Section 602. Effect of Dissociation as Limited Partner

(a) Upon a person’s dissociation as a limited partner:

(1) subject to Section 704, the person does not have further rights as a limited partner;

(2) the person’s obligation of good faith and fair dealing as a limited partner under Section 305(b) continues only as to matters arising and events occurring before the dissociation; and

(3) subject to Section 704 and [Article] 11, any transferable interest owned by the person in the person’s capacity as a limited partner immediately before dissociation is owned by the person as a mere transferee.

(b) A person’s dissociation as a limited partner does not of itself discharge the person from any obligation to the limited partnership or the other partners which the person incurred while a limited partner.

Comment

Source – RUPA Section 603(b).

Subsection (a)(1) – In general, when a person dissociates as a limited partner, the person’s rights as a limited partner disappear and, subject to Section 113 (Dual Status), the person’s status degrades to that of a mere transferee. However, Section 704 provides some special rights when dissociation is caused by an individual’s death.

Subsection (a)(3) – For any person that is both a general partner and a limited partner, the required records must state which transferable interest is owned in which capacity. Section 111(9)(C).

Article 11 provides for conversions and mergers. A plan of conversion or merger may provide for the dissociation of a person as a limited partner and may override the rule stated in this paragraph.