[BUYING AND SELLING REAL ESTATE IN THE UNITED STATES - MASSACHUSETTS]
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2. Same advantages and disadvantages as a general partnership, but partners have limited liability. 3. Must renew LP status by annual filing with Secretary of State. E. LLCs 1. Governed by G.L. c. 156C. Requires filing of certificate of organization naming manager (of if no manager, at least one person authorized to sign filings with the Secretary of State). 2. Very flexible, can be member-managed or manager-managed. 3. “Pass - through” tax treatment unless it elects to be taxed as a corporation. 4. Single-member LLCs can be treated as “disregarded entities” for tax purposes. 5. Written operating agreement unnecessary, but highly desirable in most cases. 6. Advantages 1. Limited liability and pass-through tax treatment. 2. Less formality than a corporation. No minute book, stock ledger, etc. Query: Is that an advantage or disadvantage? 3. Flexibility. Operating Agreement can create (i) a “corporate model” LLC, with officers and a board of
4. Can limit or eliminate fiduciary duties. 7. Disadvantages 1. Limited transferability. Effectively disqualifies LLCs from being public companies. 2. Operating agreements can be complex and expensive to create. 3. Uncertainty as to “corporate veil” doctrine. 4. Uncertainty re legal status in other states. F. Business Trust 1. An unincorporated organization governed by the common law, but subject to regulation under G.L. c. 182. 2. Written declaration or agreement of trust and all amendments must be filed with the Secretary of State and the clerk of every municipality in which trust has a usual place of business and recorded in the registry of deeds if it owns real property. 3. Trustees are the managing body of the trust and may delegate duties to officers. Shareholders may elect trustees, but this may give rise to personal liability. See Paragraph 4 below. 4. Trustees have personal liability for contracts, but typically limit liability to the trust assets. Shareholders who participate in excessive control or management may be personally liable, as partners, for the debts of the trust. 5. Shares are represented by certificates, which are freely transferable subject to applicable securities laws.
managers elected by members (like a corporation); (ii) a “partnership model” LLC, with management by the members (like a general partnership); (iii) an “autocratic model” LLC, with one or more managers having sole control of the LLC (like a limited partnership); or (iv) any combination of the above.
ILN Real Estate Group – Buying and Selling Real Estate Series
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