The LLLP is a sub-set of the Limited Partnership, similar to a traditional Limited Partnership (LP) where the ownership is divided into two categories: Limited Partners (passive investors without management authority with limited liability) and General Partners (Managers). The difference between an LP and a LLLP is that in an LLLP, the General Partner has limited liability, not unlimited personal liability.
Often, real estate investors will hold title to investment property through an LP by making themselves the limited partners and forming an LLC to act as the general partner to avoid unlimited general partner liability. The LLLP is an alternative to this tiered structure in real estate because it limits the liability of the general partner without the need to form a separate LLC. Nonetheless, LLLPs are uncommon in the context of commercial real estate.
Creating an LLLP begins with the filing of a Certificate of Limited Partnership, which in turn, makes the election to be a limited liability limited partnership. After the development of the LLC Act, most prefer the simplicity of the LLC to the complexity and higher annual state fees of the LLLP.