Real Estate Partnership: LLC vs LP in 31,206 SEC Filings (2026)

What "partnership" means on the paperwork

When two or more people put money into a property together, they almost never sign up as a bare general partnership, because every general partner is on the hook for the partnership's debts. They form an entity that limits that exposure for the people who are not running the deal. The choice is mostly between two boxes:

• A limited partnership (LP) has at least one general partner, usually the sponsor's company, which runs the deal and carries the liability, and limited partners, the investors, who put in money and stay out of management.
• An LLC has members. Most real estate LLCs that raise outside money are run by a manager, the sponsor, with investor members who do not vote on day-to-day decisions. The result looks like an LP without a general partner who is personally exposed.

Both are taxed the same way by default, as a partnership, and both sell interests that are securities when the investors are passive. So when a sponsor raises money from outside investors under Regulation D, it files a Form D, and Item 1 of that form makes it pick an entity type: “Corporation”, “Limited Partnership”, “Limited Liability Company”, “General Partnership”, “Business Trust” or “Other (Specify)”, plus a box for “Yet to Be Formed”. The SEC publishes every Form D as quarterly data sets. We used the files from the first quarter of 2020 to the quarter ended September 30, 2026.

How we drew the line: original Form D filings (amendments excluded, 9,699 of them), primary issuer only, in the five industry groups the form lists under Real Estate: Commercial, Construction, REITS & Finance, Residential and Other Real Estate. (The territory we were given named four of them; the form itself lists Construction under Real Estate too, so we kept it: 543 filings.) We set aside 3,335 filings of $100,000 to $140,000 with a $500 to $1,000 minimum: they are almost all the 125-holder preferred placements that a REIT sells so that, in the words of 26 U.S.C. 856(a)(5), its beneficial ownership is “held by 100 or more persons”. We cover those in our private REIT census. Real estate funds that file as "Pooled Investment Fund" are not in the count, because the form gives them no real estate category. Entity type is what the filer typed; a few names ending in "LP" are filed as LLCs.

The census: who uses which entity, 2020 to September 2026

Source: SEC Form D data sets, 2020q1 to 2026q3; original filings January 1, 2020 to September 30, 2026, excluding 3,335 REIT preferred placements. "Median sold" and "median investors" use the latest filing for the same SEC file number and count only offerings reporting more than zero; "median minimum" counts only minimums above zero. All medians and shares are our arithmetic.

Four out of five real estate offerings are LLCs, and that has not moved: the LLC share was 78.5% in 2020, 80.4% in 2024 and 79.9% in the first nine months of 2026. The limited partnership is the second choice at about one in eight, and the rest are specialised: statutory trusts are almost all Delaware statutory trusts sold for 1031 exchanges (covered in our DST guide and our Passco DST filing analysis), corporations include REITs organized as Maryland corporations (23.2% of the corporations are Maryland entities), and the LLLP, a limited partnership whose general partner also has limited liability, is mostly a Colorado product: 62 of the 86 are Colorado entities.

LPs are the bigger deals, and bigger deals go to Delaware

Source: SEC Form D data sets; size is the total offering amount on the original filing (2,247 LLC and LP offerings stating "Indefinite" are not banded). Bands and shares are our arithmetic.

The LP is the institutional structure. It is 13.1% of filings but 28.5% of the offering dollars stated and 34.5% of the dollars reported sold, $104.0 billion of $301.7 billion (our arithmetic). The pattern holds within each structure: a Delaware LLC's median offering is $6,700,000, against $3,625,000 for an LLC organized in its home state; a Delaware LP's is $16,079,000, against $7,351,000 for a Texas LP. The single-property deal raising a few million from the sponsor's own investor list is usually a home-state LLC; the fund-like vehicle raising from family offices and wealth platforms is more often a Delaware LP.

By year, 2020 to September 2026

Source: SEC Form D data sets, 2020q1 to 2026q3; counts and medians are our arithmetic. Offerings first filed in 2026 have had less time to report sales.

New offerings peaked in 2022 at 5,759 and fell 26.0% to 4,260 in 2023 (our arithmetic) as interest rates rose; the mix of structures barely moved through the cycle. What changed is how deals are sold: the advertised, accredited-only Rule 506(c) route went from 16.9% of offerings in 2020 to 30.0% in 2025, and among statutory trusts from 46.2% to 68.8% in 2026 so far. The LP median offering has stayed close to $10 million every year. For a count of syndication sponsors, deal sizes and Item 16 fees, see our real estate syndication census; this page is about the legal wrapper.

Delaware, Texas or the home state

Source: SEC Form D data sets; "principal office" is Item 2 of the Form D, "organized in" is the jurisdiction of incorporation or organization in Item 1. Shares are our arithmetic; the remainder is organized in a third state, such as Wyoming.

Delaware is the default for big deals and for sponsors in New York, Illinois and Massachusetts, but it is not the default for the typical real estate partnership: 55.4% of the 24,672 LLCs are organized in the state where they have their principal office, against 35.6% in Delaware. Texas is the outlier in the other direction. 891 limited partnerships are Texas entities, 21.8% of all real estate LPs, and 97.8% of them are run from Texas.

There is a practical reason, in our reading. An entity formed elsewhere has to register in the state where it does business: the Texas Business Organizations Code, section 9.001(a), says “To transact business in this state, a foreign entity must register under this chapter” if it is a foreign limited partnership, a foreign LLC or another entity that limits its owners' liability. A Texas sponsor buying a Texas property with a Delaware LP files twice and keeps two registrations; with a Texas LP it files once, and the Texas statute gives limited partners the same basic protection (section 153.102(a), quoted below). Delaware's draw is its body of case law and the freedom-of-contract language below, which matters more to institutional investors writing large checks, and that is where the large deals sit. Section 9.051(b) adds a cost to skipping the registration: an unregistered foreign filing entity cannot bring a lawsuit in a Texas court on business it did in Texas until it registers.

What the statutes say each structure does

Both Delaware statutes, the Delaware Revised Uniform Limited Partnership Act (Delaware Code title 6, chapter 17) and the Delaware Limited Liability Company Act (chapter 18), set defaults and then let the agreement override almost all of them. Section 17-1101(c) says “It is the policy of this chapter to give maximum effect to the principle of freedom of contract and to the enforceability of partnership agreements.” Section 18-1101(b) says the same of LLC agreements.

Source: Delaware Code title 6, sections 17-303, 17-403, 17-603, 17-1101, 18-303, 18-402, 18-503, 18-603 and 18-1101 (delcode.delaware.gov); Texas Business Organizations Code sections 101.114 and 153.102 (statutes.capitol.texas.gov), read October 12, 2026.

Three of these rows decide most outcomes for an investor. Liability: section 17-303(a) says “A limited partner is not liable for the obligations of a limited partnership unless he or she is also a general partner or, in addition to the exercise of the rights and powers of a limited partner, he or she participates in the control of the business.” For an LLC, section 18-303(a) says no member or manager “shall be obligated personally for any such debt, obligation or liability of the limited liability company solely by reason of being a member or acting as a manager of the limited liability company.” Exit: under section 17-603, “unless a partnership agreement provides otherwise, a limited partner may not withdraw from a limited partnership prior to the dissolution and winding up of the limited partnership”; section 18-603 says the same of LLC members. Duties: under section 17-1101(d), a partner's duties “may be expanded or restricted or eliminated by provisions in the partnership agreement”, as long as the agreement does not eliminate “the implied contractual covenant of good faith and fair dealing”. In plain terms (our reading): the operating agreement or partnership agreement, not the entity label, decides what you can do if the sponsor underperforms, and a Delaware agreement can leave you with very little.

How the IRS sees it: one information return, a K-1 for each investor

An LLC and an LP get the same federal tax treatment by default. Under the Treasury's entity-classification rule, 26 CFR 301.7701-3(b)(1), a domestic eligible entity that does not elect otherwise is “A partnership if it has two or more members”. Subchapter K of the Internal Revenue Code then applies; section 701 says “A partnership as such shall not be subject to the income tax imposed by this chapter.” The IRS instructions for Form 1065 put it as: “Generally, a partnership doesn’t pay tax on its income but passes through any profits or losses to its partners.” A calendar-year partnership files by the 15th day of the third month, which for the 2025 year was March 16, 2026; each investor gets a Schedule K-1. Our K-1 versus 1099-DIV guide covers what that does to an investor's own return.

Two limits are worth knowing. The waterfall in a partnership agreement only holds for tax if its allocations have “substantial economic effect”; otherwise section 704(b) reallocates income by the partners' interests. And a partnership whose interests trade publicly is, under section 7704(a), treated as a corporation unless 90 percent or more of its gross income is “qualifying income”, a list that includes “real property rents” (section 7704(c) and (d)). REITs go the other way: they are taxed under their own regime and, under section 856(a)(5), need beneficial ownership “held by 100 or more persons”, which is what the 3,335 placements we set aside are for.

Why every one of these files a Form D: partnership interests are securities

The Securities Act's definition of "security" in 15 U.S.C. 77b(a)(1) includes any “investment contract”. The Supreme Court's test in SEC v. W. J. Howey Co., 328 U.S. 293 (1946), asks whether a person “invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party”. A limited partner or a non-managing LLC member who wires money to a sponsor and waits for distributions fits that description (our reading), so the sponsor needs a registration or an exemption, and the exemption almost everyone uses is Rule 506. Under Rule 506(c), “All purchasers of securities sold in any offering under paragraph (c) of this section are accredited investors”, and the issuer has to take reasonable steps to verify it; Rule 506(b) forbids advertising and caps non-accredited purchasers at 35 in any 90-calendar-day period (17 CFR 230.506(b)(2)(i)). A general partnership in which every partner actually manages is different (our reading), which is one reason only 15 general partnerships appear in nearly seven years of real estate filings.

The structures sort themselves by exemption too. 24.4% of LLC offerings and 17.6% of LP offerings use Rule 506(c); 47.8% of statutory trusts do. 21.6% of LLC offerings check the Form D box for non-accredited investors, against 7.3% of LP offerings, consistent with the LLC being the vehicle for smaller deals sold to the sponsor's own network and the LP the vehicle for accredited and institutional money. LLLPs check that box most often (47.7%). Sales commissions appear on 7.9% of LLC offerings and 10.5% of LP offerings, against 92.1% of statutory trusts, which are sold through broker-dealers.

What a reader can do with this

• Find the entity on the Form D before you sign. Search the exact legal name in EDGAR. Item 1 gives the entity type and the state of organization; if the subscription documents name a different entity or state, ask why.
• Read the agreement for the three rows that matter: whether you can be required to put in more money, when and how you can exit (in Delaware the default is that you cannot before dissolution), and what the agreement does to the sponsor's duties.
• Check who the general partner or manager is. In an LP, the general partner carries the liability; it is usually a newly formed LLC with few assets, so the protection runs to the sponsor's principals, not to you.
• Expect a K-1, and plan for it. A calendar-year partnership return is due March 15 (March 16 in 2026). Ask the sponsor when it sends K-1s, because your own return waits for them.
• Compare against the medians. A $50,000 minimum, a $4 to $5 million LLC raise and a $10 million LP raise are typical; a 506(c) deal you saw advertised is not open to you unless you are accredited and verified.

FAQ

Sources, read and saved on October 12, 2026: U.S. SEC Form D data sets, quarterly files 2020q1 to 2026q3 (FORMDSUBMISSION, ISSUERS and OFFERING tables), with our census script and its output; SEC Form D (the form itself, Items 1, 2 and 4); Delaware Code title 6, chapter 17 (sections 17-303, 17-403, 17-603, 17-1101) and chapter 18 (sections 18-303, 18-402, 18-503, 18-603, 18-1101), delcode.delaware.gov; Texas Business Organizations Code sections 9.001, 9.051, 101.114 and 153.102, statutes.capitol.texas.gov; 26 U.S.C. 701, 704, 856 and 7704 and 15 U.S.C. 77b (U.S. Code, 2024 edition, govinfo.gov); 26 CFR 301.7701-3 and 17 CFR 230.506 (eCFR, text as of October 1, 2026); IRS Instructions for Form 1065 (2025); SEC v. W. J. Howey Co., 328 U.S. 293 (1946), U.S. Reports via the Library of Congress. Counts, medians, shares, bands and year-over-year changes are our arithmetic; interpretations are marked "our reading". This is analysis of public documents, not investment, legal or tax advice.