Can I Force My LLC Co-Owner to Buy Me Out in California?

Owners who want out often ask whether they can make the other side buy them out. In California, the first place to look is usually not a statute but the company’s own governing documents. These questions come up frequently in LLC and business-owner disputes.

California Corporations Code section 17701.10 generally makes the operating agreement the primary document governing relations among members, the rights and duties of managers, the LLC’s activities and how they are conducted, and how the agreement may be amended—subject to limits the statute imposes.³

An operating agreement may include buy-sell provisions. When present, they may address:

If the operating agreement contains an enforceable exit mechanism, the dispute may primarily become a contract issue: whether the trigger occurred and how the agreed valuation process works. Careful drafting of operating agreements and business governance can prevent much of this uncertainty.

Not generally. California law separates membership and management rights, transferable economic interests, dissociation, transfers, and dissolution.

Under Corporations Code section 17706.03, after a member dissociates, that person’s right to vote and participate in management ends, and the former member generally holds the transferable interest only as a transferee.⁴

In other words, dissociation does not itself require the LLC or another member to redeem the interest for cash. A departing member may keep an economic interest without any right to be paid for it immediately.

Corporations Code section 17706.01 gives a member the power to dissociate by express will, whether rightfully or wrongfully. But an express-will withdrawal before the LLC’s termination is treated as wrongful under the statute, and a dissociation is also wrongful if it breaches an express provision of the operating agreement. A member who wrongfully dissociates may be liable for damages caused by the dissociation.⁵

Withdrawal should not be treated like resigning from an ordinary job. Wrongful dissociation does not automatically determine the amount of damages; liability is for damages caused by the dissociation. Before giving notice, review the operating agreement, your management and economic rights, pending obligations, company and member debts, existing claims, and the practical consequences of dissociation.

Corporations Code section 17707.03 allows a member or manager to seek judicial dissolution when statutory grounds exist—for example, when it is not reasonably practicable to carry on the business in conformity with the articles or operating agreement, dissolution is reasonably necessary to protect the complaining members’ rights or interests, the business has been abandoned, management is deadlocked or subject to internal dissension, or those in control have engaged in or knowingly countenanced persistent and pervasive fraud, mismanagement, or abuse of authority.

Filing for judicial dissolution does not automatically entitle the member seeking dissolution to compel a buyout. Instead, section 17707.03(c)(1) gives the other members the option to avoid dissolution by purchasing for cash, at fair market value, the membership interests of the members who initiated the proceeding.¹

If the purchasing members elect to buy and the parties cannot agree on fair market value, section 17707.03 provides a court-supervised appraisal process. The court appoints three disinterested appraisers, and their award—or the award of a majority of them—becomes final and conclusive when confirmed by the court. The default valuation date is the date the dissolution action was commenced, unless the court selects another date for good cause.

Cheng v. Coastal L.B. Associates, LLC (2021) 69 Cal.App.5th 112 involved a section 17707.03 buyout of 25% LLC interests. A majority of the appraisers applied a 27% minority-interest discount, the trial court confirmed that valuation, and the Court of Appeal affirmed. The court emphasized that section 17707.03 uses a fair market value standard, not the separate fair value standard that applies to certain corporate dissolution buyouts under Corporations Code section 2000.²

Cheng does not require a minority discount, and its 27% figure is not a benchmark. It demonstrates that market-based discounts can be relevant under the fair-market-value standard on an appropriate evidentiary record. A 25% interest does not necessarily equal exactly 25% of undiscounted enterprise value.

Under Corporations Code section 17707.01(b), an LLC is dissolved upon the vote of 50% or more of the members’ voting interests, unless the articles of organization or a written operating agreement require a greater percentage.⁶

In Friend of Camden, Inc. v. Brandt (2022) 81 Cal.App.5th 1054, a 1% member filed a judicial-dissolution case, and the opposing members sought to invoke the section 17707.03 buyout mechanism. The plaintiff and other members who collectively held 50% then voted to dissolve the LLC. The Court of Appeal held that the 50% dissolution vote had to be given effect and that, on those facts, the pending buyout proceeding became moot.⁷

That decision turned on the sequence of events and California’s statutory dissolution framework. Governing documents can also matter because section 17707.01(b) permits the articles of organization or a written operating agreement to require a greater percentage for dissolution. A 50% dissolution right can create substantial leverage, but it is not the same thing as a guaranteed buyout right.

Potentially, but it is not a routine exit mechanism. Reliant Life Shares, LLC v. Cooper (2023) 90 Cal.App.5th 14 involved extensive findings concerning misconduct, breach of contract, fraud, fiduciary-duty violations, and attempts to strip an LLC member of ownership rights. The Court of Appeal rejected the argument that section 17707.03 was the exclusive possible source of buyout relief, explaining that nothing in the statute categorically deprived courts of equitable power to award buyout damages in other circumstances where dissolution had not been sought.⁸

Reliant Life does not create a standalone buyout claim. It shows that remedies in serious ownership litigation may depend on the actual claims, misconduct, pleadings, and equitable circumstances. Where a co-owner’s conduct is itself the problem, a related Insight discusses My LLC Co-Owner Is Taking Company Money. What Can I Do in California?

Many owner exits can be resolved by agreement rather than court order. A negotiated agreement can address purchase price, payment schedule, security, personal guarantees, company debts, intellectual-property ownership, customer relationships, tax allocations, records, releases, and transition obligations.

Negotiation is often most effective when both sides understand what will happen if no agreement is reached. Litigation is not always necessary, and its expense matters when comparing options; see How Much Does a Business Litigation Lawyer Cost in California?

Under Corporations Code section 17705.02, a transfer of a transferable interest does not, by itself, cause dissociation or dissolution, and it does not give the transferee voting or management rights. The operating agreement may also contain enforceable transfer restrictions.⁹

That is why a member cannot safely assume that owning 50% means the member can sell a full 50% management position to anyone.

Before opening negotiations, collect:

Then ask the strategic question: what outcome do you actually want—cash and a clean exit, control, sale of the company, dissolution, or damages for separate misconduct? Those objectives can require different legal strategies.

The better question is: what right do you have to exit, what leverage exists if the other owner refuses, and what is your interest actually worth under the route you choose?

Depending on the facts, the answer may involve a contractual buy-sell process, voluntary negotiation, transfer of an economic interest, dissolution, a statutory buyout elected by the other members, or litigation involving separate claims.