Real Estate Operating Agreements for Developers and Investors: Key Terms, Drafting Considerations, Pitfalls to Avoid

Description

In recent years, more and more real estate investors and developers are opting to form LLCs due to the flexibility allowed to define the business relationship via the operating agreement and for certain liability protection and tax advantages.

Real estate entities have unique business needs to be protected and addressed in their operating agreements beyond basic boilerplate language and template agreements. Counsel and their clients should take the time to determine whether an LLC is the right entity for their business, examining the pros and cons, including liability and tax benefits. They should also carefully consider the details of how the business will operate and be managed to be accurately reflected in the operating agreement including whether the LLC will be manager or member managed, the capital contribution process, transfer or assignment of member interest, restrictive covenants, and dispute resolution.

In addition to business-specific needs, counsel and clients should be aware of the impact the Corporate Transparency Act may have on their business and any state law considerations.

Listen as our expert panel provides a comprehensive look at drafting operating agreements for real estate entities. The panel will discuss the pros and cons of using an LLC in real estate, address key terms and drafting considerations unique to the industry, and offer best practices for practitioners.