LLC Operating Agreement – Real Estate LLC – One Owner – Taxed as Disregarded Entity

This document is essential for a limited liability company (LLC).

Why do I need an Operating Agreement for my real estate LLC?

An Operating Agreement is an LLC’s primary governing document. It covers in some detail how the LLC will own and manage the real estate.   It also outlines the fundamental features of the LLC. Most importantly, it tells the world that the real estate LLC has the requisite formality to be respected as a business entity.  

One Owner: This model document is intended for an LLC with only one  owner (member). For an LLC that has two or more owners, this model document will not be a good fit. 

If More Than One Owner: A tax partnership structure for a real estate ownership and investment has many benefits.  If you intend to own your real estate LLC with a family member or a business partner, that would require a different type of Operating Agreement and multi-member LLC structuring services. Should you need structuring and custom drafting for a multi-member real estate LLC, please contact the office at office@petrovalaw.com.

Disregarded for Tax Purposes: From a tax perspective, this model document is intended for an LLC with the default tax classification.  In other words, the LLC is taxed as a disregarded entity.  All of a disregarded LLC’s income and expenses are reported on its owner’s individual tax return.  

Tax Note: Keep in mind that an LLC that is taxed as an S corporation or a C corporation would file a separate business tax return. For an LLC that is taxed as an S corporation or a C corporation, this model document will not be a good fit. 

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