50/50 Exit Strategies & Protections Against the Unforeseen

[Kevin Danikowski]

My partner and I are going to purchase a buy and hold 10 unit where everything is divided 50/50 (money, work, etc.) and a management company holding it. I would like to know what are main safe guards which 50/50 LLC partnerships typically put into place.

Lets say all goes well and then an unforeseen event occurs to one partner...

1. What should happen if more money is required and one partner can't pay up? (maybe a 10% penalty to a certain point?)

2. What should happen when one partner needs to leave/exit? Or one wants to sell and one wants to hold? (Maybe a 20-30% penalty for early exist or early buyout policy)

3. What should happen if one partner gets a divorce and needs to liquidate? (penalty again?)

4. What is one partner goes into bankruptcy? (no idea...)

5. What is one partner dies and new agreements can't be made from the heirs?

6. What is the area turns to crap because of something unforeseen and we can't agree on changing or keeping the plan?

7. What is one partner feels the other isn't putting in the work?

Any legal advice or past experience is appreciated. 

[Kenneth Garrett]

@Kevin Danikowski

This is why the operating agreement is so important with a LLC partnership. The agreement essentially is to address the what if scenarios. It is designed to handle all of your questions you have addressed. Have an attorney assist in developing the OA. There is never a problem when everything is just fine, the OA is for everything else.