Multifamily Investing Operating Agreements and Clauses Transfer of Unit

Multifamily Investing: Operating Agreements and Clauses:Transfer of Unit

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You might have some legal clause in an operating agreement that reads approximately like this:


Transfer of Unit. In connection with each Transfer of a Unit in the Company: (i) the transferor and transferee shall execute and deliver to the Company a written instrument of Transfer in form and substance reasonably satisfactory to the Company; and (ii) the transferee shall execute and deliver to the Company a written instrument pursuant to which the transferee assumes all obligations of the transferor associated with the transferred Unit and otherwise agrees to comply with the terms and provisions of this Agreement.
9.2 Requirements of Transfer. In connection with each Transfer, the transferring Member shall provide to the Company either: (i) an opinion of counsel to such transferring Member satisfactory in form and substance to counsel for the Company to the effect that such Transfer will not give rise to a requirement that Units in the Company be registered under Section 5 of the Securities Act; or (ii) sufficient information to allow counsel to the Company to make a determination that such Transfer will not give rise to a requirement that Units in the Company be registered under Section 5 of the Securities Act; provided that each of (i) and (ii) are in a form acceptable to the Manager in its sole discretion. The Company shall use its reasonable efforts to assist the transferring Member in obtaining Company information necessary for such Member to satisfy its obligations under the preceding sentence.

In simpler terms, when transferring a unit in the company, both the person transferring the unit and the person receiving it must sign a written agreement that meets the company's requirements. The new unit holder must also agree to follow the company's rules and take on any obligations tied to the unit.

For example, if John wants to transfer his unit to Jane, they both need to sign a written document that the company approves. Jane will also have to agree to follow the company's rules and take on any responsibilities that come with the unit. Additionally, the person transferring the unit must provide either a legal opinion or sufficient information to ensure that the transfer doesn't require registering the unit under Section 5 of the Securities Act. The company will help in providing any necessary information for this process.

If you would like to learn more about multifamily investing, you should join the Benjamin Z Miller Investor Networking Group.

If that sounds interesting contact my office by going to www.benjaminzmiller.com and fill out the contact form.
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I hope that helps and good luck with your investing!


Benjamin Z Miller
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