(a) Except as otherwise provided in subsection (b), a person that makes an investment in an organization and erroneously but in good faith believes that the person has become a limited partner in the organization is not liable for the organization's obligations by reason of making the investment, receiving distributions from the organization, or exercising any rights of or appropriate to a limited partner, if, on ascertaining the mistake, the person:
(1) causes an appropriate certificate of formation, amendment, or statement of correction to be signed and filed with the filing officer in accordance with Article 4 of Chapter 1; or
(2) withdraws from future participation as an owner in the organization by signing a statement of withdrawal and filing it with the Secretary of State.
(b) A person that makes an investment described in subsection (a) is liable to the same extent as a general partner to any third party that enters into a transaction with the organization, believing in good faith that the person is a general partner, before the statement of withdrawal, certificate of formation, amendment, or statement of correction to show that the person is not a general partner is filed with the filing officer in accordance with Article 4 of Chapter 1.
(c) If a person makes a diligent effort in good faith to comply with subsection (a)(1) and is unable to cause the appropriate certificate of formation, amendment, or statement of correction to be signed and filed with the filing officer in accordance with Article 4 of Chapter 1, the person has the right to withdraw from the organization pursuant to subsection (a)(2) even if the withdrawal would otherwise breach an agreement with others that are or have agreed to become co-owners of the organization.
Last modified: May 3, 2021