Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 56 posts · 13 votes
The title agency is asking for my operating agreement for my multi-member llc to check if I have signing authority. I have been educating myself on the OA for a few weeks and was going to take my time to draft an OA and then meet with an attorney and or CPA to review/revise. But time has become an issue. Can anyone recommend a good CPA or attorney in the Tampa Bay Area? The LLC is set up with myself and my father as managing mbr's. I find the deals, hire the contractors, marketing etc..., he supplies the money out of a HELOC. He lives in NJ. Or can I provide a generic OA that states I have signing authority to satisfy the title co. then change the OA later to be more comprehensive?
Investor · Ojochal, Costa Rica · Member since 2013 · 287 posts · 164 votes
13y
I'm currently on my 4th revision of the OA that I use for my LLC's in Ohio. It's currently 28 pages long and was written by 1 lawyer for about $500, and has been subsequently reviewed and updated by some rather pricey attorneys working for various JV partners since then.
It is very important to have a comprehensive OA, to protect yourself, and your partners, not only against the risks of lawsuits (the usual asset protection), but also against unforeseen issues arising from partnership issues, divorce, death, insanity, and a host of other issues. Your OA also specifies how your LLC will be taxed, as well as how you or your partners can sell off your share, or buy out your partner. An improperly written and maintained OA (yes, there are annual meetings and other paperwork that needs to be done) can be set aside by a judge in a lawsuit and your LLC demoted to a Partnership. Oops, what happened to the asset protection now?
If anyone would like a copy of my current Ohio LLC OA, drop me a message with your email address and I'll send you a sanitized version of it. I have one caveat though; you must have your own lawyer review it before using it to ensure it is right for your situration and coveres everything your need it to.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
13y
One option is NOLO Press. They have a book on operating agreements and it has software to create them. They may even have an online option at this point.
You can always create one just for the closing and then create a new one that is attorney reviewed at your leisure. Good luck - Ned
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
If you have to go to a closing get anything at hand that satisfies the title company and close, all they really need is that part showing authorizations and minutes statement authorizing the purchase at that price. Then I suggest you get a good OA done. Your company is not operable, operating legally without the OA and it needs to be dated as accepted as of the date you filed the Articles. An OA can be amended the day after or at any time, but it should be done right the first time as it clogs the history of your operations and can become an issue......:)
Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
13y
I did exactly what @Bill Gulley suggested when I needed to provide an OA for a purchase when I first formed my LLC but didn't have a good OA setup.
Not a great move to get that going without something, but it happens especially if the company is with close family (In my case just my wife).
I actually used a generic one that I had gotten with a Guru course. They were happy and I had something that was reasonably adequate before customizing a more appropriate one.
Investor · Brooklyn, NY · Member since 2013 · 254 posts · 28 votes
13y
Can someone post a sample OA for a multi member LLC that is used for buy and hold long term strategy ? I am just planning hold the properties long term and rent it out.
Can someone post a sample OA for a multi member LLC that is used for buy and hold long term strategy ? I am just planning hold the properties long term and rent it out.
Thanks
The best thing to do is talk with a local attorney about drafting one for you.
What I did and what people are advising @Marc Pfleger to do is a Band-Aid to get though a transaction where they are requiring one but one is not yet in place.
My guess is that everyone is in agreement that having a good customized OA is the best idea overall. While you don't necessarily need an attorney to do it for you, unless you have experience with them it is probably a good idea to have one do it.
It should only cost a few hundred dollars (If they want more than ~$500 find a different lawyer as it IS mostly boiler plate for them) but it will have all the standard language, will be customized properly and they should be willing to defend the document if you are ever taken to court.
A crappy OA will be a very bad start if someone was ever to try to pierce your corporate veil.
the reasons vary why people don't post their docs but one really good one is that posting the legal work of an attorney is not a good idea, that could really cost them.
Next, states are different but there are basic similarities. As much as I dislike internet forms, for your purpose that is state approved that will probably do just fine. What you will be doing, buying and holding, isn't much activity. If family are involved consider your estate matters and provide for other members to buy out other members and take members out, probably the two main issues as to operations.
Someone who will be flipping, taking on partners, getting money guys in the company, it gets very involved. You need to consider the path and paths you may take and plan for contingencies for operations.
Study all you can under a time frame, draft ideas and write it out, then go see an attorney to put it in good form, that should cost you less than having them start from scratch (which they don't but...). Last week I had a neighbor pay a hundred bucks for an initial meeting and they called me to speak to him, we talked about an hour and a half and they got more than they needed, set on the right path. That is rather unusual time wise but an attorney is also looking for future business and they will help usually to get a business started up. Just saying, I think most investors are scared to approach an attorney and the bill they will get.
After all, you are building a business, hopefully worth hundreds of thousands+ and risking your future in many ways, going in on the cheap isn't a good idea. :)
Investor · Ojochal, Costa Rica · Member since 2013 · 287 posts · 164 votes
13y
I'm currently on my 4th revision of the OA that I use for my LLC's in Ohio. It's currently 28 pages long and was written by 1 lawyer for about $500, and has been subsequently reviewed and updated by some rather pricey attorneys working for various JV partners since then.
It is very important to have a comprehensive OA, to protect yourself, and your partners, not only against the risks of lawsuits (the usual asset protection), but also against unforeseen issues arising from partnership issues, divorce, death, insanity, and a host of other issues. Your OA also specifies how your LLC will be taxed, as well as how you or your partners can sell off your share, or buy out your partner. An improperly written and maintained OA (yes, there are annual meetings and other paperwork that needs to be done) can be set aside by a judge in a lawsuit and your LLC demoted to a Partnership. Oops, what happened to the asset protection now?
If anyone would like a copy of my current Ohio LLC OA, drop me a message with your email address and I'll send you a sanitized version of it. I have one caveat though; you must have your own lawyer review it before using it to ensure it is right for your situration and coveres everything your need it to.
Real Estate Broker · Ellenton, FL · Member since 2010 · 101 posts · 23 votes
12y
I have used lawdepot.com. They provide you a set of questions (based on your state of business) and create the OA for you. They also have an attorney review the docs for you for "more". I don't know what the price is, but i'm sure it's less than seeing a real attorney--although with a real attorney you would get one drawn up suited to your "needs" and specific protections you want. What the online version does is save you time/money, not necessarily provide you as much protection as getting a custom one done for you.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 56 posts · 13 votes
12y
I received an email response from a local attorney and he said The statute says you can have a verbal agreement, so why not tell them your operating agreement is verbal as allowed by the statute and see what they say. Anybody ever here of this in Florida?
Investor · Ojochal, Costa Rica · Member since 2013 · 287 posts · 164 votes
12y
The OA is a private document between the parties involved. It should not be filed or posted anywhere, Yes, the members of the OA can amend the OA at any time, but the OA must remain in your company's records, as well as any updates or replacements. You'll need this if you ever go to court. Technically, the bank probably doesn't have the right to retain a copy, however they probably should see it to confirm who the LLC's members are. You don't need to have it notarized, or anything like that (at least not in Ohio). I suppose you could present anything you wanted to the bank and say it's the OA and how would they know if it was or wasn't?
I received an email response from a local attorney and he said The statute says you can have a verbal agreement, so why not tell them your operating agreement is verbal as allowed by the statute and see what they say. Anybody ever here of this in Florida? @Bill Gulley I will let you know what I find
Remind him you deal in Real Estate, mention the Statute of Frauds, mention that there are audit requirements by law for RE settlements, might mention to no lender will fund a loan that a title company won't insure the settlement to. Just mention how tuff it is to be in the RE business without financing.
Is the ink still wet on his Bar exam? Seek other advice, IMO. :)
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 56 posts · 13 votes
12y
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0608/Sections/0608.423.html here is the link to the statute. I do not think the lawyer was suggesting that I just tell the title co. its verbal for now. He did recommend having an OA drafted in the very near future. I did some research on the atty and he has been around in FL for 25 + yrs, in good standing and no complaints, and he came recommended from someone at my local REI meeting. I will reach out to other atty's though.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 56 posts · 13 votes
12y
"I do not think the lawyer was suggesting that I just tell the title co. its verbal for now" Was supposed to say I do think
I told the title co. it was verbal for now and all we had to do was sign an affidavit stating that I was authorized to sign any documents. So it worked for now. I am going to get a solid OA drafted and then take one to an attorney ASAP.
Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes
9y
Marc Pfleger your first sentence in the original post says it all: "The title agency is asking for my operating agreement for my multi-member llc to check if I have signing authority."
In my experience, and remember that LLCs are handled differently in each state, all the title agent is truly looking for is "who is the proper person to put on the signing block, and is that person authorized by the company to sign?"
Title is not interested in how your company is run, managed, or organized other than ensuring that they are managing a valid contract signed by person authorized by the company who is party to the contract.
Lastly, as is always the case when discussing LLCs, the laws vary greatly from state to state. Much of what is mentioned in this thread is not applicable in Arizona, for example. So find out what is and isn't required in Florida and keep it as simple as possible to close this deal. Then maybe take this as a starting point for better organizing the company. Any multi-member LLC should have an operating agreement.