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LLC Operating Agreement

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Old 08-27-2015, 03:35 AM
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Default LLC Operating Agreement

Short version of a long story....

My wife started an LLC with her brother to flip a house. I am not in the LLC as a partner.

I did a lot of work in the flip, he has never stepped foot in the house.

My wife got defensive when I told her that we should bill the LLC for my work before profits were split.

She says it's not in the operating agreement.

So I just did the work 48% for her brother?

Am I wrong to have such a hard time with this? I told her I won't step foot in the next house without getting "paid". (Yes, all of our assets are shared and I realize that I benefit from the successful flip).
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Old 08-27-2015, 03:41 AM
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Maybe not labor but definitely materials. If the labor is significant, should at least be a topic of discussion.
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Old 08-27-2015, 03:55 AM
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Probably have 80+ hours in.

Majority of demo, including kitchen gut and some wall removal.

100% of electrical, including all new receptacles, switches and fixtures.

90% of rough carpentry.

A lot of pool work.
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Old 08-27-2015, 04:15 AM
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Will the proceeds of the sale not be used by both you and your wife?

If she makes $20K on the sale, I'm sure you will get to enjoy some of it.
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Old 08-27-2015, 04:45 AM
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Money stays in LLC.
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Old 08-27-2015, 04:54 AM
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Originally Posted by rit.05 View Post
Probably have 80+ hours in.

Majority of demo, including kitchen gut and some wall removal.

100% of electrical, including all new receptacles, switches and fixtures.

90% of rough carpentry.

A lot of pool work.
I'm not sure why you would do all of that work without an understanding re compensation. Eat this one and make sure you get paid next time.
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Old 08-27-2015, 04:57 AM
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Did the brother finance this deal?

How was he involved?
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Old 08-27-2015, 05:17 AM
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why not ask the other member of the LLC.

If they say no - then u know how to proceed on the next one

To be honest these are issues to discuss before doing the deal.

Good luck
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Old 08-27-2015, 05:21 AM
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Originally Posted by rit.05 View Post
Short version of a long story....

My wife started an LLC with her brother to flip a house. I am not in the LLC as a partner.

I did a lot of work in the flip, he has never stepped foot in the house.

My wife got defensive when I told her that we should bill the LLC for my work before profits were split.

She says it's not in the operating agreement.

So I just did the work 48% for her brother?

Am I wrong to have such a hard time with this? I told her I won't step foot in the next house without getting "paid". (Yes, all of our assets are shared and I realize that I benefit from the successful flip).
Was there ever a commercial agreement between you and the owners (LLC0)to do the work?

Seems to me you volunteered your time.
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Old 08-27-2015, 05:36 AM
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I made some assumptions about the business sense of the parties involved, my mistake.

If I was paid, my wife and I would make more on the project. It only makes sense.

Her brother only put in enough to partially finance. He never did any labor, which he verbally agreed to do.

Fool me once....
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Old 08-27-2015, 05:39 AM
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Btw - who is the manager of the LLC - should be defined in the agreement.

I would simply put in a reasonable invoice and see what happens. There are polite ways to ask for compensation
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Old 08-27-2015, 05:40 AM
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Assumptions are a bad idea; in any partnership there should be specific responsibilities and specific compensation. And specific remedies to resolve issues like this.
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Old 08-27-2015, 05:41 AM
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You are wrong to give her a hard time with this one. Next time make sure what is going on up front. Sounds like the real issue is that the brother did little on the project and is not really needed. Is your wife keeping him involved in flipping to help support him?
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Old 08-27-2015, 05:42 AM
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When she says it is not in the operating agreement, I bet she is referring to a partnership interest for services contributed. (DR Guaranteed Payment; CR Capital)

I bet there is no mention that you can't hire people to do work on the place. That would make no sense. I agree that this should have been handled before work was started but should be able to be handled easily.
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Old 08-27-2015, 05:45 AM
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So you're out materials and labor and bil gets same share of the profits.

Your wife is defending her brother when you deserve to be compensated.

I had similar issues with my wife. Her family always came before me. That's why she's my ex wife.
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Old 08-27-2015, 06:08 AM
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I'm sure the LLC paid for the material. Right OP?

If you put in 80 hrs and BIL did not, his wife or partner did not, then you should be compensated above your wife's portion of proceeds from the sale. If you put in 80 (on behalf of your wife) and BIL put in 80, I would say you should not be compensated. If he was financing deal and the ownership was 50/50, I would say you should not be compensated.
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Old 08-27-2015, 06:14 AM
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File a construction lein on the property.
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Old 08-27-2015, 06:15 AM
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Originally Posted by rit.05 View Post
I

If I was paid, my wife and I would make more on the project. It only makes sense.

..
No - if you were paid "you" would make some money ....

The members would still distribute the net profits as stated in the agreement..

You are not a member of the LLC ...

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Old 08-27-2015, 06:30 AM
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Originally Posted by billinstuart View Post
File a construction lein on the property.
No can do if he has no contract with the LLC, which, it appears he does not.
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Old 08-27-2015, 06:31 AM
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Originally Posted by Trollin4Tuna View Post
When she says it is not in the operating agreement, I bet she is referring to a partnership interest for services contributed. (DR Guaranteed Payment; CR Capital)

I bet there is no mention that you can't hire people to do work on the place. That would make no sense. I agree that this should have been handled before work was started but should be able to be handled easily.
This...not really sure what an operating agreement has to do with hiring anyone or paying anyone to render services.
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