Cohousing-L Mailing List: RE: [C-L]_ LLC vs co-op?

[Maura K. Deering (maura]

Hi Lynn,

I don't personally know of any cohousing groups that have stayed LLCs  
after move-in, but here is some information on LLCs in Washington  
(vis-a-vis real estate), which may or may not be helpful to you.

In the case of a limited liability company, unless the limited  
liability agreement provides otherwise, amendments have been made to  
Chapter 25.15
RCW to assure that an event of dissociation of a member does not  
cause the dissolution of the limited liability company prior to its  
stated
dissolution date, if there are any other remaining members.

 -what happens if a resident couple splits up


Limited liability companies have substantial flexibility in  
allocating management and control among owners. Under the Washington  
Limited Liability Company Act, management of the limited liability  
company is vested in its members, unless the certificate of formation  
vests management of
the LLC in a manager or managers.

    If management of the LLC is vested in the members, then all  
decisions are made by a majority in interest of the members, but
this general rule may be varied by the limited liability company  
agreement. RCW 25.15.120 specifically authorizes the limited
liability company agreement to provide for classes or groups of  
members having differing rights, powers, and duties, including
voting rights. In effect, this gives the LLC the ability to have the  
equivalent of varying classes of stock with the corresponding ability  
to allocate management and control.

    If the management of the LLC is vested in a manager or managers,  
similar flexibility is allowed. RCW 25.15.165 specifically authorizes  
the limited liability company agreement to provide for classes or  
groups of managers having varying rights, powers, and duties,  
including voting rights. Again, this allows virtually complete  
flexibility in allocating management and
control.

 -how it affects the sense of empowerment of the community as a  
whole vs
individuals, or vice versa



An LLC affords limited liability to all owners in the same manner as  
a corporation. The Washington Limited Liability Company Act (RCW  
25.15.125) provides that "the debts, obligations, and liabilities of  
limited liability companies, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations, and liabilities of  
the limited liability company; and no member or manager of a
limited liability company shall be obligated personally for any such  
debt, obligation or liability of the limited liability company solely  
by reason of being a member or acting as a manager of the limited  
liability company."

However, the advantage of limited liability can be reduced if lenders  
or other parties require the personal guarantees of members.


 -and PS what liability is limited?

Lynn Nadeau, on behalf of PTEV legal team

Maura Deering
Attorney-at-Law
Jackson Place Cohousing, Seattle, WA