TRANSFERABLE INTERESTS AND RIGHTS OF TRANSFEREES AND CREDITORS

Iowa Code tit. XII, ch. 489, subch. V

in effect

Iowa Code § 489.501 Nature of transferable interest.

489.501. Nature of transferable interest. A transferable interest is personal property. 2008 Acts, ch 1162, §41, 155

Iowa Code § 489.502 Transfer of transferable interest.

489.502. Transfer of transferable interest. 1. Subject to section 489.503, subsection 6, for a transfer, in whole or in part, all of the following applies to a transferable interest: a. It is permissible. b. It does not by itself cause a person’s dissociation as a member or a dissolution and winding up of the limited liability company’s activities and affairs. c. Subject to section 489.504, it does not entitle the transferee to do any of the following: (1) Participate in the management or conduct of the limited liability company’s activities and affairs. (2) Except as otherwise provided in subsection 3, have access to records or other information concerning the limited liability company’s activities and affairs. 2. A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled. 3. In a dissolution and winding up of a limited liability company, a transferee is entitled to an account of the company’s transactions only from the date of dissolution. 4. A transferable interest may be evidenced by a certificate of the interest issued by a limited liability company in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate. 5. A limited liability company need not give effect to a transferee’s rights under this section until the company knows or has notice of the transfer. 6. A transfer of a transferable interest in violation of a restriction on transfer contained in the operating agreement is ineffective if the intended transferee has knowledge or notice of the restriction at the time of transfer. 7. Except as otherwise provided in section 489.602, subsection 5, paragraph “b”, if a member transfers a transferable interest, the transferor retains the rights of a member other than the transferable interest transferred and retains all duties and obligations of a member. 8. If a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest, the transferee is liable for the member’s obligations under sections 489.403 and 489.406 known to the transferee when the transferee becomes a member. 2008 Acts, ch 1162, §42, 155; 2023 Acts, ch 152, §46, 161

Iowa Code § 489.503 Charging order.

489.503. Charging order. 1. On application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. Except as otherwise provided in subsection 6, a charging order constitutes a lien on a judgment debtor’s transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor. 2. To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under subsection 1, the court may do all of the following: a. Appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made. b. Make all other orders necessary to give effect to the charging order. 3. Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, the court may foreclose the lien and order the sale of the transferable interest. Except as otherwise provided in subsection 6, the purchaser at the foreclosure sale obtains only the transferable interest, does not thereby become a member, and is subject to section 489.502. 4. At any time before foreclosure under subsection 3, the member or transferee whose transferable interest is subject to a charging order under subsection 1 may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order. 5. At any time before foreclosure under subsection 3, a limited liability company or one or more members whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order. 6. If a court orders foreclosure of a charging order lien against the sole member of a limited liability company all of the following apply: a. The court shall confirm the sale. b. The purchaser at the sale obtains the member’s entire interest, not only the member’s transferable interest. c. The purchaser thereby becomes a member. d. The person whose interest was subject to the foreclosed charging order is dissociated as a member. 7. This chapter does not deprive any member or transferee of the benefit of any exemption law applicable to the transferable interest of the member or transferee. 8. This section provides the exclusive remedy by which a person seeking in the capacity of judgment creditor to enforce a judgment against a member or transferee may satisfy the judgment from the judgment debtor’s transferable interest. 2008 Acts, ch 1162, §43, 155; 2023 Acts, ch 152, §47, 161

Iowa Code § 489.504 Power of personal representative of deceased member.

489.504. Power of personal representative of deceased member. If a member dies, the deceased member’s legal representative may exercise all of the following: 1. The rights of a transferee provided in section 489.502, subsection 3. 2. For the purposes of settling the estate, the rights the deceased member had under section 489.410. 2008 Acts, ch 1162, §44, 155; 2023 Acts, ch 152, §48, 161