Re: Limited Liability Company
From: Fred H. Olson (fholsoncohousing.org)
Date: Sun, 28 Feb 1999 09:41:55 -0700 (MST)
Philippe Jordi  aquinnah [at] vineyard.net
is the author of the message below but due to a problem it was posted
by the Fred the list manager: owner-cohousing-L [at] cohousing.org
--------------------  FORWARDED MESSAGE FOLLOWS --------------------

>A small group here in Chicago is exploring the possibility of buying  a 6
>or 8 flat together. Some members had heard that there were abvantages in
>forming a limited liability company in term of negotiating a mortage with
a bank.
>
>I would appreciate any feedback from those who have had experience with
>llc's -pluses and minuses.

Howard,

Island Cohousing, located on the island of Martha's Vineyard in
Massachusetts, was formed as a Limited Liability Company (LLC)  two years
ago.  We're currently organized for the purpose of buying and developing
land (16 detached units and a common house).  We're also in the process of
revising our existing LLC Operating Agreement (a.k.a. By-laws), so that
once we move into our community our LLC will act as a homeowner's
association in order to properly manage the affairs of the community.  We
initially considered becoming either a LLC or a Limited Liability
Partnership (LLP)  over a typical for-profit corporation because the LLC/
LLP provided greater flexibility regarding how we could structured the
governing body within the Operating Agreement (i.e. member households v.
elected or appointed representatives)  and the decision making process
(i.e. consensus with a fall-back vote v.  majority vote), as well as
shielding the members from liability. We chose the LLC over the LLP
because members owning corporate shares v. partnership assets seem to work
more easily. 

We've been able to create an LLC - Operating Agreement that has met the
needs of the bank(s) that we've secured a construction loan(s) from
(Martha's Vineyard Cooperative and the Cape Cod Five), while providing our
community with an appropriate governing structure and decision making
process.  We've also incorporated the delegation of certain management
responsibilities/ decisions to various committees.

Once we move-in to our community in the spring of 2000 the LLC will
transform from a developer to a homeowner's association.  In our neck of
the woods, appraisers and therefore banks seem to shine on homeowner's
associations rather than condos.  As a group, Island Cohousing feels
strongly about legitimizing a governing structure and decision making
process that reflects our community's values and that is more practical. 

If you're interested in our existing development LLC Operating Agreement
you can access a copy of it at:  www.vineyard.net/org/icoho/ or if you're
interested in a copy of the homeowner's association LLC Operating
Agreement contact me at: aquinnah [at] vineyard.net. 

Philippe Jordi 



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