How To Structure Bylaws In Corp Or Operating Agreement In LLC

After many failures in the real estate business, and realizing that an LLC (especially a single member LLC, very dumb of me to do this, have read court cases stating why this is BAD) does not make me invulnerable. I would like to know more about structuring LLC Operating Agreements and Corp Bylaws. I

Is there a standard set of Bylaws and Operating Agreement rules for all corporations or does it vary with operations?

If it does vary with operations then, I guess I have to pay my attorney a pretty hefty fee,

Comments(10)

  • cjmazur5th August, 2008

    the agreements will vary from entity to entity, project to project and atty to atty.

    I always suggest that people hie an atty for their 1st agreement, then they have a template.

  • NewKidInTown318th August, 2008

    Chances are that DTI will never get to a level the lender wants if you do nothing. Rent increases have a tendency to be absorbed by property tax increases and hazard insurance premium increases.

    The quickest way to improve your DTI is to do a 30-year cash out refinance to lower your debt service, especially if the prevailing interest rate is lower than your current mortgage loan rate.

  • cjmazur18th August, 2008

    do you trust that there are no other liabilities in the LLC?

    The owner of the property is not chancing, so there is no reassessment.

    Look out for accounting issue like what the cost basis of the asset.

  • Kimtd18th August, 2008

    Would forming a new one then immediate transferring over the deed(s) to the LLC not be "safe" enough?

    Thanks cjmazur.. you have the best advices on TCI!

  • cjmazur19th August, 2008

    Please... I have a big enough ego as it is.

    I would only be comfortable if the LLC was formed as part of escrow and there was no way to create any liabilities.

    The seller will not be able to do a 1031, which might be a deal killer.

  • finniganps19th August, 2008

    Keep in mind - when you buy the LLC, you will be subject to re-assessment in CA on the purchase price because at that point there is a change in ownership of over 50% of the property.

  • cjmazur19th August, 2008

    IS that a FTB rule or IRS?

    So much for attys. I was told something contrary to this.

  • Kimtd19th August, 2008

    ACtually i am trying this method in Texas and Georgia

  • finniganps19th August, 2008

    Property tax is administered by the State Board of Equalization in CA. If over 50% of a property changes ownership, than the property is subject to re-assessment. This was not always followed by entities and enforcement has increased as have fines/penalties for not reporting the changes. If you look at the CA corporation, partnership and LLC forms, they all have questions now that ask whether the LLC/partnership/C Corp owned CA real property and if they transferred 50% or more of the entity in one or more transactions since 3/1/1975, which was not reported in a prior years tax return.

    These rules are based on state Proposition 13.

  • Kimtd19th August, 2008

    Ah crap. That totally sucks. Damn IRS.

    I am a total noob when it comes to this..
    1) How do people get around this 50% issue?
    2) Since it is a LLC purchase, is there somehow a way to lower the cost basis of the asset to lower the tax assessment?

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