I have already set up an LLC for an investment business. But I haven't set up a corp agreement for the LLC. It is owned by me and my wife. I am planning to close on a property soon and take title on the LLC's name. Do I need to file a corporate agreement before the closing or can it be done later?
Lawsuit / Dispute Attorney
The lifeblood of an LLC is the Operating Agreement. (I don't know in business what an LLC corporate agreement might be.)
You will find in a well draft Operating Agreement that an investment business may not relate well with or have similar purpose to owning real estate.
I think you need to start from step one. Get a good business lawyer and immediately have him (me) or her draft an Operating Agreement for the LLC so it is real.
Then, tactically decide with advice of counsel whether the current LLC plans and operations are consonant with the purchase of real estate.
4 lawyers agree
I agree with my colleague. Although the operating agreement is not mandatory, it is strongly suggested to have one and well drafted.
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Intellectual Property Law Attorney
You can wait for later, but that would not be wise. What you call a "corporate agreement" is actually called an "operating agreement", and it tells how the LLC is to be operated. You don't need to file one to take title to property, you need it to define how your LLC is to be run. Where the LLC is owned by a husband and wife, this is even more important as you want to settle now what would happen with the LLC should you divorce or one of you die. Don't bury your head in the sand and say that won't happen. If you don't spell out these details, that leaves these details open for dispute and that can lead to court where a judge will set the terms.
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3 lawyers agree
I agree with Mr. Brinkmeier: it is important you hire a local attorney to draft a sound operating agreement for your existing LLC.
Real estate, regardless of whether it is the office for the business controlled by the existing LLC, or a rental property cause liabilities (visitors, trespassers, tenants.....) . You want to isolate these liabilies from your business and from your personal assets.
I would recommend to set up a separate LLC that holds the property and put the sole ownership in an entity that is specifically designed for asset protection purposes, such as an Asset Management LimitedPpartnership that is filed in a state with strong charging order rules and a legislative history as AZ.
The Asset Management Limited partnership that controls the LLC(‘s) can hold directly your liquid assets (bank and brokerage accounts). This way, you are protecting your property and isolating the liabilities it may cause, and at the same time, protecting your liquid assets.
Douglass Lodmell is the nations #1 Asset Protection attorney and has clients in all 50 states, protecting over $4 Billion in client assets. Answers given by him in this forum do not establish an attorney-client relation. He advises to seek a specialized attorney in the area of your interest for legal representation.
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3 lawyers agree
Real Estate Attorney
1. The Illinois Limited Liability Company Act stands in place of an operating agreement if there is none.
2. As you and your wife are the only members, you may be able to function without an operating agreement but if you ever intend to take in outsiders, an operating agreement would definitely be in order.
3. Your lender may tell you if you need an operating agreement or not if the LLC is the borrower and they insist on your having one. One of the problems of NOT having an operating agreement is that management can become cumbersome. For example, all members of a member managed LLC must sign off on certain kinds of transactions, as would all managers of a manager managed LLC.
4. You can have an operating agreement made up at any time and until then the LLC Act (See #1 above) will stand in its place. Whenever you do, an attorney should help you.