Florida LLC Charging Order Protection | Fla. Stat. § 605.0503
Description: Florida LLCs receive standard charging order protection. Creditors cannot seize membership interests directly; they receive only distributions.
What is the charging order protection in Florida?
Florida law grants LLCs standard charging order protection under Fla. Stat. § 605.0503. When a creditor obtains a judgment against an LLC member, the creditor cannot directly seize or control the member's ownership interest. Instead, the creditor receives a "charging order," which entitles them only to distributions the member would receive—nothing more. The creditor cannot vote, manage the LLC, or force the LLC to make distributions. This protection shields the LLC's operations and other members from individual creditor claims.
How Charging Order Protection Works
Under Fla. Stat. § 605.0503, a creditor of a member may obtain a charging order against the member's transferable interest. The charging order limits the creditor's remedy to whatever distributions the member is entitled to receive. The creditor cannot:
- Force the LLC to liquidate or sell assets
- Vote on LLC decisions
- Become a member or manager
- Access the LLC's books or records
- Compel distributions if the LLC chooses not to make them
This means the LLC can continue operating normally while the creditor waits for—or never receives—distributions. Many LLCs distribute nothing to members, making a charging order a hollow remedy for creditors.
Key Limitations
Standard protection only. Florida offers standard charging order protection, not enhanced "full shield" protection available in some states. A creditor still obtains a charging order; they simply cannot exercise membership rights through it.
Not a complete liability shield. Charging order protection applies only to member creditors. It does not protect against:
- Direct claims against the LLC itself
- Claims for LLC debts or obligations
- Piercing the corporate veil in fraud cases
- Professional liability (for PLLCs under Fla. Stat. ch. 621)
Operating agreement matters. While Florida does not require a written operating agreement (Fla. Stat. § 605.0105), having one is critical. The agreement can define distribution rights, redemption provisions, and transfer restrictions that affect how a charging order functions in practice.
Next Steps
Draft a comprehensive operating agreement that clearly defines member rights, distributions, and transfer restrictions. This strengthens the practical effect of charging order protection. For professional LLCs, consult Fla. Stat. ch. 621 for additional requirements and liability rules specific to your profession. Consult a Florida business attorney to ensure your LLC formation maximizes asset protection within state law limits.
This is general information, not legal advice.