Cohousing-L Mailing List: Re: Limited Liability Company

[Randi Baird (dune]

>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.

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 into our community in the spring of 2000 the LLC will
change 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
or  a copy of the draft homeowner's association LLC Operating Agreement contact
me at: aquinnah @vineyard.net.

Philippe Jordi, Island Cohousing

Randi Baird
email: dune [at] vineyard.net