that effect the company's day-to-day activities. Limited partners of the company have no involvement in the day-to-day affairs of the business. However, limited partners can participate in decisions to liquidate and dissolve the company, as explained by the Trusts and Estates website.
Liability
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General partners of a Texas limited partnership have unlimited liability for company debts and obligations. This means if the company gets sued, a general partner may lose his home and other personal valuables if the company's assets are insufficient to cover the judgment. Limited partners have limited liability protection from company debts and losses. A business creditor cannot pursue the home, car and other assets of a limited partner to compensate for the debts of the company. However, a limited partner who involves himself in the company's affairs will have unlimited liability for company liabilities, just like a general partner.
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Liability After Withdrawal
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A general partner has no liability for company debts and obligations after she withdraws from the business. However, if the limited partnership owed a business creditor prior to a general partner's departure, the general partner has a personal responsibility to pay the company's debt. To avoid getting charged with the company's liabilities after withdrawal from the company, a general partner needs to publish a notice of withdrawal in a newspaper that operates in the same county as the limited partnership. In addition, the general partner must notify all of the company's creditors of his withdrawal from the company. Failure to properly advertise withdrawal and notify the company's creditors may cause the withdrawing general partner to remain personally liable for company debts and liabilities.
Considerations
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If a general partner's withdrawal violates the terms of the company's partnership agreement, the general partner may have a personal obligation to pay the company for breaching the partnership agreement. The Texas limited partnership can recover damages from the general partner, as well as the company's costs to obtain a new general partner that can provide comparable services, as explained by the Texas State Legislature website.
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