Operating Agreement Template for Real Estate Llc

OPERATING AGREEMENT FOR [COMPANY FULL LEGAL NAME]

Document ID: LLC-RE-2024-[001]
Effective Date: [Date]
Version: 1.0
Governing Jurisdiction: [State of Formation]

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LEGAL COMPLIANCE NOTICE

DISCLAIMER: This Operating Agreement is a legal instrument drafted for use by a limited liability company organized for real estate investment or management purposes. It is intended to comply with the default provisions of the [State of Formation] Limited Liability Company Act. Laws governing LLCs vary significantly by jurisdiction. This document does not constitute tax, investment, or specific legal advice. Parties should review this document with qualified legal and tax counsel to ensure compliance with specific state requirements and internal revenue codes (e.g., Subchapter K or S-election implications).

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1. PARTIES AND RECITALS

This Operating Agreement (the "Agreement") is entered into as of the Effective Date by and between the Members listed in Schedule A (each a "Member" and collectively the "Members").

1.1. Formation: The Members have formed a Limited Liability Company under the laws of the State of [State] named [Company Full Legal Name] (the "Company").
1.2. Purpose: The Company is formed for the purpose of acquiring, holding, managing, developing, and disposing of real estate assets, and conducting any other lawful business for which an LLC may be organized under the governing jurisdiction.
1.3. Principal Address: The principal office of the Company shall be at [Principal Address].

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2. CAPITAL CONTRIBUTIONS AND INTERESTS

2.1. Initial Capital Contributions: Each Member shall contribute the amount set forth in Schedule A as their Initial Capital Contribution.
2.2. Membership Interests: The ownership interest of each Member shall be determined by their respective percentage of total capital contributions (the "Membership Interest").
2.3. Additional Contributions: No Member shall be required to make additional capital contributions unless unanimously agreed upon in writing.

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3. MANAGEMENT AND VOTING

3.1. Management: The Company shall be [Member-Managed / Manager-Managed]. If Manager-Managed, the Manager(s) shall have full authority to execute contracts, deeds, and financing documents.
3.2. Voting: Decisions shall be made by a [Majority / Super-Majority] vote of Members based on Membership Interest, except for matters requiring unanimous consent as defined by state law.
3.3. Compensation: No Member shall receive salary for services rendered unless authorized by a written agreement approved by the non-interested Members.

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4. ALLOCATION OF PROFITS, LOSSES, AND DISTRIBUTIONS

4.1. Tax Allocations: Profits and losses shall be allocated to Members in proportion to their Membership Interests, subject to the "substantial economic effect" requirements under Section 704(b) of the Internal Revenue Code.
4.2. Distributions: Available Cash Flow shall be distributed to Members at such times and in such amounts as determined by the Manager(s) or by Member vote, after reserving for capital improvements and operational contingencies.

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5. TRANSFER OF INTERESTS

5.1. Restrictions: No Member may sell, assign, encumber, or transfer their interest without the prior written consent of a majority of the other Members.
5.2. Right of First Refusal: If a Member receives a bona fide offer to purchase their interest, the remaining Members shall have a right of first refusal to purchase said interest on the same terms.

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6. CONFIDENTIALITY AND NON-DISCLOSURE

Members shall maintain the strict confidentiality of all Company proprietary information, including but not limited to investment strategies, property acquisition pipelines, investor lists, and financial records. This obligation survives the termination of this Agreement or a Member’s withdrawal.

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7. LIMITATION OF LIABILITY AND INDEMNIFICATION

7.1. Limitation of Liability: No Member, Manager, or officer shall be liable to the Company or other Members for any act or omission performed in good faith, provided such act does not constitute gross negligence, fraud, or willful misconduct.
7.2. Indemnification: The Company shall indemnify and hold harmless its Managers and Members to the fullest extent permitted by [State] law against any claims or liabilities arising out of their service to the Company.

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8. TERMINATION AND DISSOLUTION

The Company shall dissolve upon: (i) the vote of Members holding a [Percentage]% interest; (ii) the entry of a judicial decree of dissolution; or (iii) the occurrence of any event that makes it unlawful for the business to continue. Upon dissolution, the Company shall liquidate assets, satisfy creditors, and distribute remaining proceeds to Members per their capital account balances.

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9. DISPUTE RESOLUTION AND GOVERNING LAW

9.1. Governing Law: This Agreement is governed by the laws of [State of Formation].
9.2. Dispute Resolution: Any dispute arising out of this Agreement shall be submitted to binding arbitration in [City, State] in accordance with the commercial arbitration rules of the American Arbitration Association (AAA).

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10. MISCELLANEOUS

10.1. Severability: If any provision is held invalid, the remainder of this Agreement shall remain in full force.
10.2. Entire Agreement: This document constitutes the entire agreement between the parties, superseding all prior discussions.
10.3. Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original.

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11. EXECUTION

FOR [COMPANY FULL LEGAL NAME]:
Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Date: [Date]

FOR [MEMBER / COUNTERPARTY]:
Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Date: [Date]

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12. EXECUTION & FILING GUIDE

1. Preparation: Open this template in a word processor. Replace all bracketed [ ] text with actual data.
2. Schedule A: Create a separate appendix titled "Schedule A" listing Member Names, Capital Contributions, and Membership Percentages.
3. Review: Ensure the "Manager-Managed" vs "Member-Managed" selection reflects your intent. If one person holds all power, select Manager-Managed.
4. Verification: Confirm signatory authority by checking the Company’s Articles of Organization. Ensure the person signing is authorized to bind the LLC.
5. Digital Execution: Utilize an e-signature platform (DocuSign, Adobe Sign) to ensure a tamper-proof audit trail.
6. Filing: File a copy of the executed Agreement with the Company’s permanent records. Note: You generally do not file this document with the Secretary of State (unless specifically required by your state), but keep it readily available for bank account openings and tax filings.
7. Retention: Maintain the original signed copy in a secure physical and digital safe-deposit environment for at least seven (7) years post-dissolution.