Charging Orders Against LLC Interests in California: How to Reach a Debtor’s Ownership in an LLC

Your judgment debtor owns an LLC. Maybe they’re the sole member. Maybe distributions flow through it every quarter. But when you try to execute against that interest the way you would a bank account or wages, you hit a wall.

Under California Code of Civil Procedure § 699.720, an LLC membership interest is not subject to execution if the LLC itself is not a judgment debtor. You cannot levy it. You cannot garnish it. The sheriff cannot seize it.

The tool you need is a charging order.

What Is a Charging Order?

A charging order is a court order that creates a lien on a judgment debtor’s transferable interest in an LLC and directs the LLC to pay distributions to the judgment creditor instead of the debtor.

California Corporations Code § 17705.03 governs charging orders against LLC interests. Under this statute, “on application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment.” The charging order “constitutes a lien on a judgment debtor’s transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that would otherwise be paid to the judgment debtor.”

A “transferable interest” is defined under Corporations Code § 17701.02 as “the right, as originally associated with a person’s capacity as a member, to receive distributions from a limited liability company in accordance with the operating agreement, whether or not the person remains a member or continues to own any part of the right.”

In practical terms, a charging order intercepts the money flowing from the LLC to the debtor. It does not give you control of the business. It does not make you a member. It redirects distributions.

The Charging Order Is the Exclusive Remedy

This is the critical point most attorneys miss.

You cannot use a writ of execution to seize an LLC membership interest. Code of Civil Procedure § 699.720 expressly provides that “the interest of a partner in a partnership or member in a limited liability company” is not subject to execution when the entity itself is not a judgment debtor.

The Court of Appeal confirmed this in Blizzard Energy, Inc. v. Schaefers (2021) 71 Cal.App.5th 832, holding that the charging order is the exclusive remedy for satisfying a judgment from a debtor’s transferable interest in an LLC. This protection exists to shield the other members and the entity from direct interference by a single member’s creditor.

If the LLC is not named in your judgment, a charging order is your only path in.

What a Charging Order Does — and What It Does Not Do

A charging order reaches only the debtor’s transferable interest — the right to receive distributions. It does not grant management rights, voting rights, or the ability to participate in LLC operations. The Court of Appeal addressed this directly in Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, holding that a charging order does not make the creditor a substitute member or give them any say in how the LLC is run.

This distinction matters. If the debtor controls the LLC and decides to stop making distributions, the charging order alone may not produce any money. The debtor can simply retain earnings inside the entity.

That is why the next step matters.

Appoint a Receiver to Add Real Leverage

Corporations Code § 17705.03 expressly authorizes the court to “appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made.”

This is where a charging order becomes a true enforcement tool rather than a passive lien.

A receiver can demand an accounting of the LLC’s finances. A receiver can investigate whether distributions are being suppressed to avoid the charging order. A receiver can examine the LLC’s books, contracts, and cash flow. In cases where the debtor is the sole member or controls the entity, the appointment of a receiver transforms the dynamic entirely.

If you obtain a charging order and the debtor responds by halting distributions, a motion to appoint a receiver should follow. The combination of a charging order and a receivership is what creates leverage — particularly when the debtor believed their LLC structure would keep assets out of reach.

How to Obtain a Charging Order in California

The procedural framework is straightforward.

Step 1: Confirm the Debtor’s LLC Interest

Before filing, confirm that the judgment debtor holds a membership interest in an LLC. This information may come from a judgment debtor examination under CCP § 708.110, where the debtor can be compelled to disclose business interests under oath. It may also come from Secretary of State filings, discovery responses, or asset investigation.

Step 2: File the Application

The judgment creditor files an application with the court for a charging order under Corporations Code § 17705.03. You must demonstrate two things: (1) you hold a valid, unsatisfied money judgment against the LLC member, and (2) the judgment remains unsatisfied. See Hellman v. Anderson (1991) 233 Cal.App.3d 840.

Code of Civil Procedure § 708.310 provides the procedural basis: “if a money judgment is rendered against a partner or member but not against the partnership or limited liability company, the judgment debtor’s interest in the partnership or limited liability company may be applied toward the satisfaction of the judgment by an order charging the judgment debtor’s interest.”

Step 3: Serve the Notice of Motion

Under CCP § 708.320, you must serve the notice of motion on both the judgment debtor and the LLC (or all members). This step is critical because service of the notice of motion is what creates the lien. If you fail to serve both the debtor and the entity, you may not have a valid lien on the transferable interest.

Step 4: Obtain the Order and Enforce It

Once the court issues the charging order, the LLC is legally obligated to redirect distributions to the judgment creditor. If the debtor controls the LLC and begins suppressing distributions, move immediately for appointment of a receiver.

When a Charging Order Works Best

Charging orders are most effective when the LLC generates regular distributions — rental income from investment properties, profits from operating businesses, or returns from passive investments. If money is flowing through the entity, a charging order captures it.

They are also effective as leverage even when distributions are irregular. A debtor who knows their LLC income is now subject to a court order — and that a receiver could be appointed to scrutinize the entity’s finances — often becomes more willing to negotiate.

When a Charging Order Is Not Enough

A charging order is a passive remedy unless paired with a receivership or other enforcement tools. If the debtor’s LLC holds assets but makes no distributions, the charging order alone will not produce money.

In those situations, consider whether additional remedies are available:

• If the debtor receives income outside the LLC — such as 1099 payments, commissions, or rents — an assignment order under CCP § 708.510 may intercept those payments directly.
• If the debtor has identifiable bank accounts, a bank levy can seize funds on deposit.
• If the debtor owns real property, recording an abstract of judgment creates a lien that attaches to that property and prevents sale or refinance without satisfying the judgment.
• If the debtor operates a cash business, a keeper levy or till tap may disrupt operations and force resolution.
• If the debtor’s assets are located in California but the judgment was entered elsewhere, domesticating the judgment is the necessary first step before any of these remedies become available.

Charging orders work best as part of a coordinated enforcement strategy — not in isolation. The goal is to cut off every avenue the debtor uses to receive or access money until the judgment is resolved.

A Note on Priority

Courts have clarified that a charging order does not by itself establish priority among competing creditors. In MDQ, LLC v. Gilbert, Kelly, Crowley & Jennett LLP (2019) 32 Cal.App.5th 702, the Court of Appeal explained that a charging order “is simply the mechanism by which a judgment creditor may enforce its judgment against an LLC member.” Priority disputes among multiple creditors holding charging orders or other liens require separate analysis.

If you suspect other creditors are pursuing the same debtor, move quickly. Delay benefits competing claimants.

Final Thoughts

Debtors who park assets inside an LLC believe they are protected. They usually are not — but only if you use the right tool and follow through.

A charging order on its own is passive. Paired with a receiver, it becomes one of the most disruptive remedies available. If you have a judgment and the debtor’s money moves through an LLC, contact our office. We handle these motions regularly and can evaluate whether a charging order — or a different approach — makes sense for your case.