BUSINESS ORGANIZATIONS: WHEN "BUSINESS PURPOSE" DISAPPEARS: ARTICLE: NINE BEAN-ROWS LLC: USING THE LIMITED LIABILITY COMPANY TO HOLD VACATION HOMES AND OTHER PERSONAL-USE PROPERTY Skip over navigation
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Copyright (c) 2012 William Mitchell College of Law
William Mitchell Law Review

BUSINESS ORGANIZATIONS: WHEN "BUSINESS PURPOSE" DISAPPEARS: ARTICLE: NINE BEAN-ROWS LLC: USING THE LIMITED LIABILITY COMPANY TO HOLD VACATION HOMES AND OTHER PERSONAL-USE PROPERTY

2012

William Mitchell Law Review

38 Wm. Mitchell L. Rev. 592

Author

J. William Callison+

Excerpt



I. Introduction
 
Many state limited liability company (LLC) statutes permit LLC formation for any lawful purpose; therefore, LLCs can be formed for non-business purposes. 1 This has led to LLCs used as subsidiaries for nonprofit, charitable entities. 2 It has also led to LLC use by individuals and families for property holding purposes, where the LLC's property is not leased to third parties or otherwise used for commercial purposes, but is used instead for personal purposes, such as for a vacation home. This article considers personal-use LLCs and concludes that they are viable vehicles for holding family property. 3 The extreme adaptability of the LLC form allows families that hold personal-use property together to avoid many of the problems, discussed infra, with real estate co-ownership. 4 For example, placing personal-use property in an LLC allows families to establish a coherent system for managing and controlling the property, restricting the transferability of ownership interests, providing a buy-out mechanism in the event a family member desires to withdraw from ownership, preventing and resolving disputes among family members, and providing estate planning and gifting options that do not involve real estate transfers.

In some sense, this article can be viewed as an attempt to put into words the thoughts behind my own creation of a Colorado LLC to hold a non-Colorado vacation property. 5 A version of an operating agreement drafted for such an LLC is included as Appendix A to the article. 6 The facts of my particular ...
 
 
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