September 16, 2016

Do We Need An Operating Agreement For A Real Estate LLC?

I am forming a real estate LLC with my wife. Do we need an operating agreement? We split the ownership 50%-50%.
Thank you

– Francisco,  Texas

Answer

You really ought to have an operating agreement for your limited liability company.

While Texas law does not require you to have an operating agreement (they are called “company agreements” in Texas), it is nonetheless a good idea to have one.

Many banks will require you to show a copy of your operating agreement in order to open an account. If your LLC tries to borrow money, a lender will almost certainly want to see that the LLC is authorized to do so under its operating agreement.

When you form an LLC with Legalzoom, they include a customized operating agreement in the price of forming your LLC.

While you can have an attorney draft an operating agreement for you, it will be far more expensive than having one made as part of an LLC formation package from a company such as Legalzoom.

If your business operations become very complicated and you need a more customized operating agreement, you will save money by having your attorney modify your existing agreement rather than trying to create a document from scratch at the beginning when cash is tight and you’re not 100% certain what provisions you need anyway.

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