South Carolina LLC governance: an old uniform act that sorts your company into at-will or term, and can force a buyout you never agreed to

South Carolina governs LLCs with the Uniform Limited Liability Company Act of 1996, a statute most states have since replaced, and its age is not a curiosity. The 1996 act carries a default that the newer acts abandoned: it sorts every LLC into one of two kinds, an at-will company or a term company, and the classification decides what happens when a member leaves. In an at-will company, a departing member can force the company to buy out his interest at fair value. Most South Carolina operating agreements never say which kind they are, which means many LLCs are sitting on a buyout right their owners do not know exists. That is the feature to understand first, ahead of the general mechanics on the site’s default rules and freedom of contract guides.

At-will or term, and the buyout that follows

Start with the classification, because it drives the outcome that hurts.

South Carolina’s 1996 act classifies every LLC as at-will or term, and an at-will company can be forced to purchase a departing member’s interest at fair value.

Under the 1996 act, an LLC is a term company if its operating agreement fixes a definite term or a particular undertaking, and an at-will company otherwise. The distinction matters because of Section 33-44-701: when a member dissociates from an at-will company and the business is not wound up, the company must purchase that member’s distributional interest at fair value. In a term company, the departing member has to wait until the term expires to be paid. So an at-will South Carolina LLC that loses a member, by his withdrawal, death, or expulsion, can be forced to come up with cash to buy out his stake at a valued price, on a timeline he can trigger. For an operating business that holds an illiquid asset, a single property that cannot be partially sold, that is a genuine danger: the buyout obligation can force a refinance or a sale to fund a payout no one planned for.

The structuring consequence is direct, and most owners miss it.

A South Carolina real estate LLC should be drafted as a term company, or should modify the buyout, so a departing member cannot force a fair-value payout.

Because the buyout right attaches by default to an at-will company, and because most operating agreements are silent on the at-will-versus-term question, the safe course is to make the company a term company by stating a definite term or undertaking in the agreement, or to modify the buyout provision directly so dissociation converts the member’s interest into a transferable interest rather than a cash claim. That is exactly how the modern acts handle it, and it is what a South Carolina drafter has to do by hand because the 1996 act does not do it for him. The point that would make a practicing lawyer pause is that a South Carolina LLC formed from a generic template is very likely an at-will company carrying a lurking Section 33-44-701 buyout, and the owner will not learn that until a member leaves and demands to be cashed out.

The duties the agreement cannot waive

On fiduciary duties, the 1996 act sets a floor, unlike South Carolina’s contractarian neighbors.

In South Carolina, the operating agreement cannot eliminate the duties of loyalty and care or the obligation of good faith.

Under Section 33-44-409, members of a member-managed LLC, and managers of a manager-managed one, owe the duties of loyalty and care and an obligation of good faith and fair dealing. And Section 33-44-103 limits what the operating agreement can do with them: it may not eliminate the duty of loyalty, may not unreasonably reduce the duty of care, and may not eliminate the obligation of good faith, though it may identify specific types of activities that do not violate loyalty if the identification is not manifestly unreasonable. That puts South Carolina with the states that keep a fiduciary floor, like the District and Utah, and against the freedom-of-contract states such as neighboring Kentucky, where duties can be reshaped far more freely. So a South Carolina operating agreement can channel and clarify the loyalty duty, but it cannot contract it away, and a manager cannot draft himself out of accountability the way a Delaware or Kentucky agreement might.

The defaults that fill the rest

On the economics, the 1996 act splits things evenly unless you say otherwise.

When a South Carolina operating agreement is silent, distributions are shared equally among the members, regardless of who contributed more.

Under Section 33-44-405, distributions are shared equally among the members, a per-capita default, not the contribution-weighted default some states use. So a member who put in most of the capital receives the same share as a member who put in little, unless the operating agreement provides otherwise, which makes an explicit distribution and allocation provision essential for any LLC with unequal contributions. Management defaults to the members under Section 33-44-404 unless the agreement provides for managers. The through-line for South Carolina is that the 1996 act’s defaults are old and surprising: the equal-shares split, the at-will buyout, and the fiduciary floor are all things a careful operating agreement should address on purpose, because leaving them to the statute produces results a modern owner would not expect.

The bottom line

South Carolina uses the Uniform LLC Act of 1996, and its at-will-versus-term classification decides what happens when a member leaves.

An at-will company must buy out a dissociating member’s interest at fair value under Section 33-44-701, so a real estate LLC should be a term company or should modify the buyout.

The duties of loyalty and care and the obligation of good faith are a floor the operating agreement cannot eliminate under Section 33-44-103, unlike in a freedom-of-contract state.

Distributions default to equal shares under Section 33-44-405, so an LLC with unequal contributions must set the split in the agreement.

A South Carolina LLC formed from a generic template is likely an at-will company carrying a buyout right its owners do not know about, which is the first thing a real operating agreement should fix.

What this page does not cover

This page is about the rules that run your company from the inside. How creditors reach a member’s interest, the foreclosable charging order, and the missing entireties are on the protection page. South Carolina’s 2026 tax reform, the 44% capital gains exclusion, and the lack of a series LLC are on the structure and cost page. The $110 formation fee and the fact that a standard LLC files no annual report are on the filing page.

Last verified August 2026.