Ashburn, VA asked in Business Formation and Business Law for California

Q: LLC Formation for Real Estate Investment

I need to form an LLC to buy and operate a rental unit. Three members are brining 1/3 investment each. Can there a buy-out clause such that one member can be bought out a year or later when two other members can bring the capital equal to the initial investment of third member plus 6% annual interest?

2 Lawyer Answers
Fritz-Howard Raymond Clapp
Fritz-Howard Raymond Clapp
  • Beverly Hills, CA
  • Licensed in California

A: The answer is yes. A limited liability company is well-suited to this sort of enterprise, as its operating agreement can specify terms (such as those you describe) for member buy-outs, transfers among them, or addition of members. I have organized LLCs many times with such provisions. Contact me to discuss setting up the LLC quickly and efficiently.

Shawn R. Jackson
Shawn R. Jackson pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Rohnert Park, CA
  • Licensed in California

A: yes, but with several issues ... management issues, capitalization protocols, any improvements ... and of course, valuation formula ... always best to schedule a few free consultation video calls with at least two law firms to discuss the options and strategies.

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