The Texas Revised Limited Partnership Act

by Heather Frances Google
Texas partnerships are now governed by the Texas Business Organizations Code.

Texas partnerships are now governed by the Texas Business Organizations Code.

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Effective January 1, 2010, the Texas Revised Limited Partnership Act (TRLPA) was fully replaced by the Texas Business Organizations Code (TBOC), which was designed to be a more user-friendly statute. The new TBOC now applies to your partnership even if it was originally organized under TRLPA and even if you have not formally adopted TBOC.

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Effective dates

If you are reviewing past actions of your partnership to see if you properly complied with Texas law, you may need to look closely at the dates involved. Any Texas business entity organized prior to January 1, 2006, was governed by a statute designed for that particular type of entity, like the TRLPA governed partnerships. If your partnership was organized on or after January 1, 2006, it has always been governed by TBOC. If your partnership had been organized prior to January 1, 2006, TBOC did not automatically apply to it until January 1, 2010. However, your partnership had the opportunity to voluntarily select TBOC as your governing statute before TBOC became automatically effective on January 1, 2010.

Changes in Terms

TBOC is designed with some general provisions that apply to all types of business entities and some provisions that apply only to specific entities such as partnerships. To accomplish this mixing of applications, TBOC also created some new terms that incorporate several specific terms. For example, a provision of TBOC that applies to “organizations” applies to partnerships, corporations, and other types of business entities; a provision that applies specifically to limited partnerships applies only to limited partnerships. Under TRLPA, this kind of distinction was not necessary since TRLPA only governed limited partnerships.

Oral Partnerships

One of TBOC’s few significant changes from TRLPA was to allow oral partnership agreements instead of requiring them to be in writing. Though oral partnership agreements are now legal in Texas, and can be enforced by Texas courts, they can be risky because they rely so heavily on the testimony of the partners. For example, if partners disagree over the terms of the oral partnership, the court may not be able to determine which partner’s testimony is accurate.

Certificate of Formation

TBOC also changed the name of the formative documents for all Texas business entities to Certificate of Formation. If you are forming a new limited partnership, TBOC requires you to file the Certificate of Formation designed for partnerships —Form 207— rather than the Certificate of Limited Partnership that was required by TRLPA. On the Certificate of Formation, you will be asked to provide information such as the name of your partnership, your partnership’s registered agent, and the names and addresses of your partners. Since this process can be complicated, you may benefit from hiring an attorney or online legal document preparer to provide advice for your specific situation.