If you have an LLC Operating Agreement, then it should specify how to dissolve the LLC or how to 'buy out' one manager/member.
Are you a member, manager or managing member? Do you keep separate books for the LLC accounting?
Have you kept track of each other's contributions to the LLC? Did you have loan/note agreements for the contributions (suggested, but not too many people do it) or did you just contribute the money to the LLC bank account or creditors?
The answers to these questions will best determine how to answer your particular concern.
To protect yourself, you could file a UCC-1 form with the state that you are registered with. This is a form that details what a business owes you based on a contract, services or other actions you did for them. It requires that you have proof of what is owed to you, signed by the managers/directors/officers of the Company.
As I stated, I need to know a little more before I can give concrete advice. However,
based on the minimal information already, here are some options:
(1) Have the other manager(s) of the LLC sign a document detailing what you have put into the LLC and what you are to be paid upon termination and have them buy you out.
(2) If you do not have an operating agreement, check with your Secretary of State website and get the particular laws governing LLCs in Virginia. The laws should specify what the 'standard' terms of an LLC agreement are and which will be imposed if an Operating Agreement is not executed. My guess would be that they do not have a 'buy out' provision.
(3) Have an Operating Agreement with termination provisions executed by all Managers and then execute the termination process.
(4) You could sue the LLC for your contributions back, however if the LLC is bankrupt or insolvent, then the other manager(s) are only liable for what they have in the LLC. This is not a good option.
If you provide more information, I could better explain your options.
The operating agreement controls most of what you are asking so you must find it or get another copy!
It may not allow for you to sell your share, or limit who and how... It may also give your partner a long period of time to complete a buyout on installments...
As for the real estate and encumbrance on you home, these debts would have to be satisfied. The bank could careless where the money comes from, but they won't release you until those are paid! And if the business doesn't have enough money, or becomes insolvent, then you maybe stuck paying them off!
You really need to go see a local business lawyer, as your case will require you move carefully to protect yourself given the debt situation. You can find lawyers at www.romingerlegal.com/attorney (use the matching links), or use the yellow pages. If you had a lawyer on the LLC, you might want to get someone else if they also helped your "partner".
What the other expert is telling you is correct. You must find or get a copy of the Operating Agreement as this will spell out any restrictions on the transfer of interests in the LLC.
As for the real estate, you could have the LLC provide you a mortgage on the real estate (if allowed by the Operating Agreement), but if there is already a mortgage on it you will be in 2nd position and if there is not enough money and you foreclose on it, you will take it subject to the first.
The note on your house is independent of the LLC, regardless of what you used the money for it is a separate contract between you and the mortgage company. Unfortunately, based on what you stated the condition of the LLC is, the LLC will not be able to support paying your equity line and you will have to pay it off. The good news is that if you invested in the LLC with the money, you can ask your accountant if the payments to pay it off (interest payments) can be considered an investment expense and how you should treat the principle amount.
If you have additional comments or questions, you should consult with an attorney in your jurisdiction.
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