|Re: Sharing LLC and other Organizational/Governing Documents||<– Date –> <– Thread –>|
|From: Edwin Simmers (edwinsimmersbellcoho.com)|
|Date: Sun, 8 Dec 2019 22:11:17 -0800 (PST)|
Everyone, Great to see newly forming communities working early on their organizational documents. Not something to delay! The documents focus attention on important community decisions, details and policies. My community has no problem with sharing our documents; we put them on a USB thumb drive to give to prospective members. But frankly, they aren’t much use to other communities, especially those out of state. State laws vary so much from state to state and the forms of organization (condo, co-op, LLC) vary so much from one community to another that it’s hard to know what’s important in another community’s documents. What IS important, though, are some general tips for every community that's starting to think about their policies: 1. What legal structures (condominium, cooperative, LLC, etc.) are available in your state? What are the advantages and disadvantages of each regarding ease of financing, cost of unit sales and transfers, and tax implications? We decided to form as a Washington state condominium because developers, construction lenders and mortgage lenders, as well as tax and legal professionals are plentiful and comfortable with the structure. 2. Which government agencies do you have to deal with and what documents do they require? Our city required a development plan, the Washington secretary of state needed articles of incorporation and the county auditor needed our condominium declaration, survey map, easements, etc. 3. These legal documents that need to be filed or recorded with government agencies are expensive and time-consuming to amend. Make sure you know which mandatory provisions in those documents are required by law. In Washington, for instance, condominiums must be governed by a condominium association formed exclusively of unit owners. Are precise unit and common area descriptions necessary? Are restrictions on an owner’s rights regarding sale or rental of units required to be stated in these documents to be valid? 4. Which decisions and policies don’t have to be stated in these government-filed or recorded documents? Can your policies regarding pets, parking and participation, for instance, be included in other documents more easily and affordably amended? In Washington, bylaws, rules and resolutions aren’t filed or recorded; state law allows them to be more easily amended, too. 5. Even though they don’t have to be filed or recorded with a government agency, governing documents like bylaws (regarding how the community is organized and decisions are made) and rules (regarding behavior of residents) are best addressed while the community is still forming, not waiting for after move-in when behaviors become established. How many cars can residents park on site? Where is alcohol consumption allowed? Must dogs be kept on a leash? Are outdoor cats allowed? How do you decide how much money to keep in reserves? Participation requirements? Landscaping expectations? Conflict resolution? Outdoor personal storage? Home business policy? Workshop, guest room and laundry room policies? Committee membership? Decision-making process? In summary, first establish with the help of your professional advisors the form of legal structure your community will take and which decisions must be made regarding specifically required provisions of the organizational documents. Decide which policies you want to move to other governing documents such as bylaws and rules so that they are more easily and less expensively amended. But don’t ignore important policies just because they don’t have to be in the more-formal organizational documents. Good policies are important and valid wherever they are located. Hope this helps. Ed Simmers
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