Editing ELS3/OperatingAgreements

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Remember to sign your comments. An easy way to sign is to add ~ 4 times. [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 22:23, 18 February 2024 (CET)
Remember to sign your comments. An easy way to sign is to add ~ 4 times. [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 22:23, 18 February 2024 (CET)


== Draft ==
=== Draft ===
=== Governance ===
* The LLC will operate using consensus decision-making. Every member will need to agree/support a decision and we shouldn't move forward if somebody feels strongly enough that they are absolutely opposed. This will cover decisions around:
* The LLC will operate using consensus decision-making. Every member will need to support a decision and we shouldn't move forward if somebody feels strongly enough to say that they "block" (i.e., they are absolutely opposed). This will cover:
** Dispute resolution
** Addition of renters
** Addition of renters
** Addition of new members
** Addition of new members
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** Renovation
** Renovation
** Refinancing
** Refinancing
* Many things we don't need formal consensus and any members can simply act on behalf of the LLC to do these things. In these cases, folks should use their judgement and are strongly encouraged to ask others about in advance. ('''Note:''' new proposal —<b>[[User:Benjamin Mako Hill|<font color="#C40099">m</font><font color="#600099">a</font><font color="#2D0399">k</font><font color="#362365">o</font>]][[User_talk:Benjamin Mako Hill|<font color="#000000">๛</font>]]</b> 18:25, 17 April 2024 (CEST))
 
** List of things:
*** anything related to normal use of the house as a living or social space (e.g., having guests over for parties or dinners, storing property in the house, etc)
*** Inviting friends/guests for short-term stays
*** Making minor or nonstructural changes to the house
*** paying bills on behalf of LLC
*** buying financial stake from other members as per the rules below
**  If somebody objects to these things, they can always invoke the full consensus process, and there will then need to be consensus in order to continue or proceed.
* Process
* Process
** If the need arises, any member may call for a synchronous meeting to reach a consensus decision. The secretary must schedule a meeting in these cases within a month and should endeavor for all members to be able to attend, but must ensure at least a majority of members. If the secretary fails to organize such a meeting in this time frame, the member calling for the meeting may organize their own meeting with at least a majority of members, which will be considered valid.
** If the need arises, any member may call for a synchronous meeting to reach a consensus decision. The secretary must schedule a meeting in these cases within a month and should endeavor for all members to be able to attend, but must ensure at least a majority of members. If the secretary fails to organize such a meeting in this time frame, the member calling for the meeting may organize their own meeting with at least a majority of members, which will be considered valid.
** In the event of the death of a member, that member will not count toward quorum. The member's financial stake can be inherited but their governance stake in the organization can not be. ('''Note:''' added based on comments from Forrest —<b>[[User:Benjamin Mako Hill|<font color="#C40099">m</font><font color="#600099">a</font><font color="#2D0399">k</font><font color="#362365">o</font>]][[User_talk:Benjamin Mako Hill|<font color="#000000">๛</font>]]</b> 17:51, 17 April 2024 (CEST))
 
** If a member is incapacitated and/or unable to participate for a period of six months, that person will not be counted against quorum for decision-making ('''Note:''' added based on comments from Forrest —<b>[[User:Benjamin Mako Hill|<font color="#C40099">m</font><font color="#600099">a</font><font color="#2D0399">k</font><font color="#362365">o</font>]][[User_talk:Benjamin Mako Hill|<font color="#000000">๛</font>]]</b> 17:51, 17 April 2024 (CEST))
* Governance-related record-keeping
* Governance-related record-keeping
** All actions taken on behalf of the entity will be kept durably by a designated secretary (decided upon by the group), in a shared location accessible to all members  
** All actions taken on behalf of the entity will be kept durably by a designated secretary (decided upon by the group), in a shared location accessible to all members  
*** we can perhaps take turns (annual?) for the secretary role? [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 18:45, 17 April 2024 (CEST)
 
* Limits on sales by a member
** A member may give notice to the LLC of their intent to withdraw. When doing so they have two options
*** The member may ask to be reimbursed as they withdraw. The LLC would purchase back that financial amount within 6 months. the member would loose their right to vote in LLC matters. At the future dissolution of the LLC, the former member would receive their share of the difference between initial and final value of the LLC if it is positive.
*** The member may choose to retain their financial stake as they withdraw. the member would be allowed to vote for matters of refinancing or dissolution of the LLC, but not for changes in renters, members, or day to day operations. In this state, the member would be able to be subsequently 'bought out' by a prospective new member.
 
* Limits on use of the property
* Limits on use of the property
** The property will not be operated as a hotel or AirBnB.
** The property will not be operated as a hotel or AirBnB.
** '''The property will not be used as a long-term rental. (should check seattle rules)'''
** '''The property will not be used as a long-term rental. (should check seattle rules)'''
*** what about things like 1 year sabbatical leave? should we add "unless all members agree..."? [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 18:48, 17 April 2024 (CEST)
 
*** that might not fall under long-term rental [[User:Terminator|lucy]] ([[User talk:Terminator|talk]]) 21:20, 17 April 2024 (CEST)
* Grounds for expulsion
* Grounds for expulsion of members
** A member may request the removal of another member through a standard governance process.
** A member may request the removal of another member through a standard governance process.
** The person who is being decided against shouldn't get a vote in the consensus decision.
** The person who is being decided against shouldn't get a vote in the consensus decision.
** If more than one person is suggested for expulsion, we would need to make these decisions serially (i.e., one at a time) in the order they were proposed.
*** what about couples? [[User:Terminator|lucy]] ([[User talk:Terminator|talk]]) 21:20, 17 April 2024 (CEST)
=== Financial Stuff ===


'''Note:''' This has not been as fully vetted/discussed as some of the material above.
=== Proposal for financial stuff ==


* After the initial purchase, shares (which we use to mean only financial stake, not governance) will be divided up among individual members based on their contributions to the down payment, fees, and any inspections incurred in the purchase of the home, where each individual gets a number of shares that are proportional to their contribution. We'll have some system for recording and tracking this that we agree to (e.g., on a wiki page or a shared repository)
* After the initial purchase, shares will be divided up among individuals based on their contributions to the downpayment, fees, and any inspections incurred in the purchase of the home, where each individual gets a number of shares that proportional.
* Going forward, contributions for monthly mortgage payments, property taxes, and house insurance will also result in a proportional number of shares based on contribution.
* Going forward, contributions for monthly payments for mortgages, property taxes, and house insurance will also result in a proportional number of shares based on contribution.
* Payments for any construction, house maintenance, purchase/repair/replacement of appliances, and contributions to an emergency fund will all be in the category of ''further contributions'' to the house/LLC or something like that. Any of these contributions will also result in a proportional number of shares based on contribution. For something to be considered an expense in this category, the group must decide to do this based on our normal processes. If someone purchases an appliance independently, that's fine, but it remains their property.
* Payments for any house maintenance, purchase of, repair, and replacement of appliances, and contributions to an emergency fund will all be in the category of ''further contributions'' or something like that. Any of these contributions will also result in a proportional number of shares based on contribution. For something to be considered an expense in this category, the group needs to decide to do this based on our normal processes. If an individual purchases an appliance on their own, that's fine, but it remains their property.
* For monthly payments and for any further contributions like those listed above that are agreed upon, everybody is committed to contributing an equal share in the same way we do for the mortgage payments and such (i.e., 1/n of the total cost where n is the number of members). If everybody agrees, we can always change this distribution for a specific transaction, and the shares will be distributed according to whatever we decide.
* For monthly payments and for any further contributions like those listed above that are agreed upon, everybody is committed to contributing an equal share (i.e., 1/n of the total cost where n is the number of members). If everybody agrees, we can always change this for a specific transaction, and the shares will be distributed differently accordingly.
* Everybody can purchase shares from other people in the LLC up until they have a set of shares that are equal to whoever has the largest share at the time. So, if everybody took full advantage of this, everybody would have equal shares. However, some people may have lower shares based on unequal contributions to the original purchase.  
* Everybody can purchase shares from other people in the LLC up until they have a set of shares that are equal to whoever has the largest share at the time. So, if everybody took full advantage of this, everybody would have equal shares. It is possible, however, that some people have lower shares based on unequal contributions to the original purchase.  
* This means that people with smaller shares can effectively choose to contribute more for any monthly payments and other further contributions. Maybe it's unnecessary to state this explicitly since it can be handled in multiple transactions, and maybe it's implicit in the other rules.
* This means that for any monthly payments and other further contributions, people with smaller shares can effectively choose to contribute more. Maybe it's not necessary to state this explicitly since it can be handled in multiple transactions, and maybe it's implicit in the other rules.
* If we sell the house or somebody decides to leave, they are entitled to their proportion of the house's value and other LLC assets based on the shares.
* If we sell the house or if somebody decides to leave, they are entitled to their proportion of the value of the house and other assets of the LLC based on the shares.
* If somebody joins the LLC after purchase, they start with no shares but are on the hook for everything else put above and can buy up in the way that is listed above. If the mortgage is not paid off, they would also need to be added to the mortgage or whatever the lender requires in order to make this happen. That will probably require getting a new mortgage, but that's up to the lender.
* If somebody joins the LLC after purchase, they start with no shares but are on the hook for everything else put above and can buy up in the way that is listed above. If the mortgage is not paid off, they would also need to be added to the mortgage or whatever the lender requires in order to make this happen. That will probably require getting a new mortgage, but that's really up to the lender.
* Complete withdrawal from the LLC
** A member may give notice to the LLC of their intent to fully withdraw. When doing so they have two options
*** The member may ask to be reimbursed as they withdraw. The LLC would purchase back that financial amount within 6 months and the member would lose their right to vote in LLC matters. At the future dissolution of the LLC, the former member would receive their share of the difference between initial and final value of the LLC if it is positive.
*** The member may choose to retain their financial stake as they withdraw. The member would be allowed to vote for matters of refinancing or dissolution of the LLC, but not for changes in renters, members, or day to day operations. In this state, the member would be able to be subsequently 'bought out' by a prospective new member.
* Withdrawal of financial stake by a member
** If somebody needs liquidity, they can ask for any amount up to the total value of their shares at any point, which should also be paid in 6 months. Other members can either buy those shares in cash (even if it upsets the distribution) or the group can choose to refinance the home as a way of getting that money to distribute it. If folks can't or don't want to do those things, the group would commit to selling the home in order to get the person who needs money or needs to leave their shares.
*** Does this last bit only apply to when someone needs liquidity or also to someone who chooses to leave? Is six months enough time before forcing this decision in the latter case?[[User:Terminator|lucy]] ([[User talk:Terminator|talk]]) 21:20, 17 April 2024 (CEST)


* Emergency Fund: Also, we should have an emergency fund that works like this:
Also, we should have an emergency fund that works like this:
** The target value of the fund should be 5% of the tax-assessed value of the home assessed at some point in the year.
** If we are lower than the value, everybody agrees to pay a minimum of some amount to the fund monthly. My suggestion is 0.04% of the assessed value. (With a 2m assessed value, this is $800/month, meaning it would take two years to build up the complete 5%). Folks could always pay more to this if want up to the target value of the fund, even if it meant that they increased their shares.
** Contributions to this fund are treated like other contributions to the house value in terms of funds and proportions.
*** Distributions of the fund are made through the normal process.
*** In the case of a sale or someone leaving, the value of the fund will be added to the value of the house for the purposes of someone leaving/being added/whatever.
**** this all sounds good, although 5% seems quite high [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 19:00, 17 April 2024 (CEST)


* Question for the lawyer; would/how would personal bankruptcy affect the rest of the group? [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 19:11, 17 April 2024 (CEST)
* The target value of the fund should be 5% of the tax-assessed value of the home assessed at some point in the year.
* If we are lower than the value, everybody agrees to pay a minimum of some amount to the fund monthly. My suggestion is 0.04% of the assessed value. (With a 2m assessed value, this is $800/month, meaning it would take two years to build up the complete 5%). Folks could always pay more to this if want up to the target value of the fund, even if it meant that they increased their shares.
* Contributions to this fund are treated like other contributions to the house value in terms of funds and proportions.
** Distributions of the fund are made through the normal process.
** In the case of a sale or someone leaving, the value of the fund will be added to the value of the house for the purposes of someone leaving/being added/whatever.


== Discussion of Proposed Policies ==
=== Proposed Policies ===
[Related to all these, I prefer that we make rules only for financial decisions (direct (e.g., mortgage) or indirect (sublet)). Thoughts? [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 22:23, 18 February 2024 (CET)]
[Related to all these, I prefer that we make rules only for financial decisions (direct (e.g., mortgage) or indirect (sublet)). Thoughts? [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 22:23, 18 February 2024 (CET)]


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*** Any member may propose an action to be taken on behalf of the entity by messaging the action to the full set of members on an approved communication channel.
*** Any member may propose an action to be taken on behalf of the entity by messaging the action to the full set of members on an approved communication channel.
*** If nobody else contests the action within a week from receiving it, it is considered ratified.
*** If nobody else contests the action within a week from receiving it, it is considered ratified.
**** unless other people cannot be contacted (e.g., being offline/in remote places) during that period? maybe a different rule for house emergency? [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 19:03, 17 April 2024 (CEST)
*** If everyone affirms the action, it can be ratified sooner.
*** If everyone affirms the action, it can be ratified sooner.
*** If anyone else contests the action it will be brought to a vote of the membership.
*** If anyone else contests the action it will be brought to a vote of the membership.
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*** Consult with a zombie epidemiologist [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 22:23, 18 February 2024 (CET)
*** Consult with a zombie epidemiologist [[User:Mika|Mika]] ([[User talk:Mika|talk]]) 22:23, 18 February 2024 (CET)


== Resources ==
=== Resources ===


Condo Association handbook
Condo Association handbook
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https://docplayer.net/17757078-River-edge-cohousing-llc-1-operating-agreement.html
https://docplayer.net/17757078-River-edge-cohousing-llc-1-operating-agreement.html


== Misc / Not fully structured thoughts ==
 
=== Misc / Not fully structured thoughts ===


* Our friends on the east coast thought of a few unlikely scenarios that we may/may not need to think about. For example, if any of us decides to have kids, what kind of rights would the kids have?
* Our friends on the east coast thought of a few unlikely scenarios that we may/may not need to think about. For example, if any of us decides to have kids, what kind of rights would the kids have?
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