Real Estate LLC Operating Agreement Template

A Real Estate LLC Operating Agreement is a document that explains how a limited liability company will manage and operate real estate investments. Our free template lets you set the rules for how the company buys, owns, manages, and sells property, as well as how profits are shared between members.

• Tailored for multi-member LLCs focused on real estate investments, both residential and commercial.
• Permits allocation of ownership, voting, and profit interest percentages separately, allowing passive and active members to own different percentages
• Real estate-specific non-competition restriction that prevents members from engaging in businesses that compete with the property owned by the LLC
• Includes property purchase in the LLC's name, allocation of expenses, title information, and management powers
• Audit rights and books-and-records provisions ensure the LLC’s finances remain transparent to members

Download this customizable Word and PDF real estate LLC operating agreement template for free. Outline member duties, percentages owned, and property management responsibilities before your first closing. Sign online in minutes.

Who It’s For

Situations where this real estate LLC operating agreement will work:

• Multiple investors buying a rental property together who want to outline each member’s equity ownership, contribution expectations, and voting power prior to closing
• Real estate investors creating a multi-member LLC for a particular deal or group of investments
• Family members who want to hold real estate within an LLC and maintain separate ownership and management interest
• Members who will be actively managing properties and those who just want to provide financial support
• Single-member investors who want to transition personally owned rentals over to an LLC and add a new member to take on equity or management responsibilities

What’s Included in the Real Estate LLC Operating Agreement Sample

This sample agreement includes the entire legal entity of a real estate LLC:

• The formation of the LLC. Includes name, state of formation, address, purpose, and duration.
• Ownership of members as percentages, along with capital contributions and deadlines for delivery.
• Distribution of profits and losses to members according to ownership.
• Voting rights and titles of members are determined separately for each member.
• Transfer of ownership is restricted unless prior written approval is obtained from all members.
• Rules for how property will be handled. Name on title, who pays expenses, and how titles are documented.
• Duties and rights of each member are specifically named.
• Non-compete, dissolution, rights to audit, books and records, dispute resolution.

How to Write Your Real Estate LLC Operating Agreement

Real estate owners often miss these important clauses when forming an LLC. Use this guide to decide which member gets what in your ownership agreement.

1. Decide on ownership percentages based on contribution

Avoid ease and just split everything 50/50. If one member is bringing the property and the other is only bringing money to the table, ownership should reflect that. Contribution and equity misalignment is one of the leading causes of real estate LLC disputes.

2. Specify what voting decisions each member has

The form allows you to decouple voting percentages from actual ownership interest in the property. Just because someone owns 40% doesn’t mean they need to have 40% control over the daily business decisions. Specify who gets to vote on what. Include purchases, sales, improvements, repairs, etc. You’ll avoid voting deadlocks down the road.

3. Be specific about who manages the property

The Rights and Responsibilities clause is intentionally left blank. List who takes care of tenant issues, upkeep, bookkeeping, and who actually signs the leases. If you have a managing member and a silent member, fill that in. If left blank, one member can argue that he should have as much decision-making power as the other.

4. Include a right of first refusal on the transfer of interest

By default, the operating agreement states that another written consent is required to transfer any share of the company. It’s recommended to go a step further by including a right of first refusal clause. This gives the remaining member the first opportunity to buy out the member’s interest at the same terms the selling member would offer to an outside party. This is common in real estate LLCs because you don’t want an outside member buying into the middle of your deal.

5. Specify a time frame to provide capital contributions

Define how long a member has to provide their share of capital contribution to the LLC. Also, determine what happens if they don’t follow through. Does their member percentage decrease? Can the remaining members buy them out at par value? Whatever you decide, get it out of the way before signing. You don’t want one member holding the LLC hostage because he doesn’t have the cash today to fulfill his share.

6. Limit the scope of the non-compete

Non-compete clauses prevent the members of the LLC from competing against the company. But what does that really mean for your deal? Acquiring similar properties in the market? Managing rentals yourself? Do one or both of these apply? Whatever the case may be, narrow the scope.

You can complete the signing online using CreateMySignature. Simply upload the finished agreement, add signature fields for each member, and send it for e-signature.

Documents Often Used Alongside a 50/50 LLC Operating Agreement

• Non-Disclosure Agreement (NDA): An NDA is used when partners share property financials, valuations, lender terms, deal structures when forming and drafting the LLC․ It protects sensitive property and deal information before governance is finalized․
• Land Purchase Agreement: Ensure the mechanics and terms of closing, contingencies, and title issues are consistent with the capital contributions and ownership distribution set forth in the LLC's operating agreement․
• Property Co-Ownership Agreement: If you're co-owning the property directly (not through the LLC) you will need a co-ownership agreement, and if you're co-owning through an LLC, the operating agreement relates to usage and transfer of ownership․