Florida Broker Practice Exam

What is true about limited partners in a limited partnership?

1. They have full management control

2. They must make an investment of services

3. They are liable for business debts

4. They are not liable unless they take part in control

The correct answer is: They are not liable unless they take part in control

In a limited partnership, limited partners play a specific role that differentiates them from general partners. One key aspect of limited partnerships is that limited partners have limited liability, meaning they are not personally liable for the debts and obligations of the business beyond their investment in the partnership. However, this limited liability is contingent upon them not participating in the management or control of the partnership. If a limited partner does take an active role in managing the business, they can lose their limited liability status and can be held personally responsible for the debts of the partnership, just like a general partner. This means that as long as limited partners remain passive investors and do not involve themselves in management decisions, they are shielded from personal liability. This structure provides a level of security for investors who wish to participate in a business venture without risking their personal assets beyond their initial investment.