I am a new REI and am fortunate enough to have a partner. We are meeting this week with a lawyer to hammer out the operating agreement. This partner will be working with me across multiple deals.
What are some some things that a newbie may not know about creating an operating agreement with a partner? Things I should/shoudn't include in the operating agreement?
Thank you in
One of the big things to remember about any kind of partnership agreement is that the legal docs are largely there for when things go wrong. You enter into agreements when you're on good terms, agreeing on what happens if things go wrong and/or you wind up on bad terms.
Lookup my post in BP
Selfstorage. Llc operating agreement.
@Lexie Greenheck one big one is a by sell agreement. This is for when you want to part ways but may not agree on how to part ways. If it is spelled out in advance then you know the rules. If you both agree when you split then you can change the agreement and do whatever you agree to do.
I like the self help legal books from Nolo Press. They have one on creating operating agreements for an LLC. I am not suggesting you do it yourself but it will help you understand the choices and issues when meeting with your lawyer.
@Lexie Greenheck what helped my partner and I create our operating￼ agreement was time!
After you sit down and get a good ruff draft of the documents with the lawyer give your self time to think of any other situation that could happen (sleep on it) and how you and your partner want to handle those situation so there is no question on how sertain situations should be handled. A lot can change over time just make sure that agreement is clear it is there to protect both of you!
@Lexie Greenheck a mentor of mine used to always say knowing how to get out of business with a person is more important than knowing how to get into business with them.
What happens when your business partner gets divorced or passes away? Does their kid or ex-spouse become your new business partner?
It’s challenging to plan for the unexpected but knowing how unfortunate situations will be handled before they occur is beneficial to everyone involved.
As someone previously said, contracts and written agreements are there for when things go wrong