Guide

The buy-sell your state already wrote for you

Summary

When a co-owner of a professional practice dies or loses a license, the state's entity statute may already answer what happens to the shares, on terms nobody in the practice chose. New York deems disqualification an irrevocable offer to sell and prices the shares at book value. California allows 90 days after disqualification and names no price. A state's LLC act may force no buyout at all. New York lets a signed agreement shorten the deadline or replace the price.

By Gale Editorial · Updated 2026-09-02. Every figure cited to a dated source. How we write.

Who ends up holding the shares?

The corporation, another licensed shareholder, or nobody in particular, depending on the state and on the form the practice took. Two professional-corporation statutes answer the question without waiting for an agreement: New York treats a shareholder's disqualification as an irrevocable offer to sell the shares back to the corporation 1Ref 1New York State Legislature (2024).Section 1509: Disqualification of shareholders, directors, officers and employees.New York's rule that a professional service corporation shareholder's loss of licensure is deemed an irrevocable offer to sell the shares back to the corporation, and that the disqualified person must sever employment and financial interest., and California gives those shares a fixed window to reach a short list of eligible holders, with the corporation's registration at stake if they do not 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section..

Which state, and which form, decide most of the rest. Article 15 of New York's Business Corporation Law and California's Moscone-Knox Professional Corporation Act both govern professional corporations, and they part company on the deadline, on the price, and on who may hold the shares afterward. A practice organized as a professional LLC lands somewhere else again: Washington's LLC chapter dissociates a member automatically on death, but reaches a license-loss exit only where the LLC agreement itself names that event 3Ref 3Washington State Legislature (2022).RCW 25.15.131: Member dissociation..The contrast point that a state LLC act may dissociate a member automatically on death while reaching a license-loss exit only where the LLC agreement itself names the event, so no buyout is forced by the statute..

But the default settles only the equity.

Charts, patients, payer enrollments and the practice's ability to keep seeing people the following Monday are a separate set of obligations, carried by the contingency plan rather than by the share ledger. The administrative work when a patient dies is a third list again, unrelated to either. Everything below is about the ownership stake alone.

The clocks the statute starts, and when they start

The clock starts on an event, not on a decision. New York gives the corporation six months to buy a deceased shareholder's shares, measured from the appointment of the executor, administrator or other legal representative of the estate rather than from the date of death 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.. Disqualification carries its own six months, running from the disqualification itself 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.. California runs shorter on one side: 90 days after disqualification, six months after death 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section..

The start date is the part that gets misread. In New York it puts probate, which the practice does not control, between the death and the opening of the corporation's window 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.. California's window carries its own penalty, and it lands on the practice: if the shares are not transferred in time, the agency regulating the profession may suspend or revoke the corporation's certificate of registration, and a corporation in that position is to cease rendering professional services in the state 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section..

Trigger	New York professional corporation	California professional corporation	Washington LLC, chapter 25.15
An owner dies	Purchase within six months of the estate representative's appointment 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.	Shares transferred within six months of the death 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section.	Member dissociates automatically on death 3Ref 3Washington State Legislature (2022).RCW 25.15.131: Member dissociation..The contrast point that a state LLC act may dissociate a member automatically on death while reaching a license-loss exit only where the LLC agreement itself names the event, so no buyout is forced by the statute.
An owner loses the license	Disqualification is itself an irrevocable offer to sell 1Ref 1New York State Legislature (2024).Section 1509: Disqualification of shareholders, directors, officers and employees.New York's rule that a professional service corporation shareholder's loss of licensure is deemed an irrevocable offer to sell the shares back to the corporation, and that the disqualified person must sever employment and financial interest.; six months to purchase, unless the disqualification lasts under six months 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.	Shares transferred within 90 days of the disqualification 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section.	Only where the LLC agreement names the event 3Ref 3Washington State Legislature (2022).RCW 25.15.131: Member dissociation..The contrast point that a state LLC act may dissociate a member automatically on death while reaching a license-loss exit only where the LLC agreement itself names the event, so no buyout is forced by the statute.
Default price	Book value at the end of the preceding month 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.	None stated in the transfer section 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section.	Nothing in the dissociation section 3Ref 3Washington State Legislature (2022).RCW 25.15.131: Member dissociation..The contrast point that a state LLC act may dissociate a member automatically on death while reaching a license-loss exit only where the LLC agreement itself names the event, so no buyout is forced by the statute.
Who may receive them	The corporation, by purchase or redemption, unless the shares pass to another professional within the same window 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.	The corporation, another shareholder, or a same-profession licensee 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section.	Nothing in the dissociation section 3Ref 3Washington State Legislature (2022).RCW 25.15.131: Member dissociation..The contrast point that a state LLC act may dissociate a member automatically on death while reaching a license-loss exit only where the LLC agreement itself names the event, so no buyout is forced by the statute.

Statutes get amended, so read the current text before relying on any row of that table. The section numbers are the durable part: New York's BCL 1509 and 1510, California's Corporations Code 13401 and 13407, Washington's RCW 25.15.048 and 25.15.131.

Does a temporary suspension trigger the same machinery?

It can, and the definition is where that happens. California's Professional Corporation Act defines a disqualified person as a licensed person who for any reason becomes legally disqualified, temporarily or permanently, to render the professional services 5Ref 5California State Legislature (2024).California Corporations Code Section 13401.California's statutory definition of a disqualified person, which covers a licensee who becomes legally disqualified temporarily as well as permanently.. A board order suspending a license pending an investigation therefore reaches the same default machinery as a revocation, and the 90-day transfer window can begin while the licensing matter is still open 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section..

New York pairs its deemed offer with a severance requirement: the disqualified shareholder is to sever employment and financial interest in the corporation 1Ref 1New York State Legislature (2024).Section 1509: Disqualification of shareholders, directors, officers and employees.New York's rule that a professional service corporation shareholder's loss of licensure is deemed an irrevocable offer to sell the shares back to the corporation, and that the disqualified person must sever employment and financial interest.. But its purchase section carves out the short case. Where the disqualification lasts less than six months and the shareholder is again eligible to practice within six months of its date, the corporation is not required to purchase the shares 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method..

A common drafting convention draws the line differently, treating a temporary suspension and a permanent revocation as separate triggers with separate consequences, on the reasoning that a suspension may resolve. Whether your own agreement draws that line, and where, is worth reading before anyone needs it.

Where the price comes from

New York names one and California does not. Absent an overriding provision, New York prices the shares at book value as of the end of the month immediately preceding the death or disqualification, computed under the corporation's own regular accounting method 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.. California's transfer section names the eligible transferees and the deadline, and, read directly, sets no default price or valuation formula at all 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section..

Book value is an accounting output. It reflects what the assets carry on the books after depreciation and liabilities, and a practice whose worth sits in its patient relationships, its referral sources and its payer contracts may carry very little of that anywhere on a balance sheet.

But no default price is its own kind of problem.

Where the statute sets a deadline and leaves the price open, the parties have to agree on a number inside the window, and in California the window closes on the practice's registration 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section.. That is a negotiation conducted at the worst moment available: after a death, or during a licensing action, with a clock already running.

If the practice is an LLC, the statute may force nothing

Washington shows the gap plainly. Its professional LLC provision requires a member who personally renders the professional services to be duly licensed or otherwise legally authorized to practice the profession in the state 6Ref 6Washington State Legislature (2015).RCW 25.15.048: Professional limited liability company—Licensing..Washington's licensing condition on a professional LLC member who personally renders the professional services, used to show that the licensing section itself carries no disqualification consequence.. That section carries the licensing condition and no consequence: it does not say what becomes of the member's interest when the license lapses. The dissociation default sits in a different section, and it reaches a license-loss exit only through the LLC agreement 3Ref 3Washington State Legislature (2022).RCW 25.15.131: Member dissociation..The contrast point that a state LLC act may dissociate a member automatically on death while reaching a license-loss exit only where the LLC agreement itself names the event, so no buyout is forced by the statute..

For a two-owner Washington PLLC the practical result is that the buyout the corporate statutes supply becomes a term the owners write for themselves or do without. A member who can no longer practice may still hold an economic interest in a practice that has to keep operating around them.

Put the question to whoever forms the entity. Ask whether the PLLC formation quote includes an operating agreement drafted for death, disqualification and withdrawal, or a filing package with the state's defaults left in place. Those are two different documents at two different prices.

What the default offers when the owners deadlock

One state's LLC act builds an exit with a price attached. California's dissolution statute names a company deadlocked or subject to internal dissension as its own ground for judicial dissolution, and a separate subsection lets the other members avoid dissolution by buying the petitioning member's interest at fair market value, set by the court and, where the parties disagree, by three disinterested appraisers 7Ref 7California State Legislature (2026).California Corporations Code § 17707.03 — Judicial dissolution.California's judicial-dissolution ground for a deadlocked LLC and its subsection allowing the other members to buy the petitioner's interest at a court-set fair market value, with three disinterested appraisers where the parties disagree..

That is California's statute, and other states differ. Another state's act may state a different ground, a different remedy, or no buyout mechanism at all, and the only reliable way to know is to read the act the entity was formed under: find the state code's limited liability company chapter, then its judicial dissolution section.

For a California LLC whose agreement sets no price, that court-supervised value is what the statute offers a deadlock, and it runs on the court's calendar rather than the practice's.

The terms to settle before any of this fires

New York's default expects a document to narrow it and says so inside the section: the certificate of incorporation, the bylaws or an agreement among the corporation and all shareholders may provide a shorter purchase period, an alternate method of determining the price, or both 4Ref 4New York State Legislature (2014).Section 1510: Death or disqualification of shareholders.New York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.. A longer period is not on the list. Washington's LLC default leaves the license-loss exit to the LLC agreement from the start 3Ref 3Washington State Legislature (2022).RCW 25.15.131: Member dissociation..The contrast point that a state LLC act may dissociate a member automatically on death while reaching a license-loss exit only where the LLC agreement itself names the event, so no buyout is forced by the statute.. The terms below are the ones a statutory default cannot fit to a particular practice, and they are the agenda to bring to counsel.

The trigger list, written out by name: death, permanent revocation, temporary suspension, disability, voluntary withdrawal, retirement, expulsion, each with its own consequence where they should differ.
The valuation method, named as a method rather than a number, with who performs it and who pays.
The buyer, in order. The entity first, then the remaining owners pro rata, then an outside licensee, because California's statute already limits who may hold the shares 2Ref 2California State Legislature (2008).California Corporations Code Section 13407.California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section. and New York's forces a disqualified holder to sell 1Ref 1New York State Legislature (2024).Section 1509: Disqualification of shareholders, directors, officers and employees.New York's rule that a professional service corporation shareholder's loss of licensure is deemed an irrevocable offer to sell the shares back to the corporation, and that the disqualified person must sever employment and financial interest..
The funding. A corporation with no reserved cash has to find the purchase price inside the statutory window, which is a different planning problem from the 12-month runway a practice budgets at launch, and it is commonly solved with insurance, an installment note, or both.
The deadline, where the statutory one is longer than the practice can carry.
The departing owner's compensation, employment and system access during the window, which New York's disqualification section already speaks to on its own terms 1Ref 1New York State Legislature (2024).Section 1509: Disqualification of shareholders, directors, officers and employees.New York's rule that a professional service corporation shareholder's loss of licensure is deemed an irrevocable offer to sell the shares back to the corporation, and that the disqualified person must sever employment and financial interest..

This is information about statutes, and legal advice needs a lawyer who has read your documents. Counsel stops being optional at recognizable points: a second owner, a professional entity form, a state default you have read and do not want, an owner whose license is already under review, or an agreement drafted for a state the practice has since left.

An agreement is cheapest at formation, when the rest of the stack in order is being bought anyway and nobody yet has a position to protect. Bring your state's section numbers to that meeting; that is where the drafting starts.

Common questions

Partly, and New York says how inside the section: the certificate of incorporation, the bylaws or an agreement among the corporation and all shareholders may provide a shorter purchase or redemption period, or an alternate method of determining the price. A longer period is not on offer. Other states differ, and an LLC act generally works through the operating agreement. Read the override language in your own state's section before assuming your document controls.

California defines a disqualified person as a licensee who for any reason becomes legally disqualified, temporarily or permanently, to render the professional services, so a suspension pending an investigation falls inside it. New York's purchase section excuses the buyback where the disqualification lasts under six months and the shareholder is eligible to practice again within six months of it. Agreements commonly separate a temporary suspension from a permanent revocation and give them different consequences.

In New York it runs from the appointment of the executor, administrator or other legal representative of the estate, not from the date of death. Probate timing therefore sits between the death and the start of the corporation's window. California's six months for a death runs from the death itself, which is one of several places the two states diverge on the same event.

Some of it, and less of it forces your hand. Washington's professional LLC provision requires a practicing member to be duly licensed, but carries no consequence for a lapse. Its dissociation default handles death automatically and reaches license loss only where the operating agreement names the event. In Washington's LLC form the buyout is a drafted term or nothing; check whether your state's LLC act does the same.

A number computed from the balance sheet. It reflects assets after depreciation and liabilities, and a practice whose value sits in patient relationships, referral sources and payer contracts may carry little of that on the books. Book value is cheap and fast because it comes off records already kept. Whether it resembles what the interest is worth is a separate question, and one for a valuation professional.

The situations that make one hard to skip are recognizable: a second owner, a professional entity form, a default you have read and do not want, an owner whose license is under review, or a document drafted for a state the practice has since left. Bring the section numbers and the trigger list into that meeting, because drafting starts from the state's own default text.

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References

1.New York State Legislature (2024). Section 1509: Disqualification of shareholders, directors, officers and employees. New York Consolidated Laws, Business Corporation Law (BSC), Article 15 — via nysenate.gov. linkNew York's rule that a professional service corporation shareholder's loss of licensure is deemed an irrevocable offer to sell the shares back to the corporation, and that the disqualified person must sever employment and financial interest.
2.California State Legislature (2008). California Corporations Code Section 13407. California Corporations Code, Division 3, Part 4 (Moscone-Knox Professional Corporation Act) — via leginfo.legislature.ca.gov. link ✓California's default transfer windows (90 days after disqualification, six months after death), the closed list of eligible transferees, and the confirmed absence of any default price or valuation formula in that section.
3.Washington State Legislature (2022). RCW 25.15.131: Member dissociation.. Revised Code of Washington, Title 25, Chapter 25.15 (Limited Liability Companies) — via app.leg.wa.gov. linkThe contrast point that a state LLC act may dissociate a member automatically on death while reaching a license-loss exit only where the LLC agreement itself names the event, so no buyout is forced by the statute.
4.New York State Legislature (2014). Section 1510: Death or disqualification of shareholders. New York Consolidated Laws, Business Corporation Law (BSC), Article 15 — via nysenate.gov. linkNew York's six-month purchase windows and their start dates, the default book-value price computed on the corporation's regular accounting method, and the statute's own permission for the certificate, bylaws or a shareholder agreement to shorten the period or substitute a pricing method.
5.California State Legislature (2024). California Corporations Code Section 13401. California Corporations Code, Division 3, Part 4 (Moscone-Knox Professional Corporation Act) — via leginfo.legislature.ca.gov. link ✓California's statutory definition of a disqualified person, which covers a licensee who becomes legally disqualified temporarily as well as permanently.
6.Washington State Legislature (2015). RCW 25.15.048: Professional limited liability company—Licensing.. Revised Code of Washington, Title 25, Chapter 25.15 (Limited Liability Companies) — via app.leg.wa.gov. linkWashington's licensing condition on a professional LLC member who personally renders the professional services, used to show that the licensing section itself carries no disqualification consequence.
7.California State Legislature (2026). California Corporations Code § 17707.03 — Judicial dissolution. California Legislative Information (leginfo.legislature.ca.gov). link ✓California's judicial-dissolution ground for a deadlocked LLC and its subsection allowing the other members to buy the petitioner's interest at a court-set fair market value, with three disinterested appraisers where the parties disagree.

https://www.gale.care/for-providers/se-default-buy-sell-statute · 7 sources. Competitor details are cited to dated public sources and maintained as they change; figures are estimates, not commitments. Synthetic demonstration.

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