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socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 38244
Experience:  Retired (mostly)
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In a business LLC with two limited liability partners. #1 partner

Customer Question

In a business LLC with two limited liability partners. #1 partner with land worth $275,000 to contribute free and clear and the #2 partner with the construction financing of $275,000 and they both work in the business, how would you word the limited liability clauses for each partners limits of liability and assets? It's like the #1 partner had all the equity in land and the #2 partner had to borrow the money to build upon. Construction completed and property value down say 50% and probably not going to appraise higher than $400,000 (just enough to meet loan to equity ratios). I am stumped on the wording of the LLC partners.
Submitted: 6 years ago.
Category: Business Law
Expert:  socrateaser replied 6 years ago.

An LLC limits each investor's liability to the amount of their respective investments, by operation of law. There is no wording necessary to divide liability, because a third party dealing with the LLC is not bound by your agreement.

 

In sum, if you put $550,000 into the business, then that's the max that anyone could sue the business for, and no member is liable for anything other than that which is assigned to the LLC.

 

Hope this helps.

 

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