Legal Question in Business Law in North Carolina

Selling memberships in an LLC

I am a general contractor and have found some very nice unfinished homes in foreclosure. These homes have an “after repaired value” of about $2.5 mil. I can buy them in bulk for $1mil and they will need approx. $400 K to finish them out. SO – I am seeking capital of 1.5 mil.

MY Question: Can I put together an LLC and pay a salesman a commission to sell membership shares in the LLC? If there is some law that keeps me from raising that much money or having too many people in an LLC, Can I use the same concept with multiple LLC’s and let each LLC own only 2 or 3 homes? ? = Amt of money raised for each LLC; ? = selling membership into the LLC; ? = paying commission for selling pieces of the LLC which would make the investment?

Asked on 7/31/08, 5:37 pm

1 Answer from Attorneys

John Kirby Law Offices of John M. Kirby
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Re: Selling memberships in an LLC

Those are good questions.

There is no reason that you can't use an LLC for this purpose. There is no limit to the number of shareholders, nor to the amount of the investments. This is, however, rather complicated, and there are lots of things to consider; for this reason, you probably want to meet with a lawyer and get a real solid business plan. You will also want to be very careful with the documents that form the LLC. These investors are shareholders, and they will have various rights, depending on the documents you prepare (and they will have rights by default if your documents don't provide for these rights).

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7/31/08, 8:08 pm

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