Virginia LLC governance: a statute that promises maximum freedom of contract, and a rule that takes some of it back

Virginia’s LLC act opens with a promise most owners would take at face value: the statute exists to give maximum effect to the principle of freedom of contract. Read that and you would assume a Virginia operating agreement can override almost any default the statute sets. It cannot, and the reason is a rule the Virginia Supreme Court laid down in Ott v. Monroe. A default is only waivable if its own section carries a specific phrase, “unless the articles of organization or an operating agreement provide.” Where the phrase appears, you can contract around the rule. Where it does not, the rule is mandatory, freedom-of-contract promise notwithstanding. And the section that sets a manager’s duties may be one of the sections without the phrase.

That single interpretive rule is the thing to understand about Virginia governance, and this page leads with it rather than re-teaching the general mechanics on the site’s default rules and freedom of contract guides. In Virginia, whether your agreement controls turns on eight words in the statute, and knowing to look for them is most of the game.

The rule that decides what you can change

Here is the canon, because everything else on the page depends on it.

In Virginia a statutory default is waivable only if its section says the articles or an operating agreement may provide otherwise, and mandatory if it does not.

The general policy in Va. Code § 13.1-1001.1 says the act favors freedom of contract and the enforcement of operating agreements. But in Ott v. Monroe, the Virginia Supreme Court read the act section by section: a provision that is prefaced by “unless otherwise provided in the articles or an operating agreement” can be overridden by the agreement, and a provision without that language is mandatory and cannot. The practical method is concrete. Before you draft a clause that overrides a Virginia default, read the statute’s own section and look for the phrase. If it is there, your clause works. If it is not, your clause may be void no matter how clearly the parties agreed, because the legislature did not open that rule to contract. This is unusual. Most states resolve waivability with a general list of non-waivable provisions; Virginia resolves it phrase by phrase, which means the answer is different from section to section.

Where the rule bites: fiduciary duties

The place the canon matters most is the one owners most want to change.

Virginia’s standards-of-conduct section does not carry the waiver phrase, so a court may hold that an operating agreement cannot eliminate a manager’s fiduciary duties.

Va. Code § 13.1-1024.1 sets a manager’s duty as the good-faith business judgment of the best interests of the company. It is not prefaced by the “unless the operating agreement provides” language that appears elsewhere in the act. Under the Ott canon, that omission points toward the duty being mandatory, meaning a Virginia operating agreement may not be able to eliminate it the way an Arizona or Washington agreement can, and the freedom-of-contract policy in the opening section does not clearly override the specific silence. That would make Virginia something unusual: a state that announces maximum freedom of contract and then, on the single most important governance question, may refuse to let you contract the duty away. It is contested, because the freedom-of-contract policy pulls the other direction, but the safe assumption for anyone drafting or signing a Virginia operating agreement is that fiduciary duties may survive a waiver clause.

The default that follows the money

On distributions, Virginia sits with the minority of states whose silent default rewards the funder.

When a Virginia agreement is silent, distributions are split by the value each member contributed, not equally by headcount.

Under Va. Code § 13.1-1029, if the operating agreement does not provide otherwise in writing, profits and losses are allocated on the basis of the value of each member’s contributions, and distributions follow the same basis. That is the opposite of the per-capita default in Pennsylvania, Michigan, Arizona, and Washington, where silence produces an equal split regardless of capital. So a Virginia LLC where one member funded the venture and another contributed effort will, by default, distribute in proportion to the capital. Like Colorado, Virginia is one of the few states whose distribution default is closer to what most funders intend. It still is not a reason to skip the agreement, because the distributions guide covers why the split should be set deliberately, but it does mean the specific ambush the per-capita states create does not happen automatically here.

The defaults that fill the rest

Two more defaults are worth setting rather than inheriting.

Amending a Virginia operating agreement requires unanimous consent by default, and the agreement can be oral but must start with every member’s agreement.

Under Va. Code § 13.1-1023, if the articles or the agreement do not set a method for amendment, every member must consent to any change, so a majority owner cannot rewrite the document over a minority’s objection unless the agreement says so. The same section allows an operating agreement to be oral, but it must initially be agreed to by all members, and an unwritten agreement is a poor foundation to prove later. Management defaults to the members unless the articles or agreement provide in writing for managers. The through-line for all of it is the Ott canon: before assuming any of these can be changed, read the section for the phrase, because in Virginia the presence or absence of eight words, not the general promise of freedom of contract, decides what your agreement can do.

The bottom line

Virginia’s act promises maximum freedom of contract, but Ott v. Monroe makes a default waivable only if its section carries the phrase allowing the articles or operating agreement to provide otherwise.

Before overriding any Virginia default, read that section for the phrase, because a clause that contradicts a mandatory provision can be void no matter how clearly the parties agreed.

The standards-of-conduct section lacks the phrase, so a court may hold that fiduciary duties cannot be eliminated, unusual for a freedom-of-contract state.

The distribution default splits by contribution under § 13.1-1029, one of the few states whose silent rule rewards the member who funded the company.

Amendment defaults to unanimous consent under § 13.1-1023, and an oral agreement is allowed but must begin with every member’s agreement.

What this page does not cover

This page is about the rules that run your company from the inside. How outside creditors reach a member’s interest, the confirmed no-foreclosure charging order, and the entireties shield are on the protection page. Virginia’s protected series LLC, the transfer taxes, and the exemption for moving property into your own LLC are on the structure and cost page. The formation fee, the annual registration fee that is not a report, and the filing details are on the filing page.

Last verified August 2026.