Cherry Creek Development, LP, is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals. A Cherry Creek limited partner loses his or her limited liability if he or she
A) participates in the firm's management.
B) does not participate in the firm's management.
C) invests in a project that Cherry Creek has declined.
D) votes to sell or dissolve the firm.

Question

Cherry Creek Development, LP, is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals. A Cherry Creek limited partner loses his or her limited liability if he or she
A) ​participates in the firm's management.
B) ​does not participate in the firm's management.
C) ​invests in a project that Cherry Creek has declined.
D) ​votes to sell or dissolve the firm.

Quizplus · Accepted Answer

A limited partner in a limited partnership cannot participate in the management of the business without risking their limited liability status. If they do participate in management, they can be deemed a general partner and lose their limited liability protection. Therefore, if a Cherry Creek limited partner participates in the firm's management, they would lose their limited liability.

Cherry Creek Development, LP, Is a Limited Partnership That Invests