LLC Question....
Scenario
We are 8 people that will pool money to buy a 2 family house. We have no LLC or partnership formed. Basically, 2 of our members with good credit and no tied up resources will be signing the contract. all of us are close and good friends so we don't care if we are in or not in the contract.
My question is this
In the contract, aside from the 2 names, can we add something like this "or an LLC to be formed"?
if not can we form an LLC and use that name in the contract?
What's the best possible way to protect the group, like forming an LLC, to buy an investment property?
Thanks for your help
I'm not an attorney but you should consult one. I would form the LLC first.
For the name of the buyer In the purchase contract use " Joe Blow or assigns" Joe Blow being your name or the other 2 people you mentioned. This will allow you to take title at closing in any name you wish. Do form an LLC or another legal entity to take title to the property. (corp etc.) In your articles of incorporation spell out and agree exactly how you will agree to manage and dispose of the property. If you do not, without question everyone will have disagreements later on. An attorney should help you with this. Godd Luck!
landfall,
thanks for your info which leads me to my next question.
So the contract, will have "Joe Blow or assigns" and title could be the LLC name. But how about the loan?
Not an attorney, so take it as you will:
from what I've read and heard, it doesn't matter how good friends you all are, you MUST have some agreement in writing BEFORE you take on this investment.
The agreement should spell out everyone's rights and responsibilities and share of any costs/profits, how partners can buy each other out, how to handle dissolution of the partnership, how to handle defaults by partners, death of partners, etc. I would look on the internet for such an agreement, modify it to suit your needs and then either take that form to an attorney (a little cheaper) or have an attorney draft an agreement from scratch.
Yes, you can use the LLC as the buyer in the contract. The actual signature at the bottom would be under "My Corp., LLC" with "John Smith, President" under the signature line.
The LLC will protect the group from judgements attaching to their personal property in case of suit, but by itself doesn't necessarily constitute a partnership agreeement mentioned above.
DISCLAIMER: not an attorney, seek professional legal advice, etc.
Andy