“10 Advantages to Cottage LLCs”  and “11 Steps to Forming a Family Cottage LLC” were  discussed earlier this month.

The New York Family Cottage Limited Liability Company (LLC) operating agreement should address these issues:

  1.  Do family members have the first right of refusal before the cottage can be transferred to a non-family member or ex-spouse?
  2. Will  the purchase price be based on an appraisal or a  predetermined formula?
  3. How is responsibility for the expenses of owning, maintaining, and improving the property allocated?
  4. What is the decision- making procedure to determine which maintenance and improvement expenditures should be undertaken?
  5. How are expenses shared among the family members?
  6.  What is the enforcement mechanism if a member does not pay his or her contribution, such as: interest charges and penalties, restrictions on the use of the property and involuntary transfer of membership interests to the other family members?
  7.  Is there a  calendar system of occupancy, to fairly  allocate the most desirable dates, such as high seasons and holidays?
  8.  What is the accountability system for damage to the property caused by members, guests, or pets?
  9. Can the cottage can be rented to non-family members?
  10.  How is the personal property, such as furniture,  divided- up if the cottage is sold?
  11. Should the parents own the voting interests and the children own the non-voting interests?
  12.  Should mediation and arbitration be required to prevent lawsuits due to disagreements?

Contact a New York business attorney to have an operating agreement drafted that meets the particular needs of your family.