If you co-own an LLC with one or more partners and are ready to leave the LLC, you may be able to sell or transfer your membership interest. Having a current LLC member buy out your share in the LLC is the easiest and most direct method, but you may also be able to assign your LLC membership interest to a third party.
Assignment of interest in an LLC is a topic usually covered in the LLC’s operating agreement. If there is a provision in the agreement about LLC interest assignment, you must follow whatever the listed requirements are. If your LLC does not have an operating agreement or if the operating agreement is silent on the issue, you must apply your state’s default rules.
Each state has a set of default rules meant to govern an LLC when the members have not agreed to a set of rules in advance. Unfortunately, state rules vary. Consider the two following statutes:
Unless otherwise provided in the articles of organization or the regulations, a member’s interest in a limited liability company is not assignable in whole or in part, unless a majority of the nonassigning members consent to the assignment.
-Florida Statutes Section 608.432 (Transferability of Member’s Interest)
Stated differently, you may only transfer (either by selling or freely assigning) your LLC membership interest to another person if the operating agreement specifically permits you to or if a majority of your partners consent to the transfer. On the other hand, a different state’s statute says:
Except as provided in the operating agreement, a membership interest is assignable in whole or in part.
-New York Statutes Article VI Section 603 (Assignment of Membership Interest)
Stated differently, you may transfer (either by selling or freely assigning) your LLC membership interest to another person unless the operating agreement specifically prohibits you from doing so.
These two rules take opposite approaches to the problem, and many states follow the principals of the first statute (assignment of membership interests only if explicitly permitted) while many follow the principals of the second (unrestricted assignment of LLC interests unless explicitly prohibited).
Before you begin the sale of your LLC share, consult your state’s laws. If you cannot find the appropriate statute for your state or do not understand how the rule applies to your situation, contact your Secretary of State or a licensed business attorney.