Seeking mulit-owner deal structure advice

[Jay Axness]

I’m looking for some suggestions on how to set up a multi-owner setup for some real estate.

It is agricultural land, just for reference. My extended family had an opportunity to purchase it at a healthy discount to tax value from a long time friend/neighbor. I purchased under my name in cash because the agreement was time sensitive given the seller’s declining health and offer deadline. Basically wanted to close the deal with the offer on the table in case we didn’t get an opportunity to ask the individual for an extension before they passed.

I want to be able to have multiple family members own the property, but what I want to avoid is a partial owner trying to force the sale at market value without unanimous agreement from shareholders. The healthy discount it was purchased at makes the annual rent for the agricultural land attractive. If paying market value, it would not be.

For all parties it would be an investment. Perhaps I should be concerned about more items but primarily I’m just concerned with someone taking a good deal and spoiling it for the rest which is why I am focused on the potential sale restrictions  below. There is currently a general agreement to hold indefinitely which is what I would do if I remain owning 100% outright but I’m just trying to cover my bases for potential future situations.

I'm not sure that an LLC is the right place for it, but could I set up something like that to do the following?

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SHARE TYPES

A Shares (controlling vote, president of LLC) - is this a good or bad idea? It would give me ‘veto' power which I like but not sure how it impacts anything else. If not doing this, I guess we could just throw in that a 67% majority vote is required to change the LLC bylaws.

B Shares (% ownership of real property) - very likely that this would be a 50/50 split between two parties. 

[ONLY IF A SHARES EXIST] The option to sell shares to be determined by "A share" holder, president of LLC, otherwise if the president elects per below:

Restricted sale provision:

Shares of LLC are not marketable except to existing shareholders or to a prospective shareholder if and only if unanimous agreement from the existing shareholders.

Selling to new shareholders or selling off a portion or all of the real estate:

If shareholder voting is unanimous, a portion of or the entirety of the underlying real estate can be sold to a new shareholder and/or removed from the LLC ownership

LLC shareholder(s) buyout of shareholder:

If any existing shareholder desires to dispose of their shares (and the desire is not unanimous as in part 2), they must be offered to existing shareholders at XX% of current assessed tax value of the underlying real estate associated with the shares. The sale must be offered with a timeline of YY months to respond to the offer.

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The next part I’m stuck at is what if nobody wants to buy out the other shareholders? I guess the shareholders are stuck holding what they own? I’m fine with this but just asking the question.

This of course isn’t fully thought out but a starting point. I’m just looking for some general feedback or suggestion of ideas on what vehicle might be the right structure or approach.