I am 1.3rd partner in an LLC. The LLC was set up to protect the siblings from any personal liablity from the rentors.

If the house is being used as security for the loan, and it sounds like it is, then the house is collateral for the loan and can be foreclosed on if the payments are not made. Use this information to decide whether you want to let him go forward with the loan. The lender will probably want all of you to sign on the loan.

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The house is at risk if there is a default by the LLC on the loan. Usually the lender will require all 3 of you to guarantee the loan. Is this business venture just his or will all 3 of you share in the risk or the reward? If all 3 share, you can decide if you want to risk the house. If it is just his venture, you should not do it.

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I agree with the first two answers, though I would like to add the following:

1. It is not clear whether the proposed business venture (flipping real estate) is something that your sibling wants to do on behalf of the LLC or on behalf of him/herself as an individual; if the latter, then it makes no sense whatsoever for the other two siblings to go along with the plan to put LLC assets at risk.

2. It is important to know what the Operating Agreement says about approval of this type of transaction. An Operating Agreement might say that at least a majority of the voting interests of the members must approve, and it might say that unanimous member approval is required, or it might say that the manager(s) can make the decision. You should examine the Operating Agreement (or ask an attorney to do so for you) so you will be absolutely clear and correct on this issue.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.