Legal Question...LLC
My partner and I have a LLC. We are closing on our first property Tuesday ...as a Subject 2. I plan on moving into the property through the winter to rehab and then sell in March. Here are my questions:
I am putting up all the moneys....downpayment, utilities, repairs, mortgage payments etc. When the property is sold I plan at closing to ask for a separate check to be issued to me for all of the above so that it does not appear I am loaning the LLC money.
Will this work?
Do you think I should have our attorney draw up an agreement to be signed by my partner stating the return of the above?. (Trust no one)
First of all I use s-corps for flips so I'll talk in terms of shares of stock and officers.
From what I understand you are the "money guy" and the other guy does all the work.
I would require that at least one more share of stock then your partner so you are always the majority shareholder.
Because your partner is in charge of the transaction, you can make him the president of the company. Might as well make yourself vice pres or secretary.
You can require 2 signatures for the checks if you want to go so far.
Basically what this does is leaves your partner in charge of things but at any time you are not happy you can declare an emergency shareholder meeting, vote him out being the pres...vote yourself in.
Your partner is protected because he still owns nearly half the corporation and is entitled to nearly hald of the profits.
I dould DEFINATELY have your attorney involved.
I have a some what similar question if anyone can help. Me and my partner have an LLC formed, the bank will loan us the money to acquire the property. How can we get the property under LLC if the bank is loaning us the money personally. Is it possible to get a personal loan and have the property under LLC ? how ? thanks for all the help.
Having done lots of RE loans it's my experience that the lender, unless it's a VA, HUD, or VA loan, doesn't really care WHO holds the title....so long as their borrowers sign the promissory note individually, and as long as they have a good Deed of Trust on the property.
If it is one of the Fed insured programs they may insist the title owner is you or you & partners individually.
If this is the case, you can later deed the property to your own trust, a la Garn St. Germaine Fed Law (lots of posts in archives here about this) and the bank cannot call the loan for that action.
thanks john