A limited liability company is a form of business organization that combines aspects of the corporation and the partnership. An LLC may be managed by its owner(s) or by one or more managers who may or may not be owners. For a more complete description of limited liability companies, and answers to the most commonly asked questions about LLCs, please see the article entitled An Introduction to the Limited Liability Company (LLC).
This LLC Operating Agreement template is designed for a limited liability company that will own, operate, and manage a single rental property. It is not suitable for a limited liability company that will be involved in real estate development, in multiple real estate projects, or in any sort of real estate investment fund. The template is for an LLC with at least three members (with each husband and wife pair counted as one member), that will be controlled by its members; however, it does provide for a “president” who will be responsible to facilitate the routine day-to-day operation of the company and its property.
This Operating Agreement is not suitable for any arrangement where any member will use or occupy the LLC-owned property, either on a full-time, occasional, shared, or rotating basis.
This Operating Agreement form can be used for limited liability companies created in any U.S. state. It is 17 pages in length, and written in plane English with the minimum amount of legal jargon. Its main topics are:
Owner usage rights waiver
Tenant selection and establishing rental amounts
Expense authorizations and allocations
Special assessments/cash calls
Distribution of operating surplus
Distribution of sale proceeds
Meetings and agenda
Voting power and abstention
Maintenance, repair, replacement and improvement
Removal or resignation of manager
Transferee and successor obligations
Mandatory sale or buyout
Default and enforcement procedure